Medicare Administrative Contractors Are Audited and Auditing: Learn From the Results

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I am sure you know that the Medicare Administrative Contractors (MACs)—which process wound/ulcer management claims—conduct pre-payment and post-payment audits, but do you know that all the MACs are audited to determine if they overpaid or underpaid the claims they processed? That audit program is called Comprehensive Error Rate Testing (CERT). Each year, an independent CERT review contractor (NCI Information Systems, Inc.) reviews the documentation in medical records and determines if the MACs properly paid those claims according to the Medicare coding, coverage, and payment regulations. If the CERT auditors determine that the claims were underpaid, the MACs must pay the entities who submitted the claims. Similarly, if the CERT auditors determine that the claims were overpaid, the MACs are required to recoup the overpayments from the entities who submitted the claims.

Although CERT audits are not focused directly on professionals, providers, and suppliers, these stakeholders should not ignore CERT audit record requests. If stakeholders fail to supply the requested records, the CERT will notify Medicare and the stakeholder will 1) be flagged for additional audits, and 2) be required to repay Medicare for those claims. Therefore, the keys to CERT audit success are to maintain accurate and thorough medical records at all times and to cooperate with record requests from the CERT auditors.

Each year when the CERT audits are completed, another independent CERT statistical contractor (The Lewin Group, Inc.) calculates an improper payment rate for service, procedure, and product claims that were either overpaid or underpaid and prepares a statistical error report that reflects the MACs’ performance. This author has been reading the CERT reports for many years and is always amazed that wound/ulcer management professionals, providers, and suppliers continue to give the CERT auditors plenty of reasons to instruct the MACs to recoup large repayments.

In case you have not been reading the valuable CERT reports, let us look at the major repayment reasons and learn from the 2022 report.¹ This author truly believes that all the CERT repayments made by wound/ulcer management professionals, providers, and suppliers could have been avoided.

Hospital-Owned Outpatient Provider-Based Departments (PBDs)

After the CERT auditors reviewed the PBDs’ documentation, the report showed that the MACs overpaid $4.4 billion, which was an improper payment rate of 5.4%. In fact, PBDs ranked number 3 for CERT repayments caused by improper coding. The major reason for the repayments was missing or insufficient documentation of information that should always be in the medical record, such as:

• Missing provider’s intent to order (for certain services)
• Missing order or inadequate documentation to support order
• Missing documentation to support medical necessity
• Missing documentation required by National Coverage Determinations
• Missing documentation for the billed date of service
• Code billed was not the correct code for the service/procedure provided
• Missing attestations to support unsigned orders and records
• Inadequate documentation for diagnostic tests ordered
• Missing results of ordered diagnostic or laboratory tests

Established Office Visits

Improper payment by the MACs for physician or other qualified healthcare professional (QHP) established office visits ranked in the top 3 Medicare Part B services identified in the 2022 CERT report. In fact, established office visits ranked number one for CERT repayments caused by improper coding. Similar to the PBDs, the major overpayment reason was missing or insufficient documentation, which could have been easily prevented:

• Documentation supports lower level of E/M service than what was billed
• Documentation supports higher level of E/M service than what was billed
• Documentation was inadequate to support the code that was paid
• Documentation did not support separately identifiable E/M service
• Documentation for the billed date of service was inadequate or missing
• Signature log to support an illegible signature was missing
• Modifier was incorrectly reported when documentation for a separate and identifiable service was inadequate or missing
• Attestation for unsigned documentation was missing
• Provider/supplier indicated they were unable to locate medical records for the patient/beneficiary

Durable Medical Equipment, Prosthetics, and Orthotics (DMEPOS)

Wound/ulcer management physicians, QHPs, and PBDs often complain either 1) that the durable medical equipment (DME) supplier requires too much documentation in order to supply surgical dressings or negative pressure wound therapy (NPWT) for patient use at home, or 2) that the patient did not receive the surgical dressing or NPWT that was ordered because the DME supplier said it was not covered by Medicare. These complaints about the DME suppliers could be prevented if physicians/QHPs would take the time to read the Local Coverage Determinations (LCDs) and Local Coverage Articles (LCAs) that pertain to surgical dressings and NPWT and to build the ordering and documentation requirements into their practices and electronic health record (EHR) templates. Just like for diagnostic tests, the ordering physician/QHP must document correctly to support the ordered tests, even if the physician/QHP is not going to receive payment for the test.

The 2022 CERT report listed the top 20 items that the MACs overpaid. Surgical dressings and NPWT were on that list: 70.6% of surgical dressing claims and 59.9% of NPWT claims were improperly paid due to lack of sufficient documentation. This author expected to see medical supply companies at the top of the list of providers who were improperly paid by the MACs. However, podiatrists were at the top of the list and 63.8% of their improperly paid claims were due to insufficient documentation.

NOTE: When the CERT identifies improper payments made by the MACs, the MACs often conduct Targeted Probe and Educate pre-payment reviews to catch the errors before they pay the claims.

For example, between October 1 and December 31, 2022, one of the DME MACs, CGS, reviewed claims for specific categories of surgical dressings: collagen dressings (A6010, A6021), alginate or other fiber-gelling dressings (A6196–A6199), composite dressings (A6203), foam dressings (A6209–A6212), gauze dressings impregnated with hydrogel (A6231–A6233), hydrocolloid dressings (A6234–A6241), hydrogel dressings (A6242–A6248), and specialty absorptive dressings (A6251–A6256). The top 10 reasons CGS denied payment of the surgical dressing claims are itemized below.²                                                                             

1. Medical records do not support that surgical dressings are required for either the treatment of a wound caused by or treated by a surgical procedure, or required after debridement of a wound.
2. The health care professional’s monthly evaluation of the wound did not include the type of each wound, its location, its size and depth, the amount of drainage, and any other relevant information.
3. The medical records do not establish that the dressing is being used as a primary or secondary dressing or for some non-covered use (such as wound cleansing).
4. Medical records do not support frequency of use or frequency of change.
5. The surgical dressing code was billed without modifiers A1–A9 for the correct number of wounds being treated by the particular dressing.
6. The medical records do not show that the hydrogel dressing is being used on full thickness wounds (such as stage III or IV ulcers) with minimal or no exudate.
7. The medical records do not include an evaluation of the wounds performed on a monthly basis or justification for why they could not be evaluated monthly and what other methods were used to evaluate the need for the dressings.
8. The medical records do not show that the Foam dressing is being used on a full thickness wound with moderate to heavy exudate (stage III or stage IV ulcer).
9. The author did not authenticate (handwritten or electronic) the medical record documentation. Refer to Medicare Program Integrity Manual 100-08, Chapter 3, Section 3.3.2.4.
10. The medical records do not show that the Alginate or other fiber gelling dressing or filler is being used to cover or fill a moderately to highly exudative full thickness wound (stage III or stage IV ulcer).

All of these denials could have been easily prevented if the wound/ulcer management physician/QHP, who ordered the surgical dressings for home use, read and implemented the coding and coverage guidelines clearly described in the Surgical Dressing LCD³ and LCA⁴, in the Standard Documentation Requirements for All Claims Submitted to DME MACs LCA⁵, and in the Surgical Dressings Documentation Checklist.⁶ These surgical dressing coverage and documentation requirements have been in place for decades. All wound/ulcer management physicians/QHPs should review the documents and use the guidelines to assist them in their wound/ulcer assessments, their documentation, and their ordering of surgical dressings.

See Dr. Caroline Fife’s editorial entitled “Why Won’t the DME Provide Dressings for My Patient? Maybe Because Of My Documentation,” which describes real-life examples of how physician’s/QHP’s lack of understanding the Surgical Dressing LCD and LCA, lack of complete documentation, and inappropriate ordering of primary and secondary dressings cause patients to not receive dressings appropriate for their wound types.

Summary

The top 4 reasons the MACs made improper payments in 2022 were for:
    1.         Insufficient documentation—63.6%
    2.         Medical necessity not documented—13.8%
    3.         Incorrect coding—10.5%
    4.         No documentation—3.8%

Wound/ulcer management professionals, providers, and suppliers could have easily prevented these repayments. The Centers for Medicare & Medicaid Services, the MACs, the American Medical Association, this speaker/author/consultant, and many other reimbursement specialists go to great lengths to share specific coding, coverage, and payment guidelines. In addition, wound/ulcer management–specific electronic health records (EHRs) allow all the regulations and guidelines to be built into data collections screens and documentation templates. The rest is up to the professionals, providers, and suppliers to meticulously incorporate the information into their documentation and coding, and to update their EHRs as they add new services or procedures, and as new codes and regulations are released.

This author recommends that readers periodically print their medical records to verify that they paint clear pictures of their work and meet all the documentation, coding, coverage, and payment guidelines. If not, they should take the time to make corrections to their coding practices, documentation, etc. Finally, establish a formal internal audit process in order to catch and correct errors before external auditors catch them and recoup payments.

If you do not have a formal internal audit process established, you may wish to listen to the series of 5 audit discussions between Dr. Caroline Fife and this author. The recordings of those discussions can be found here.
 
Kathleen D. Schaum is a founding member of the Today’s Wound Clinic editorial advisory board and oversees a consulting business. She can be reached for consultation and questions by emailing kathleendschaum@gmail.com.

References
1. Centers for Medicare and Medicaid Services. CERT Report: 2022 Medicare Fee-for-Service Supplemental Improper Payment Data. Last accessed February 11, 2023.
 
2. CGS Surgical Dressings Pre-Pay Review Quarterly Status Report. Last accessed February 11, 2023.
 
3. Centers for Medicare and Medicaid Services. Surgical Dressing LCD L33831. Last accessed February 22, 2023.
 
4. Centers for Medicare and Medicaid Services. Surgical Dressing LCA A54563. Last accessed February 11, 2023.
 
5. Centers for Medicare and Medicaid Services. Standard Documentation Requirements for All Claims Submitted to DME MACs. Last accessed February 11, 2023.
 
6. Surgical Dressing Documentation Checklist. Last accessed February 11, 2023.