Audits: Part 1

Tuesday, December 27, 2011

Editor's note: This introductory overview is Part I of a five-part series. Part II will address prepayment reviews; Part III will address post-payment audits; Part IV will compare post-payment audits and prepayment reviews conducted by DME MACs with those conducted by ZPICs; and Part V will discuss contractor abuses and the steps that AAHomecare and industry stakeholders are taking to correct the abuses. 

The HME industry is young. In its present form, it has been around for about 30 years. Compare this to physicians, hospitals and pharmacists who have been around for thousands of years. The industry grew up relatively unregulated. HCFA (now CMS) did not know what we did. And then approximately seven years ago it is as if CMS woke up one morning and asked: "Who are these people and why are we paying them money?" Added to this was bad publicity emanating from Operation Wheeler Dealer in Houston and blatant fraudulent schemes in South Florida. Another challenge is that few people with CMS and on Capitol Hill have ever set foot in an HME company. Young, healthy people go to physicians, hospitals and pharmacies. As a general rule, senior citizens (whose bodies break down as they age) use HME companies. The 28-year-old legislative staffers and the 50-year-old CMS employees have had no reason to visit an HME company, much less understand what an HME company does. As the government is famous for doing, it overreacted. In a relatively short time-frame, the industry got hit with increased regulations, decreased reimbursement, competitive bidding, and aggressive post-payment audits and prepayment reviews.

The pendulum will eventually swing back toward the middle. Until that time, however, the HME industry will have to deal with intrusive government scrutiny. What is interesting is that the demand for what the industry has to offer will only increase exponentially. There are 78 million baby boomers (people born between 1946 and 1964). They are retiring at the rate of 10,000 per day. The boomers will live until they are 85 years old, their bodies will start breaking down at 70, they will expect a good quality of life until they die, and they will not want to live in a long-term care facility--they will want to live at home. The mantra of healthcare cost containment will be to keep Medicare beneficiaries away from physicians and hospitals. The demand, then, for what HME providers have to offer will be huge. I call this the "irresistible force" (demand) meets the "immovable object" (Medicare is broke).

And so while we are in strange times, the future is bright for well-run, innovative HME providers. One of the biggest challenges facing providers today is preparing for and responding to post-payment audits and prepayment reviews. There is abundant contractor abuse in how the audits and reviews are being conducted. AAHomecare and industry stakeholders are working with CMS to correct these abuses. Nevertheless, audits and reviews will be a permanent part of the landscape.

Why is there such an increase in audits and reviews? Audits and reviews are moneymakers for the government. For every dollar expended by the government to chase a recoupment, the government recovers many more dollars. There is an increase in utilization of HME; this is to be expected in light of the "graying of America." Generally speaking, HME is expensive. This, by itself, will capture the government's attention. Contractor auditors are becoming more sophisticated in reviewing HME claims. It is a priority of CMS to uncover and prevent fraud in the Medicare fee-for-service program. Healthcare providers (not just HME providers) have become the new bogeyman to the government. The bogeyman used to be "Big Oil"....then "Big Tobacco"....then "Big Pharma".....and now "fraudulent healthcare providers." Recovering money from fraudulent healthcare providers makes for an easy sound bite for politicians.

Jeffrey S. Baird, Esq. is chairman of the Health Care Group at Brown & Fortunato, P.C., a law firm based in Amarillo, Texas. He can be reached at (806) 345-6320 or



This is why it is soooo! important for the Nichole Medical/Dominic Rotella case in the Third Circuit Court of Philadelphia, PA. to be successful. This case encompasses the entire health care industry. If we lose the entire health care industry will be left with no recourse for any egregious acts by CMS and/or any of it&#39;s contractors. Competitive bidding will be the least of everyone&#39;s problems. Why? This issue is much bigger then competitive bidding and/or any other wrench CMS chooses to throw at the health care industry. A loss for the Plaintiffs, Nichole Medical and Dominic Rotella crowns CMS the undisputed autonomous ruler over the entire medicare system and would leave no wiggle room of recourse for any provider of health care within the jurisdiction of the current medicare system. This includes every doctor and hospital the HME industry&#39;s primary referral sources. CMS will be given powers above the Federal Courts and leave the entire health care system powerless from whatever CMS and/or it&#39;s contractors do legal or otherwise!<br />
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You can have all the seminars in the world but none of them would be able to keep CMS, their auditors and/or contractors at bay. Every health care provider will become defenseless. If CMS wins this case it will be handing them the biggest ball of kryptonite ever!<br />
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I have been saying this same issue over and over again for months but I am not sure everyone understands how serious and the potential collateral damages that will occurr should Nichole Medical and Dominic Rotella not prevail.<br />
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Happy New Year Everyone!