A Diagnostics & Imaging Week

FDA is often thought of as the most beleaguered of all the agencies at the Department of Health and Human Services (HHS), but those who work at the Centers for Medicare & Medicaid Services (CMS) may think they're not far behind.

The recent report by the Office of Inspector General at HHS on the agency's Comprehensive Error Rate Testing (CERT) program for 2006 ratcheted up the projected error rate for Medicare's durable medical equipment (DME) billing, but a close look at the OIG document indicates that the office applied a standard of scrutiny that would likely raise hackles among beneficiaries if applied to all claims.

The OIG document included several damning observations, including that "CMS orally instructed the CERT contractor to deviate from written policies" in three areas, including "not counting lack of proof of delivery as an error if that was the only issue with a claim." The CERT contractor's data indicated that the error rate for 2006 was 7.5%, which would generate about $700 million in improper payments.

However, OIG contracted with auditor KePRO (Harrisburg, Pennsylvania) to perform two audits of the data from more than 360 of the roughly 8,000 claims in the original CERT database. According to the cover letter from the OIG report, KePRO used the same procedures as the CERT contractor for the first of these reviews and found that medical reviews were accurate for 324 of the 363 examined claims, but KePRO identified what it saw as 39 erroneous claims that the CERT contractor did not peg. Apparently, "the CERT contractor agreed with 18 of the additional error determinations and disagreed with 21."

Among the disputed errors were eight claims for oxygen equipment that did not include "sufficient detail" as to parameters of use such as oxygen flow rate and frequency. In one of these cases, the CERT contractor used the diagnostic codes in the patient's medical history to infer need in the absence of a doctor's order, but KePRO concluded "that clinical inference should not be applied to an incomplete order."

In another instance, the failure of a doctor to specify the frequency of glucose testing for a diabetic patient led KePRO to conclude that the provision of diabetic testing supplies was erroneous. The CERT contractor's position was that "the signed physician order indicated that the beneficiary was insulin-dependent and because the testing supplies ordered did not exceed the . . . guidelines for in insulin-dependent patient," the order was filled

OIG extrapolated the additional 39 errors to an overall error rate for DME billing to 17.3%, but KePRO was said to have backed off on five of those claims. On the second review, KePRO said it pegged an additional 73 errors, which would yield an error rate of almost 29%. However, KePRO had to go to some lengths to obtain the high-end error rate, requiring extensive contact efforts with both physicians and with patients.

One of the cases that supports the OIG conclusion also resurrects a longstanding suspicion about fraudulent DME suppliers. The OIG report states that KePRO's second review of power mobility claims included one case in which both members of a married couple were said to have obtained powered wheelchairs despite both being ambulatory. The prescribing doctor denied having written an order and claimed no knowledge of the patients, and the couple said they had never heard of either the doctor or the supplier.

CMS's response to the report indicated that CERT contractors will have to "review all available supplier documentation," assuming the OIG recommendations are put into play. CERT contractors would also have to "review all medical records . . . necessary to determine compliance with applicable requirements on medical necessity."

According to the OIG paper, the nearly 8,000 records from which KePRO drew its sample generated about $1.2 million in claims, and the value of the invalidated claims was about $81,000. This constitutes an erroneous payment percentage of 6.75%. In its response, CMS said the cost of implementing the OIG recommendations would run as much as $2.5 million.

Generally speaking, CMS agreed with the recommendations, but acting administrator Kerry Weems indicated in his response that the analysis was based on a claims-checking paradigm that was no longer in force. Weems stated that "beginning with the 2007 improper payment reporting period, CERT has been asking physicians as well as suppliers for supporting information on DME claims."

CMS has complained in the past about Congress's decision in 2003 to cap auditing funds for the agency at $720 million, which Weems has said "has seriously degraded CMS' ability to meet its responsibilities in combating fraud and abuse." However, those on Capitol Hill were not mollified, with Sen. Chuck Grassley (R-Iowa) stating, "I want to know what happened, who's responsible, who will be held accountable and what [HHS Secretary Mike] Leavitt will do about it." Grassley is the ranking GOP member of the Senate Finance Committee, one of the committees with jurisdiction over federal public health plans.

In a statement, Tyler Wilson, president/CEO of the American Association for Homecare (AAHomecare; Arlington, Virginia), said the association supports "fiscal responsibility within the Medicare program," but decried the appearance of "news articles linking two separate issues; pricing through competitive bidding and fraud prevention."

Wilson said the recently passed Medicare law that overrode the DME bidding program will require certification of DME providers and includes a 9.5% reduction in prices for the items that were under bidding, saving "taxpayers the billions of dollars that the flawed [bidding] program would have saved."

CMS spokesman Peter Ashkenaz declined to comment for the record, as did the Advanced Medical Technology Association (Washington).

Uninsured down, taxpayers cover more

The Census Bureau report filed on the number of Americans without health insurance indicated that the numbers were down to about 45.7 million last year, a drop from the 47 million reported from the previous year. The slight downtick, however, apparently reflects an increase in enrollment in taxpayer-funded plans such as Medicare and Medicaid.

The Census Bureau stated that the ratio of Americans covered by government health insurance programs rose from 27% percent in 2006 to 27.8% last year, representing an absolute increase from 80 million to 83 million. Those covered by employer-sponsored insurance dropped from 59.7% to 59.3%.

Ron Pollack, executive director of Families USA (Washington) said in a statement, "It is ironic that, at the very time the Bush administration tried to cut back Medicaid and twice vetoed legislation to extend children's health coverage, the public safety net cushioned the loss of employer-sponsored health coverage. He said the numbers demonstrate "the importance that the next president should protect, and not undermine, the public health safety net."