August 24, 2011

OIG Report Describes Questionable Billing by Suppliers of Lower-Limb Prostheses

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The Department of Health & Human Services (HHS), Office of Inspector General (OIG) has issued a report that describes questionable billing by suppliers of lower-limb prostheses and the extent to which Medicare improperly paid claims for these prostheses.

Between 2005 and 2009, Medicare spending for lower-limb prostheses increased 27 percent, from $517 million to $655 million, while the number of Medicare beneficiaries receiving lower-limb prostheses decreased by 2.5 percent, from almost 76,000 to about 74,000. Medicare paid 4,575 suppliers for lower-limb prostheses in 2009, and 1,632 of the 4,575 suppliers accounted for 92 percent of the $655 million billed for lower-limb prostheses.

The report indicates the following:

In 2009, Medicare inappropriately paid $43 million for lower-limb prostheses that did not meet certain requirements; these payments could have been prevented by using claims processing edits.

These payments were for claims—32,260 claims for 9,265 beneficiaries—that did not meet the local coverage determination (LCD) requirements. The $43 million is based solely on an analysis of claims data and does not include payments that a medical-record review may find to be unreasonable or unnecessary.

Medicare paid an additional $61 million for beneficiaries with no claims from their referring physicians.

These beneficiaries had no Medicare Part A or Part B claims that included their referring physicians during the last five years. Billing for prostheses when the beneficiary had no claims from the referring physician raises questions about whether the physician ever evaluated the beneficiary and whether these devices were medically necessary. These payments accounted for 55,274 claims for 7,066 beneficiaries.

In 2009, 267 suppliers of lower-limb prostheses had questionable billing.

In 2009, 136 suppliers accounted for $22 million of the payments that did not meet certain Medicare requirements or were for beneficiaries with no claims from their referring physicians. An additional 131 suppliers had other questionable billing, such as billing for a high percentage of beneficiaries with no history of an amputation or missing limb or a high percentage of beneficiaries with unusual combinations of prostheses.

Two-thirds of these 267 suppliers were independently owned, and these suppliers were at least twice as likely as other suppliers to be located in Alabama, Mississippi, Puerto Rico, or Wyoming.

Medicare contractors conducted varying degrees of program safeguard activities related to lower-limb prostheses.

The four Durable Medical Equipment Medicare Administrative Contractors (DME MACs) had varying claims processing edits in place, but none had edits for all requirements. Also, none of the DME MACs conducted medical reviews, and not all conducted data analyses or provided education related to lower-limb prostheses. All five Zone Program Integrity Contractors (ZPICs) and DME program safeguard contractors (PSCs) conducted data analyses and opened a total of 19 investigations related to lower-limb prostheses; the investigations had differing results.

The OIG report includes the following recommendations for the Centers for Medicare & Medicaid Services (CMS):

  1. Implement additional claims processing edits to prevent inappropriate payments, based on all of the LCD requirements.
  2. Strengthen monitoring of billing for lower-limb prostheses. Specifically, for each supplier, contractors should determine: (1) the percentage of claims that did not meet certain Medicare requirements; (2) the percentage of claims for beneficiaries with no claims from their referring physicians; (3) the percentage of beneficiaries who had no Part A or Part B history related to an amputation; (4) the percentage of beneficiaries who received unusual combinations of prostheses; (5) the percentage of beneficiaries that suppliers have in common; (6) the percentage of beneficiaries who received prostheses for both lower limbs; (7) the percentage of beneficiaries who received prostheses for transfemoral amputations; (8) the average payment per beneficiary for transfemoral prostheses; and (9) the average payment per beneficiary for transtibial prostheses. CMS should develop thresholds for these measures and instruct its contractors to conduct additional reviews of suppliers that exceed the thresholds.
  3. Implement requirements that the referring physician have a face-to-face encounter to establish the beneficiary’s need for prostheses.
  4. Revise the LCD requirements. First, CMS should clarify the definitions of beneficiaries’ potential functional levels. Second, CMS should revise the LCD or take other steps to require that licensed/certified medical professionals, such as physical therapists, evaluate beneficiaries to determine their potential functional levels. Lastly, CMS should consider revising the LCD to deny as medically unnecessary certain combinations of prostheses, such as more than one definitive base prosthesis or prostheses for different sites of amputation billed for the same limb on the same date.
  5. Enhance screening for currently enrolled suppliers of lower-limb prostheses.
  6. Take appropriate action on suppliers with questionable billing. In a separate memorandum, OIG will refer the suppliers that were identified to CMS for appropriate action.

According to the OIG report, CMS concurs with all of recommendations except for the fifth one, stating that it has in place sufficient tools for increased scrutiny of existing providers of durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS). CMS noted that if an existing supplier meets one of several triggering events, that supplier automatically is elevated to the high-risk level.

Based on this report and the findings of other OIG reports on DMEPOS, OIG maintains that all current suppliers of lower-limb prostheses should be placed at the high-risk level.

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