Positive Airway Pressure Device Supplies on the Medicare Audit Chopping Block…Again

EDITOR’S NOTE: While presenting at the recent New England Healthcare Internal Auditors (NEHIA) annual conference in Connecticut, Knicole Emanuel encountered the recurring audit topic of positive airway device supplies or PAPs. The following is her report.

Back in 2014 and 2015, then again in 2018, PAPs were the main area of concern for Recovery Audit Contractor (RAC) auditors. In June 2018, The U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) released a scathing report titled “Most Medicare Claims for Replacement Positive Airway Pressure Device Supplies Did not Comply with Medicare Requirements.”

The OIG found that out of 110 claims in its sample, 24 complied with Medicare requirements; 86 claims did not. OIG estimated that Medicare made overpayments of almost $631.3 million for replacement PAP device supply claims that did not meet Medicare requirements.

The most immediate audit concern today is HHS OIG’s recent decision to add sleep re-supply items to its work plan.

One important and frightening issue about past PAP audits was the fact that the auditors commonly used a six-year lookback period. Six-year lookbacks are a difficult, expensive process that involves hiring third-party experts such as statisticians. If claims don’t meet guidelines, those are deemed overpayments, and the money must be refunded to Medicare. Six-year lookbacks also present common mistakes on the part of the government or auditors. For example, if a six-year lookback includes claims that were already audited by another auditor, the new audit should be dismissed. The same is true if the universe of claims contains claims that were never paid to the provider, or claims that the provider repaid due to a self-audit. Or, even more common, how often do reimbursement rates change? An audit that goes back six years can involve multiple reimbursement rates. Auditors can easily misapply a reimbursement rate and then extrapolate that mistake across the universe.

Then there is also the question of whether a six-year lookback period is even allowed by law. A federal regulation limits RAC auditors to a three-year lookback period, but federal law is almost silent when it comes to the lookback periods of different types of auditors. So, inevitably, when I am defending a provider from what we understand to be a RAC audit that includes claims from four years ago, the auditor will argue before an administrative law judge (ALJ) – “hey, we aren’t acting in the capacity of a RAC auditor. Here we are, a CERT (Comprehensive Error Rate Testing) or ZPIC (Zone Program Integrity Contractor), or TPE (Targeted Probe-and-Educate), so the three-year limitation on lookbacks does not apply to us, in this circumstance.”

Although there is a presumption of compliance on the part of the providers under the Social Security Act, if claims are over five years old, that presumption does not prevent an audit from occurring, even if the records being reviewed are more than five years old.

Going back to the PAP issue, what were the most common mistakes identified by auditors?

• Physicians’ orders were not made in accordance with local coverage determination (LCD) requirements.
• Replacement supplies were neither reasonable nor necessary:
  • Suppliers did not have a proper request for replacement supplies, which must include:
    • Date of request
    • Description of each item requested
    • The functional condition of the items being replaced in detail to demonstrate why they need to be replaced
    • Replacements must only be made when supplies are no longer able to function.
    • Contact with the beneficiary must occur no more than 14 days before filling the order for new supplies.
  • The supplier had no proof of delivery.
  • The supplier did not respond to auditor requests for documentation.

Obviously, breathing supplies are important, and suppliers need to stay on top of these issues. A break in services is not acceptable when it comes to breathing.