Court Rules More DMEPOS Documentation Needed

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By John Latsko

In late October 2007, the United States Court of Appeals for the Fourth Circuit ruled that an executed Certificate of Medical Necessity (CMN) was not sufficient medical documentation to establish the medical need for supplying durable medical equipment, orthotics, prosthetics, and/or supplies (DMEPOS) to a Medicare beneficiary.

In the case of MacKenzie Medical Supply Inc. v. the Secretary of Health and Human Services (HHS), MacKenzie sought to set aside an HHS determination that Medicare overpaid MacKenzie more than $500,000 for 135 power wheelchairs that MacKenzie had provided to Medicare beneficiaries. According to HHS, a post-payment audit it conducted found that insufficient medical documentation existed to establish medical necessity for those wheelchairs.

MacKenzie, on the other hand, claimed that an executed CMN existed for each of the wheelchairs, and a CMN was sufficient documentation to establish the medical necessity and qualify for Medicare reimbursement. According to MacKenzie, federal law only requires that a physician attest to the medical need for the DMEPOS, and no other medical documentation is necessary in order to support Medicare payment.

Palmetto Government Benefits Administrators (GBA), the Region C DME carrier at the time, had established coverage guidelines for many DMEPOS items, including power wheelchairs. The criteria to support the need for a power wheelchair included the prevention of the patient from being confined to a bed or chair, the patient's ability to operate a power wheelchair, and the patient's inability to operate a manual wheelchair. Medicare regulations limit Medicare Part B coverage to services that are medically "reasonable and necessary" for the diagnosis or treatment of illness. Palmetto claimed that Medicare payment of DMEPOS claims under Part B cannot be made "unless there has been furnished such information as may be necessary in order to" support payment of the claim, and a CMN may not be enough.

Medicare defines a CMN as "a form or other document containing information required by the carrier to be submitted to show that an item is reasonable and necessary for the diagnosis or treatment...." A supplier may fill out the identification of the supplier and the beneficiary, the description of the DMEPOS, and the product code, but the supplier may not fill out questions related to a patient's condition, which must be filled out by the treating physician or another qualified third party. Medicare regulations say that only the attending physician can attest through a signature on a CMN that "the medical necessity information... is true, accurate, and complete..."

In this case, a post-payment audit was conducted on MacKenzie's claims because of the extremely high number of claims MacKenzie submitted for power wheelchairs, with over 30 percent of the claims coming from the same referring physician. Many claims were for patients who had never used a wheelchair before. During the audit, the investigator asked for all relevant medical records from MacKenzie and the treating physicians. The investigator concluded that the information provided was not sufficiently specific to warrant the need for power wheelchairs. Subsequently, Palmetto suspended all payments to Mac- Kenzie, and MacKenzie appealed the action claiming that a properly completed CMN was legally sufficient documentation of medical necessity.

The District Court and the Court of Appeals agreed with HHS that the Medicare Act gave it the right to require documentation over and above an executed CMN to establish the medical need for the DMEPOS ordered.

There are several important lessons to be taken from this case. You as a supplier must know each and every criterion required to establish medical necessity for every device you supply, and there must be sufficient documentation somewhere in the medical record establishing that each criterion is met. Second, when all of the criteria are not met, you must go back to the attending physician, and the physician must decide what to do. More comprehensive documentation is an option. Finally, an audit can come at any time, and an audit that finds inadequate documentation of medical necessity can be very costly. While a CMN is important, in some cases it is not enough. In the MacKenzie case, power wheelchairs were the focus of the government investigators because of the significant increase in their utilization and cost. "Medical necessity is a concept that can be extremely subjective in the post-acute-care phase of orthotics and prosthetics. A few payers have irresponsibly set arbitrary payment caps and exclusions on orthotics and prosthetics rather than face the issue. This happens when industry standards for necessity do not exist and payers use that as a reason to deny coverage. Payers are rightfully watching carefully as healthcare costs continue to escalate. If industrywide standards exist on the benefits of certain devices for certain conditions, all the better. The more objective the criteria, the more likely payers will find medical necessity, and patients will receive the medical devices that they really need.

John Latsko is a partner in the health law practice of Schottenstein, Zox & Dunn, Columbus, Ohio. He can be contacted at 614.462.2329; jlatsko@szd.com.