An unusual case of downcoding

Saturday, May 31, 2003

PUERTO RICO — Here’s an audit you don’t see every day, although the result — it was overturned at the ALJ level — is becoming a rather ho-hum experience.

When it comes to DMERC audits and recoupments, most revolve around a lack of medical necessity or services allegedly not rendered. In the case of Home Orthopedics, one of the commonwealth’s largest providers of orthotics and prosthetics, auditors seized on a perceived coding violation.

“Coding issues are usually cut and dry because the provider either used the right code or he didn’t,” said the company’s attorney, J. Everett Wilson.

Turns out this case wasn’t so cut and dry. In trying to provide a new model of orthotic, one that hadn’t yet been assigned a HCPCS code, Home Orthopedic billed it under a code (appropriate as it turned out) that covered earlier versions of the product.

When Medicare discovered the billing during a random audit, it said no way. Because the SADMERC hadn’t yet assigned it to a billing code, Medicare decided to treat it as a miscellaneous item, which reimburses 10% of the coded item. In the end, Medicare ordered Home Orthopedic to return $100,000, Wilson said.

At the ALJ appeals level, the judge found that the equipment and services that the company had provided were medically necessary and covered by Medicare. The judge also agreed with Wilson that Medicare had erroneously downcoded a new model of prosthetic simply because it had not yet been classified.

Despite the victory, Wilson sounds a note of caution.

“All’s well that ends well,” he said. “But to a certain extent, the provider is at risk if he is providing a product that hasn’t received SADMERC classification. The conservative legal approach would be to provide the classified product until the new product gets classified.” HME
Read Q & A with J. Everett Wilson