Audits: An overview of abuses

Jeffrey Baird
chairman, Health Care Group, Brown & Fortunato

Editor’s note: This is the last (Part V ) in a series of commentaries on audits. Also read Part I, Part II, Part III and Part IV.

No matter how you look at it, the contractors are out of control. Examples include: instructions by a ZPIC to the four DME MACs to suspend payments to a supplier because the ZPIC is dissatisfied with the supplier’s documentation and because the ZPIC asserts (without substantiated evidence) that the supplier is violating the telephone solicitation statute; placement of a supplier on a 100% prepayment review because the contractor does not feel that the medical necessity documentation is sufficient; and a supplier having to respond to the same audit request for the same patient on multiple occasions.

Specific contractor abuses

•    There is a glaring failure of CMS oversight of the ZPICs. CMS does not have the staff (with sufficient experience) to know if the ZPICs “are doing things right.” This is compounded by the fact that, too often, a ZPIC contractor has no experience in the areas of fraud and abuse that it is investigating. This lack of knowledge results in incorrect policy applications, errors in data analysis, and unnecessary audits, reviews and investigations.

•    A contractor will disregard medical necessity documentation that is contemporaneous with the physician’s order. There have been a number of incidents in which a CERT contractor has disregarded medical documentation created contemporaneously with the initial order and, instead, requires suppliers to submit patient records that document medical necessity on the date of service that the CERT contractor is auditing.

•    Contractors interpret CMS instructions (pertaining to LCDs and NCDs) to mean that suppliers must document, in unrealistic detail, every element of the coverage criteria in the LCD. The result is that supplier must document ancillary LCD provisions that, in and of themselves, do not affect coverage for the DMEPOS item. In short, contractors are looking for documentation that reflects, word-for-word, the language of the LCD. It is impossible for physician records to recite words and phrases from an LCD with the cookie-cutter precision that the contractors demand.

•    Contractor staff is prohibited from using “clinical judgment” (or “clinical inference”) in reviewing documentation. DME MACs and ZPICs employ clinical staff; unfortunately, the staff has no ability to exercise their clinical expertise. This lack of clinical inference can lead to ridiculous results.

•    There is a lack of consensus among contractors, and even among auditors working for the same contractor, regarding what documents establish medical necessity. Some, but not all, contractors interpret CMS’s audit strategy as a mandate to audit every statement in an LCD no matter how remotely the statement affects coverage of the item. This interpretation results in requests for information that are not relevant to the determination of medical necessity. The same phenomenon occurs within a single contractor: One auditor will adopt a hyper-strict interpretation of what the LCD requires, while another auditor will not take such a strict view.

•    Too often, ZPICs request hundreds of medical records on short deadlines without any explanation about why the documents are being reviewed. ZPICs are not receiving appropriate oversight and monitoring from CMS to ensure that they are complying with CMS guidelines for medical review. Further, the ZPICs are not affording suppliers even the most basic procedural protections set out it in the Program Integrity Manual. This creates hardships for suppliers that remain indefinitely on prepayment reviews.

Responsive steps by the industry

AAHomecare has taken the leadership role in confronting contractor abuses. It has gathered evidence of contractor abuse from multiple HME providers. Through its various committees and councils, AAHomecare has met with CMS on multiple occasions. At these meetings, AAHomecare has presented examples of contractor abuse. AAHomecare has also submitted a detailed white paper to CMS that outlines the problems discussed above and suggests solutions.

State DME associations have been aggressive in presenting the problems to their elected U.S. representatives and senators. VGM and The MED Group have encouraged their members to lobby their elected representatives. Stakeholders have submitted white papers to the Senate Finance Committee that detail contractor abuses.

At the end of the day, it is important for HME providers to educate their customers and physicians regarding the problems that the suppliers are encountering with audits. History has shown that CMS often turns a deaf ear to complaints by providers. To a lesser extent, Capitol Hill does the same. However, when a Medicare beneficiary and/or a physician complains, CMS and Capitol Hill listen.

Jeffrey Baird, Esq., is chairman of the Health Care Group at Brown & Fortunato, P.C., a law firm based in Amarillo, Texas. Reach him at 806-345-6320 or



If anyone has read any of my comments the term I use to classify Auditors is they are a "Runaway Train". I have also written that neither the legislative or executive branches of the government are interested in hearing any complaints from Providers. I have also written the only place this carnage can be stopped is in only on venue, The Federal Courts! The system
needs Federal Judges to "Gavel Down" a Decision binding ALL. Auditors accountable for their actions outside the statute and/or the regulations established by and under The Secretary. CMS has taken this case very seriously because they know this is "High Stakes Poker". This
is an ALL-IN situation and it is ALL on the line.

I tried reaching out to many industry stakeholders for help and support and except for handful of very perceptive and concerned Providers I was denied by ALL. Not one major industry
representative appeared in the Court Room on April 20th. Not one even offered good wishes
before the hearing and several writings were published informing everyone of the scheduled

All I can say now is whatever The Third Circuit Decides, it will remain in place for the entire
industry and will more than likely be extremely difficult to overturn in either direction.