CMS to Apply Surety Bonds to Recoup Payments, OIG L0631 Acquisition “Survey”

Late last year The Centers for Medicare and Medicaid Services (CMS) announced changes to the Medicare Overpayment Notification Process.  Under the new process, Medicare will send just one notice of overpayment information to providers; previously, CMS sent three notices of overpayment to providers over 90 days. An OIG report found that a majority of providers respond to the first notice and that recoupment happens on average 41 days after the initial letter is sent out.  Provider appeal rights are unchanged under the new policy, but if an overpayment is not paid within 9o days, CMS will notify the provider of their intention to turn the payment over to a collection agent.

A new policy change announced last week that was tied to the OIG Report released in November 2011 is additional information on how CMS intends to use surety bonds, that many O&P providers have been forced to obtain, as a means of recouping Medicare overpayments. From the CMS release:

According to 42 CFR section 424.57(d), a surety must pay the Centers for Medicare & Medicaid Services (CMS) – within 30 days of receiving written notice to do so – the following amounts up to the full penal sum of the bond:

  1. The amount of any unpaid claim, plus accrued interest, for which the DMEPOS supplier is responsible; and
  2. The amount of any unpaid claim, civil monetary penalty (CMP), or assessment imposed by CMS or the Office of the Inspector General (OIG) on the DMEPOS supplier, plus accrued interest.

For purposes of this surety bond requirement, an “unpaid claim” is defined as an overpayment (including accrued interest, as applicable) made by the Medicare program to the DMEPOS supplier for which the supplier is responsible.

A surety is liable for any overpayments incurred during the term of the surety bond. This includes overpayment determinations made on or after the surety bond effective date. These overpayment determinations can relate to payments made on or after March 3, 2009 MORE

OIG “Survey” Results on L0631 Lumbar Support Devices The OIG also announced preliminary findings in their comparison of DMEPOS suppliers’ acquisition costs for support surfaces to Medicare’s payment rates for several items. Specifically, this ongoing initiative compares acquisition costs to Medicare’s payment rates for pre-fabricated lumbar supports (HCPCS L0631). OIG’s lumbar support investigation has revealed that supplier’s acquisition cost for lumbar supports and the online retail price for similar items are significantly lower than Medicare’s payment rates for lumbar supports.

If the OIG concludes that the difference between the acquisition cost and payment rate for an item is excessive, then the Medicare payment rates for the item may be reduced by the Centers for Medicare and Medicaid Services (CMS).  OPGA Government Relations has been in contact with OPGA members across the country that have been asked to participate in this OIG “survey” on acquisition costs for the L0631.  Based on the preliminary reports, L0631 seems likely to be reduced in the fee schedule and, also, potentially targeted by auditors for overpayments moving forward.

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