Effect of Sequestration on DME

Questions and AnswersQuestion: Does the 2% payment reduction under sequestration apply to the payment rates reflected in Medicare fee-for-service fee schedules or does it only apply to the final payment amounts?

Answer: Payment adjustments required under sequestration are applied to all claims after determining the Medicare payment including application of the current fee schedule, coinsurance, any applicable deductible, and any applicable Medicare Secondary Payment adjustments. All fee schedules, Pricers, etc., are unchanged by sequestration; it’s only the final payment amount that is reduced.

Question: How is the 2% payment reduction under sequestration identified on the electronic remittance advice (ERA) and the standard paper remittance (SPR)?

Answer: Claim adjustment reason code (CARC) 223 is used to report the sequestration reduction on the ERA and SPR.

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Mandatory Payment Reductions in the Medicare Fee-for-Service (FFS) Program – “Sequestration” (201303-02)

Spending-Cuts-ShutterstockThe Budget Control Act of 2011 requires, among other things, mandatory across-the-board reductions in Federal spending, also known as sequestration.  The American Taxpayer Relief Act of 2012 postponed sequestration for 2 months.  As required by law, President Obama issued a sequestration order on March 1, 2013.  The Administration continues to urge Congress to take prompt action to address the current budget uncertainty and the economic hardships imposed by sequestration.

This listserv message is directed at the Medicare FFS program (i.e., Part A and Part B).  In general, Medicare FFS claims with dates-of-service or dates-of-discharge on or after April 1, 2013, will incur a 2 percent reduction in Medicare payment.  Claims for durable medical equipment (DME), prosthetics, orthotics, and supplies, including claims under the DME Competitive Bidding Program, will be reduced by 2 percent based upon whether the date-of-service, or the start date for rental equipment or multi-day supplies, is on or after April 1, 2013.

The claims payment adjustment shall be applied to all claims after determining coinsurance, any applicable deductible, and any applicable Medicare Secondary Payment adjustments.

Though beneficiary payments for deductibles and coinsurance are not subject to the 2 percent payment reduction, Medicare’s payment to beneficiaries for unassigned claims is subject to the 2 percent reduction.  The Centers for Medicare & Medicaid Services encourages Medicare physicians, practitioners, and suppliers who bill claims on an unassigned basis to discuss with beneficiaries the impact of sequestration on Medicare’s reimbursement.

Questions about reimbursement should be directed to your Medicare claims administration contractor.  As indicated above, we are hopeful that Congress will take action to eliminate the mandatory payment reductions.

Therapeutic Shoes – Documentation Requirements

The National Government Services, Jurisdiction B Medical Review department recently conducted a widespread post pay probe for HCPCS codes A5500, A5501, A5512, and A5513.  A widespread post pay probe is a selection of paid claims reviewed for medical necessity based on a particular service from multiple suppliers.  The suppliers who had claims selected and reviewed for this probe have been sent final probe determination letters.  The letter indicates the probe review findings and any overpayment(s) identified. The claims that were found to have been paid in error have been adjusted and a demand letter has been generated.

The following are the most common errors found during the recent medical review audit of therapeutic shoes and inserts and clarification of documentation requirements.

 

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Results of Widespread Prepayment Probe Review of Ankle-Foot/Knee-Ankle-Foot Orthosis (HCPCS L4360, L1970 and L1960)

Review Results

Jurisdiction D DME MAC Medical Review Department completed a widespread prepayment probe review of HCPCS codes L4360, L1970 and L1960. This review was initiated based on CERT analysis.

The L4360 review involved 101 claims of which 97 were denied. This resulted in an overall error rate of 97%.

The L1970 review involved 100 claims of which 80 were denied. This resulted in an overall error rate of 79%.

The L1960 review involved 100 claims of which 69 were denied. This resulted in an overall error rate of 68%.

Primary documentation errors that resulted in denial of claims

• 21% of L4360 claims received a denial as basic coverage criteria not met.

• 21% of L1970 claims received a denial as basic coverage criteria not met.

• 30% of L1960 claims received a denial as basic coverage criteria not met.

Medical records are insufficient to support basic coverage criteria.

BASIC COVERAGE CRITERIA: Ankle-foot orthoses are covered for ambulatory beneficiaries with weakness or deformity of the foot and ankle, who require stabilization for medical reasons, and have the potential to benefit functionally.

•  21% of L1970 claims received a denial as criteria 1,2,3,4 or 5 not met.

•  32% of L1960 claims received a denial as criteria 1,2,3,4 or 5 not met.

1 of the 5 following criteria were not met:

•  The beneficiary could not be fit with a prefabricated AFO; or

•  The condition necessitating the orthosis is expected to be permanent or of longstanding duration (more than 6 months); or,

•  There is a need to control the knee, ankle or foot in more than one plane; or

•  The beneficiary has a documented neurological, circulatory or orthopedic status that requires custom fabricating over a model to prevent tissue injury; or,

• The beneficiary has a healing fracture which lacks normal anatomic integrity or anthropometric proportions.

20% of L4360 claims received a denial as no proof of delivery submitted.

7% of L1960 claims received a denial as no proof of delivery submitted.

No proof of delivery submitted.

Proof of delivery (POD) is a Supplier Standard and DMEPOS suppliers are required to maintain POD documentation in their files. For medical review purposes, POD serves to assist in determining correct coding and billing information for claims submitted for Medicare reimbursement. Regardless of the method of delivery, the contractor must be able to determine from delivery documentation that the supplier properly coded the item(s) submitted for Medicare reimbursement and that the item(s) are intended for, and received by, a specific Medicare beneficiary.

• 42% of L4360 claims received a denial as no written or verbal order received.

• 7% of L1970 claims received a denial as no written or verbal order received.

• 5% of L1960 claims received a denial as no written or verbal order received.

No written or verbal order received.

All items billed to Medicare require a prescription. An order for each new or full replacement item billed must be signed and dated by the treating physician, kept on file by the supplier, and made available upon request.

Equipment and supplies may be delivered upon receipt of a dispensing order except for those items that require a written order prior to delivery. A dispensing order may be verbal or written. The supplier must keep a record of the dispensing order on file. It must contain:

• Description of the item

• Beneficiary’s name

• Prescribing Physician’s name

• Date of the order and the start date, if the start date is different from the date of the order

• Physician signature (if a written order) or supplier signature (if verbal order)

 

For items that are provided based on a dispensing order, the supplier must obtain a detailed written order before submitting a claim. Detailed written order (DWO) is required before billing. Someone other than the ordering physician may produce the DWO. However, the ordering physician must review the content and sign and date the document. It must contain:

• Beneficiary’s name

• Physician’s name

• Date of the order and start date, if start date different than date of order

• Detailed description of the item(s)

• Physician signature and signature date

Going Forward

Based on high error rate, Noridian Administration Services will close this probe review and begin a widespread targeted review on HCPCS codes L4360, L1970 and L1960.

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