Home Health & Hospice Week

Industry Notes:

OIG Estimates $137 Million In KX Overpayments For DME

Published on Wed Jun 16, 2010

Suppliers on the hot seat again as watchdog agency takes a close look at documentation.

When the HHS Office of Inspector General audited a sample of 2006 DME claims with the KX modifier, it found $127 million in estimated overpayments. Now it's looking at 2007 claims, and the results are equally grim for the industry.

Background: Certain durable medical equipment items require a KX modifier for Medicare claims. The modifier indicates that the item in question has extra documentation requirements and that the supplier has the required documentation on file.

For example: Respiratory assist devices require extra sleep study documentation, explains the OIG in its new report.

The problem is that of a sample of 100 claims with the KX modifier from 2007 that the OIG audited, 55 lacked required documentation, according to the OIG. "The KX modifier was not effective in ensuring that suppliers of DMEPOS ... had the required supporting documentation on file," the report says.

Extrapolated to all KX claims paid by contractors Palmetto GBA and CIGNA during the period, the Medicare program paid $137 million to suppliers for KX claims that lacked required documentation, the OIG concludes.

The most common missing documentation was a physician's order for 40 of the 100 claims.

Other missing items were proof of delivery (14 items), followup documentation (12 items), and physician's statement (8 items). Seventeen of the 100 claims were missing multiple items, the OIG notes.

CIGNA is proposing a pre-pay documentation verification process for KX claims as part of its plan to combat the problem, it says in comments on the report.

Change: A modification the DME Medicare Administrative Contractors have already made should help head off this problem, CIGNA says. As of Dec. 1, 2009, suppliers who don't include the KXmodifier when required must file a redetermination to add the modifier to the claim and provide supporting documentation. Before that date, DME MAC staff would add the modifier upon request under a clerical reopening.

Resource: The report is online at www.oig.hhs.gov/oas/reports/region4/40904039.pdf.