Home Health & Hospice Week

At the request of the Senate Finance Committee, the HHS Office of Inspector General reviewed Medicare's Comprehensive Error Rate Testing rate for fiscal year 2008. The Committee's request came after the OIG last year accused the Centers for Medicare & Medicaid Services of lowballing the DME CERT rate for 2006, with considerable political commentary (see Eli's HCW, Vol. XVII, No. 31, p. 242).

This time around, CMS already had hired contractor Palmetto GBA to double-check a sample of the DME claims that CERT contractor AdvanceMed reviewed. The OIG's job was to come in after Palmetto and triple-check the results, the watchdog agency says in a new report.

CMS directed Palmetto to conduct the 250-claim review based on the same criteria and using the same documentation AdvanceMed used. But Palmetto got startlingly different results.

Palmetto claimed Medicare paid 175 claims, or 70 percent, in error. That's in contrast to AdvanceMed's error rate of just 23 erroneously paid claims in the sample -- 9 percent. After reviewing Palmetto's work, Advance agreed that Medicare paid an additional 17 claims in error, bringing the CERT contractor's error rate up to 16 percent for the sample.

Suppliers fear Palmetto's claim of incredibly high error rates will paint the entire industry with a broad fraud and abuse brush just when it is trying to make gains in this year's congressional wrangling over health reform and Medicare payment.

The difference: Most of the discrepancy hinges on AdvanceMed's use of "clinical inference" in the review, the OIG explains. The CERT contractor used supplier documents, beneficiary claim histories, and limited medical records for the reviews. Palmetto insisted it couldn't clear the claims unless they also had sufficient medical records.

"Palmetto determined that 160 of the 175 erroneous claims had insufficient documentation to establish medical necessity," the report explains. "The remaining 15 claims had sufficient documentation to establish that the DME items were not medically necessary."

"Whereas Palmetto required sufficient medical records to support medical necessity determinations, the CERT contractor stated that it could infer medical necessity and compliance with applicable NCD and LCD requirements" using the other documents it had, the OIG says.

Palmetto's error rate doesn't mean those claims weren't valid, the OIG points out. "If the CERT contractor had obtained sufficient medical records to determine medical necessity, Palmetto would likely have had fewer error determinations."

Recommendations: The OIG recommends that CMS require a corrective action plan from its CERT contractor and perform complex medical review to determine medical necessity.

CMS is already changing its program integrity manuals to reduce the differences between contractors in interpretation of clinical judgment, it says in comments on the report.

The agency is also considering beefing up its 2009 CERT review with tools like beneficiary and provider interviews, it adds. Those tools would be used for DME items "highly vulnerable to fraud" like oxygen and power mobility devices, the agency says.