Prepare Yourself and Your Business for Appeals and Audits

BOSTON — As Medicare increases its oversight of overpayments and documentation, O&P practices must know how to mount a successful payment denial appeal and prepare themselves for the potential for audit. In her presentation at the American Orthotic & Prosthetic Association National Assembly here, Teri P. Kuffel JD, presented some tips to navigate the variety of appeals and audits that O&P practices may face. Kuffel is co-owner of Arise Orthotics and Prosthetics in Blaine, Minn.

Kuffel suggested three rules to live by as an O&P business owner: don’t give Medicare a reason not to pay; devise a plan for billing and appealing; and practice patience, persistence and perseverance in all steps of the appeals and audit processes. She offered tips to launching a successful appeal, starting with the letter.

Write an effective letter

“The KISS mentality, or Keep It Simple, Sam, applies,” Kuffel said. “Think like a lawyer, write like a lawyer. Write a legal brief, defending your claim and justifying payment. Your purpose is to explain why you fit the particular device.” Kuffel said it’s important to know your policy and the rules that govern each particular claim. Review the entire file, gather supporting documentation and get the practitioner involved, she said.

Write directly to the audience in simple language, avoiding O&P or medical acronyms, Kuffel advised. Use the patient’s name in the appeal letter, and don’t neglect to say please and thank you.

“Include all necessary info in the letter, including plan ID and claim or reference number. Start with an introductory sentence, such as “the purpose of this letter is to appeal the denial of the above referenced claim. Enclosed please find the following documents. Then list those documents and attach them,” she said.

In the body of the letter, use the FIRAC formula: Facts, Issue, Rules, Analysis and Conclusion.

State the facts and the reason for denial. State the rule from the policy and restate it in the document. “Your analysis will combine your facts to the rules. Use specifics. Reference your exhibits. Tell them where to find the points you’re making. Use plain words explaining why your claim should pay,” Kuffel said.

Neatly package the appeal letter and supporting documents, mail using a tracking service and confirm receipt of delivery within 7 days to 10 days.

Medicare levels of appeals

Kuffel noted five levels of appeals: redetermination, reconsideration, administrative law judge hearing, department of appeals board and judicial review. “We usually don’t experience the fourth and fifth levels,” she said.

For redetermination, “you have from 120 days from the date of denial to file your appeal. Submit all documentation to support your claim. The review is generally conducted by the same DME MAC (Durable Medical Equipment Medicare Administrative Contractors) that processed the denial. The process takes at least 45 days, but often it’s much longer.

“Overturning is unlikely at this level; if your appeal is unsuccessful, you may choose not to go to the next level but it is highly recommended that you do.”




For reconsideration, you should appeal to a qualified independent contractor, now a representative of C2C Solutions, within 180 days of receipt of a redetermination denial. “You may submit additional documentation supporting your claim at this level,” Kuffel said.

If this is unsuccessful, the next level of appeal is to an administrative law judge (ALJ) from the Dept. of Health and Human Services (HHS), which must occur within 60 days of the result of reconsideration. “This is an independent review of all your previous documentation,” she said. “Upon a showing of good cause, you have the ability of showing more documentation at this level; however, the ALJ can choose to accept or deny its inclusion.”

The ALJ is not bound by DME MAC rules, she said. “These appeals are often successful, something like 60%,” Kuffel said. “The ALJs appear more reasonable and less narrow-minded.”

If this step is unsuccessful, an appeal to the HHS Dept. of Appeals board (DAB) review must be made in writing within 60 days of the receipt of the ALJ determination. The DAB must issue a decision within 90 days, and may uphold, reverse or return it to the ALJ level, Kuffel said.

The last level of appeal is the judicial review.

“The appeal must be made in writing within 60 days of receipt of the DAB’s ruling, and the monetary threshold is $1,150. This is an actual filing of a civil lawsuit against Medicare in federal court; it necessitates the use of an attorney,” Kuffel said.

Kuffel noted an option of Medicare reopening a claim, a discretionary level of appeal by a DME MAC, used to reopen rather than appeal when there is as minor clerical error, such as entering the wrong date of service of forgetting to use a modifier. “Call them and ask if that applies to your denial and if you can circumvent the appeal process. If it doesn’t work, then start the first level of Medicare appeals.”

Kuffel also advised knowing your limitations and when the cost may outweigh the benefit, at which point you may want to halt the appeals process.

Types of audits

Recovery audit contractors, or RACs, look to claim-specific audits. “Each Medicare jurisdiction has an insurance company as a RAC auditor,” Kuffel said. RAC audits may look at claims through a specific period of time or they may extend back as much as 3 years. The audits may be automated or complex, and they are restricted to a certain percentage of claim lines and Healthcare Common Procedure Coding System codes. If a RAC auditor discovers a problem you have several choices, she said. “You can pay it back immediately, wait for recoupment from future claims, and exercise your right to a discussion period with the auditor. If these attempts fail, you may start the Medicare appeals process.”

Comprehensive Error Rate Testing testing audits, or CERT audits, are “post payment audits of the DME MACS (Durable Medical Equipment Medicare Administrative Contractors) that target the accuracy of the claims process in the entire region. There are two companies that perform these audits. They look to Medicare regulations, billing manuals and local coverage determinations. They do not target you directly, but they target your claims through the process,” she said. Results are used to identify problem areas and create new policies to avoid these problems in the future.

Zone program integrity contractor audits, or ZPIC audits, are a more severe type of pre-and post-payment audit that looks to identify improper payments, recoupment of money and evidence of fraud. A ZPIC audit can use comparative billing records or previously filed claims of fraud. They request documentation within 30 days, and they can review an unlimited number of claims. Auditors may visit your facility, interview you, your employees and referral sources.

Medicare is starting to move away from “pay and chase” methods of auditing, Kuffel said, by conducting prepayment audits. Audit requests originate with the DME MAC prior to payment. These are standard with a K3 modifier. They request a list of documents to be provided within 45 days. “Send everything you have, because they want to see more than they ask for,” she said. If documents are insufficient to support the claim, they will issue a denial and you can then begin the appeal process.

Protect your business

Kuffel outlined several ways you can protect your business against Medicare audits.

“You may decrease your chances of an audit if you familiarize yourself with the instances that trigger audits and avoid them; for example, submission of duplicate claims.” she said. “Know what an auditor is looking for, familiarize yourself with Medicare policies and local coverage determinations and establish relationships with pay administrators, contract managers and medical directors. Invest in a reliable software program. Enforce or change existing policies on documentation, and organize documents in a concise and accessible manner.”

Conduct regular self-audits to give yourself a birds-eye view of what an auditor looks for, Kuffel said. Meet regularly with staff to go over billing and coding procedures.

You must protect your business, your employees and your assets, Kuffel said. She suggested putting money away now, at least a few months of expenses, to prepare for a worst-case scenario. She also recommended establishing or increasing the amount on business credit line.

“Don’t wait to do that,” she told the audience.

Educate referrals

Provide your referral sources with a Medicare physician letter. “Explain to the physician that this is a letter drafted by Medicare to assist us in explaining to the physicians what’s happening.” Kuffel said. “It states that O&P providers’ reimbursement depends on the physician’s documentation. It states that your mutual patient may be responsible for the cost of the device if the physician documentation is not in compliance.”

Kuffel suggested offering your guidance at physician activity level assessments. She also suggested offering to review the physician’s notes for compliance. “Remind physicians they can amend their notes. If the physician is resistant or reluctant, the patient can request an amendment of the physician’s notes through HIPAA.”

Gather resources

“Gather knowledgeable resources in the O&P field and reach out to them for assistance,” Kuffel said. “AOPA and Ottobock have reimbursement specialists to help you.”

She noted Ottobock’s guide to Medicare documentation requirements for lower limb prosthetic devices. “I used that last month. I found it extremely helpful.”

Kuffel suggested staying informed via O&P periodicals and websites. Utilize the advanced beneficiary notice forms if the physician’s documentation is not sufficient.

In the community, join a state O&P organization to work through audit issues with colleagues, Kuffel said. “Support national groups that work to represent the O&P community of patients, businesses and manufacturers,” she said. Attend functions and write letters to state and federal legislators asking them to support the Medicare O&P Improvement Act that speaks to the reduction of fraud.

“If there isn’t an amputee clinic in your community consider working with a physician or physicians group to establish one. A clinic works for the patient, and is great for the referring doctor who’s not comfortable doing this type of assessment; great for you because your documents are in place, at hand; and potentially great for the new physical medicine and rehabilitation physician who can bill for it and may be able to gain some rehabilitative service work.”

For more information:
Kuffel TP. Reimbursement challenges. Presented at the American Orthotic & Prosthetic Association National Assembly 2012. Sept. 6-9. Boston.

Disclosure: Kuffel has no relevant financial disclosures.

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