UPDATE: National DMEPOS RAC on hold after protest filed by Connelly competitor

Earlier this year, CMS released information about the new national recovery audit contractor (RAC) that will take the place of the four regional RAC’s currently auditing DMEPOS claims. Prior to this release, CMS announced it had selected Connelly LLC, currently the CMS contracted auditor in Region C, to be the new national RAC contractor tasked with auditing all Medicare DMEPOS claims. However, just days later a competitor of Connelly, Performant Recovery, currently the RAC in Region A, filed a bid protest with the Government Accountability Office (GAO).

The national RAC rollout out must now be put on hold pending the GAO appeal decision. A decision must be made by April 16th. The four regional Recovery Audit Contractors will continue auditing DMEPOS claims until the national RAC contractor is finalized.

Stay tuned for additional guidance as it becomes available.


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New year brings new national RAC for DMEPOS

In 2014, CMS announced that Connelly LLC, currently a contracted auditor in Medicare Region C, was awarded the contract to become the first national recovery auditor for DMEPOS. The new national RAC will review claims throughout the entire country for durable medical equipment orthotics, prosthetic and supplies, hospice, and home health effective January 1, 2015.

The Centers for Medicare & Medicaid Services reported on December 30th, “CMS has awarded the Region 5 Recovery Audit contract to Connolly, LLC. The purpose of this contract will be to support the Centers for Medicare & Medicaid Services (CMS) in completing this mission through the identification and correction of improper payments for durable medical equipment, prosthetics, orthotics and supplies (DMEPOS), and home health/hospice (HH/H) claims submitted under Title XVIII of the Social Security Act (the Act).”

 “The Recovery Auditor will review all applicable claims types through the appropriate review methods and work with CMS and the DME and HH/H MACs to adjust claims to recoup overpayments and pay underpayments. This award marks the beginning of the new Recovery Audit contracts and is the start date of the implementation of many improvements to reduce provider burden and increase transparency in the program.”

This announcement obviously leads to more questions than answers: Will RAC activity increase/decrease with this change? Is the new RAC prepared for the increased volume? What happens to audited claims from 2014? Will the auditors remain focused on technical issues or move toward the intent of the program by targeting medical necessity? 

OPGA will keep you updated of any further news about rollout of the national RAC and other issues impacting independent O&P providers.



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CMS elects to wait on implementation of ‘minimal self-adjustment’ and ‘specialized training’

Last week CMS issued a final rule relating to Medicare’s competitive bidding program (CBP), the inclusion of off the shelf orthotics in the CBP and the definitions surrounding “minimal self-adjustment” and “specialized training” for providers that are eligible to provide certain types of orthotic services and devices. The rule lays out a pilot program for bundled payment on certain types of durable medical equipment and also creates a mechanism to set national ceiling and floor pricing for items included in CBP for areas that are not covered by an existing competitive bidding area, as mandated by January 1, 2016.

The full rule, released on October 31st, 2014 largely leaves unanswered the questions of the O&P community governing who can bill for orthotics and the overall definition “minimal self-adjustment” from their previous guidance. Specifically, CMS states

At this time, we have decided not to finalize any changes to the definition of minimal self-adjustment in §414.402 to recognize as an individual with specialized training. We may address this provision in future rulemaking.

Sections of the proposed rule are below, as is a link to the federal register release of the proposed rule.

Since adoption of the minimal self-adjustment definition there has been some concerns raised by industry and other stakeholders regarding who is considered an individual with specialized training. We have had many inquiries and comments that this term is too ambiguous and left open for interpretation.

In addition, questions were raised regarding when it is appropriate for a supplier to bill for a prefabricated orthotic as having been custom fitted versus one furnished OTS. In order to address this specific question, the DME MACs issued a policy article on March 27, 2014, which details what custom fitting of an orthotic involves and indicating that furnishing custom fitted orthotics “requires the expertise of a certified orthotist or an individual who has equivalent specialized training in the provision of orthotics such as a physician, treating practitioner, an occupational therapist, or physical therapist in compliance with all applicable Federal and State licensure and regulatory requirements.” The DMEPOS quality standards have been updated to reflect this requirement and we decided to revise the definition of minimal self-adjustment in the regulation to address this issue as well.

In order to identify OTS orthotics for the purpose of implementing CBPs for these items and services in accordance with the statute, we need a clearer distinction between OTS orthotics and those that require more than minimal self-adjustment and expertise in custom fitting. In doing so, we believed it was essential to identify the credentials and training a supplier needs to have in order to be considered a supplier with expertise in custom fitting; therefore, we believed the term “individual with specialized training” must be clarified… READ FINAL RULE BEGINNING ON PAGE 442


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AOPA backed audit lawsuit dismissed by District Court

The United States District Court of the District of Columbia recently dismissed a case brought by the American Orthotic and Prosthetic Association (AOPA) against Former Secretary of the Department of Health and Human Services Kathleen Sebellius. The suit focused on the authority of Medicare and contracted auditors to reinterpret and retroactively apply regulations pertaining to documentation requirements for billing orthotics and prosthetics.  A copy of the ruling can be found here. Continue reading

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CMS Informs Congress of intention to re-start portions of RAC program

From HealthDataManagement.com :

The Centers for Medicare and Medicaid Services is restarting the controversial Recovery Audit Contractor Program—in a limited fashion—in August.

CMS sent a communication on August 4 to congressional health staff members from Lauren Aronson, Director of the Office of Legislation at CMS, informing them of the decision.

“Today, the Centers for Medicare and Medicaid Services announced plans to modify contracts with current Recovery Auditors to allow for a limited number of Medicare fee-for-service claim reviews beginning in August 2014,” states the communication. “Current Recovery Auditors will conduct a limited number of automated reviews and a small number of complex reviews on certain claims including, but not limited to: spinal fusions, outpatient therapy services, durable medical equipment, prosthetics, orthotics and supplies; and cosmetic procedures. The Recovery Auditors will not conduct any inpatient hospital patient status reviews during this limited restart period.” Continue reading

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CMS Announces New Phase of Controversial Competitive Bidding Program, OTS Orthotics Left Off

The Centers for Medicare and Medicaid Services (CMS) announced earlier this week that they will seek to hold a recompete of the bidding that set single payment amounts for Round 2 of Medicare’s Competitive Bidding program. Round 2 of the competitive bidding program went into effect in July of 2013 and forced an average 45% reduction in single payment amounts for competitively bid products. New payment amounts for the 100 Metropolitan Statistical Areas included in Round 2 will be calculated based on the “recompete” of the bidding process.

CMS has also announced their intention to apply the new average single payment amounts nationwide prior to the January 2016 mandate.

Of particular interest to orthotic and prosthetic providers are “Off the Shelf” orthotics. Since the inception of the competitive bidding program, CMS has had the authority to include off the shelf orthotics into their competitive bidding program. Continue reading

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Region D Scrutinizing K3 Feet

From time to time I like to present additional resources for OPGA members to review. The following post is from Ossur’s R&R blog and authored by David McGill, one of the leading audit experts in the O&P profession. The full post can be found at the link below.

Posted by David McGill | July 10, 2014

In the last year MAC Region D has invested a significant amount of time reviewing claims for K3 feet – especially those using L5980 and L5981.  

Overall, the data show that claim denial rates have not materially decreased over the last 9-12 months for either code in Region D, and remain very high for both codes.

What does this mean for you?

Continue reading

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Medicare Contractors looking for O&P supplier violations on posted business hours and physical facility standards


Wanted to pass along this article to OPGA membership; recently OPGA was contacted by several members who have had site visits from CMS contractors looking to verify that the O&P facility is adhering to Medicare DMEPOS supplier standards. This is consistent with CMS increased focus on DMEPOS supplier standard violations. If an O&P facility is found not to be adhering to the posted business hours, or is found not to be open during those posted business hours, it could mean a revocation of your Medicare provider billing number for up to 2 years. Please take the time to read the article below and reach out to OPGA with any questions you may have.

Medicare Contractors looking for O&P supplier violations on posted business hours and physical facility standards

Medicare suppliers of durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) should be on the alert for enhanced Medicare supplier standard compliance monitoring by CMS, the National Supplier Clearinghouse (NSC), and their agents. Recently, these entities have taken draconian actions to revoke the enrollment of a number of suppliers who failed to be present during indicated hours of operation. Recent Administrative Law Judge (ALJ) decisions have upheld such revocations for technical violation of the Medicare supplier standard, even in the face of extenuating circumstances, reinforcing the need for suppliers to review their practices and policies to ensure full compliance.

Medicare supplier standard number 7 requires suppliers to appropriately maintain their physical facilities, including being accessible and staffed during posted hours of operation, maintaining a permanent visible sign in plain view, and posting hours of operation. In addition, supplier standard 7 requires the supplier’s business location to be accessible to the public, Medicare beneficiaries, CMS, NSC, and their agents (although there is an exception for “closed door” businesses, such as a pharmacy or supplier providing services only to beneficiaries residing in a nursing home, under certain circumstances).

Since compliance with all Medicare supplier standards is a condition of Medicare participation, suppliers must be present during published business hours or face revocation of their supplier number. This includes having staff present during lunch, unless the posted hours of operation specifically exclude certain lunch hours, and during holidays unless otherwise posted. We have observed a trend in deficiencies relating to supplier standard 7 being found during CMS and/or NSC supplier site visits resulting in supplier number revocations. For instance, suppliers have been found in violation when staff are out to lunch during a site visit or when an inspector uses the wrong set of elevators in a multi-use office building and is therefore unable to find the supplier’s office.

Recent ALJ decisions Continue reading

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House Subcommittee Focuses on RAC’s in hearing, Duckworth stands up for small providers

Two major subcommittee meetings were held in the House of Representatives today on Medicare waste, fraud and abuse. One of the issues hightlighted in both hearings was the conduct of RAC auditors and the impact they are having on providers large and small. The House Government Oversight and Government Reform Health Subcommittee heard testimony from The Center for Program Integrity, the GAO and the HHS OIG on efforts to control waste fraud and abuse within the Medicare program.

Subcommittee member Congresswoman Tammy Duckworth, herself a double amputee veteran, questioned the CMS witnesses on the impact of these RAC policies on small medical providers, specifically the orthotic and prosthetic providers that have worked to bring her back to a sense of normalcy in her life. Take a look at the link to video of the testimony to see members of congress putting the words of small orthotic and prosthetic providers into action. OPGA, our network of independent O&P facilities and the entire O&P profession have worked hard over the past several years to engage Congresswoman Duckworth on the audit issue and that work seems to be paying off in 2014.

Congresswoman Tammy Duckworth (D-IL) said “It seems blaintly unfair and unAmerican to take these folks money and not give them the right to due process.” She then addressed the panel asking if CMS has any plans to restore fairness to our providers.

View the video here: Congresswoman Duckworth begins at the 1:06:44 mark. Continue reading

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Region D Custom AFO’s Audit Results

From time to time I like to present additional resources for OPGA members to review. The following post is from Ossur’s R&R blog and authored by Linda Collins, one of the leading audit experts in the O&P profession. The full post can be found at the link below.

Posted by Linda Collins | May 16, 2014

Medicare continues to audit Ankle-Foot Orthoses. Last week Jurisdiction D announced the results of a widespread pre-payment review of HCPCS codes L4360, L1970 and L1960. There was an overall 80% plus denial rate for these claims. The main reasons for denial include:

  • The treating physician’s records did not provide detailed documentation to support medical necessity of a custom orthosis rather than a prefabricated orthosis.
  • Documentation submitted was insufficient to support custom coverage criteria.
  • Documentation submitted was insufficient to support basic coverage criteria
  • There was no detailed written order or dispensing order provided

What does this mean for you?

First, Medicare expects that the beneficiary’s medical records will reflect the need for the care provided. This documentation must be available upon request.

In the case of custom-fabricated AFOs, Continue reading

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