Home Health & Hospice Week

Follow the law and keep a paper trail to prevent legal woes for overbilling.

Careful documentation is your best weapon if you're confronted with convoluted billing advice and bureaucratic confusion, a recent court case confirms.

The U.S. District Court for the Northern District of Texas ruled Jan. 31 that the federal government couldn't justify recovery of Medicare overpayments made to Fort Worth, TX-based durable medical equipment supplier Medica-Rents Co.

U.S. District Judge Terry R. Means rejected arguments that Medica-Rents had received payment by mistake and unjust enrichment through Medicare claims for rental of ROHOs, which are non-powered adjustable-zone pressure-reducing mattress overlays used to prevent bedsores, from 1991 to 1996.

Medica-Rents argued a DME regional carrier  told it to use code E1399 (Durable medical equipment, miscellaneous) to bill the ROHO rentals. But the government withheld payment under that code, resulting in nonpayment for six months' worth of claims for rentals of hundreds of ROHOs.

The problem: ROHOs qualify for reimbursement as capped rental items but E1399 could not be used to bill for capped rental items. Region C DMERC Palmetto GBA found that the reimbursement problem stemmed in part from this fact and also that the "administrative nuisance caused by using E1399 was a factor in the nonpayment," the decision says.

Correct code: Palmetto advised Medica-Rents to use code E0277 (Powered pressure-reducing air mattress) for payment purposes "because there was no other way to ensure fair and timely payment to Medica-Rents for the rentals of the ROHOs," the opinion says.

Court Rules In Favor Of Supplier

The government sought to recoup alleged overpayments made to Medica-Rents based on the difference between what the company received under code E0277 and what it would have received under code E1399.

To prove payment by mistake, the government had to show payments were made under the erroneous belief that they were properly owed, and the decision to pay was based on this belief. The case fails on the element of mistake or error. "The preponderance of the evidence proves that the payment of Medica-Rents' claims for the ROHO was a billing issue and not purely a coding issue," the decision says. "As such, the DMERC was authorized to give guidance on appropriate coding for billing purposes."

The court didn't buy the government's unjust enrichment argument either.

Case Offers Hope--And A Warning

The feds previously filed a False Claims Act lawsuit against Medica-Rents for ROHO overpayments between 1993 and 1995, but the court ruled in 2003 that Medica-Rents' billing was not fraudulent, that Medica-Rents didn't knowingly submit false claims, and that Medica-Rents did not act in deliberate ignorance or reckless disregard of the truth, according to the opinion.

Suppliers should take note that the government is trying to recover funds through "more traditional contract theories [such as] mistake and unjust enrichment," says attorney Robert Falk with the Washington, DC office of Powell Goldstein Frazer & Murphy. "They stretch for these theories after they have failed on their traditional false claims act theory," he notes.

Good news: This case could indicate that courts are going to be "less sympathetic to the government's efforts to recoup funds when it was aware of a coding and billing problem, and ... gave incomplete or conflicting guidance," says Falk.

The case shows that if suppliers follow the law, have a paper trail and can afford the legal costs, they can prevail, says Medica-Rents' attorney Jeff Kinsel with Fort Worth-based Cantey & Hanger.

The decision may deter the government from "add-on" suits and claims against providers when they have insufficient evidence to make a False Claims Act case stick, says Falk. "Unfortunately for this provider, it had to bear the additional expense of further litigation to reach the same outcome," he says.

Note: For a copy of the decision in U.S.  v. Medica-Rents Co., N.D. Texas, No. 4:00-CV-483-Y, 1/31/06, email editor Jan Mater Cavagnaro at janm@elijournals.com with "Court Decision" in the subject line.