The New Reality: Documenting O&P Medicare Claims

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By Peter W. Thomas, JD, and Christina A. Hughes, JD, MPH

The August 2011 "Dear Physician" letter sent to all physicians participating in the Medicare program and the U.S. Department of Health & Human Services (HHS) Office of Inspector General (OIG) report that preceded it- "Questionable Billing by Suppliers of Lower Limb Prostheses"- is having the impact that many in the profession expected. The letter instructed physicians that the only medical records that are relevant in determining the medical necessity of prosthetic care are the physicians' records, not the prosthetists' clinical files. Specifically, the Dear Physician letter stated, "The prosthetist's records must be corroborated by the information in your patient's medical record. It is the treating physician's records, not the prosthetist's, which are used to justify payment."

In response, the national O&P organizations-the American Orthotic & Prosthetic Association (AOPA) in particular, but also other members of the O&P Alliance-went on the offensive with the Centers for Medicare & Medicaid Services (CMS) and other policymakers. High-level meetings with government policymakers have been held over the past 18 months, written responses to the OIG report and the Dear Physician letter were submitted, and direct meetings with OIG officials have taken place. At the present time, CMS says that it understands the O&P profession's concerns and is working toward a reasonable solution.

The OIG "Questionable Billing" report notes that even though the prosthetic limb benefit is not a major Medicare expense overall, and the number of patients with amputations is not dramatically growing, the amount that Medicare has spent per patient in this population in the recent past has increased significantly. This suggests that one of OIG's main concerns is "upcoding" the level of technology available to individuals with amputations under the program. Medicare contractors have leveraged the OIG report's conclusion to organize concerted auditing activity around the prosthetic limb benefit. It should not be surprising that these types of claims are under scrutiny. There are fairly few of these claims in terms of Medicare claims volume, but they are relatively large-dollar claims in an area that few fully understand.

The new standard of documentation for prosthetic care has had a major impact on practitioners and physicians and the patients they serve. Medicare audits have increased dramatically in this area, including audits undertaken by Recovery Audit Contractors (RACs). The auditing activity is greater in some areas of the country than in others. Patient care has been delayed as prosthetists try to work with physician referral sources to improve the physicians' documentation related to the need for prosthetic care and patients' functional levels. Many physicians have become hostile with prosthetists who are than they ever have before.

By all accounts-including from prosthetic component manufacturers and suppliers-the new documentation standard and its aftermath have had a "chilling effect" on prosthetic prescriptions, especially for components that are generally described by Healthcare Common Procedure Coding System (HCPCS) codes that fall under Medicare's functional level K3. To the extent that they have dampened inappropriate selection of unnecessarily expensive prosthetic components, these developments can be viewed favorably. But to the extent there are Medicare patients who are being systematically denied the technologies they need to maximize their function and independence, these developments are a major problem for Medicare beneficiaries in need of prosthetic care and the providers who serve them.

The OIG report and the new documentation standards have also empowered Medicare contractors, such as Durable Medical Equipment Medicare Administrative Contractors (DME MACs), RACs, and Zone Program Integrity Contractors (ZPICs), to increase their audits of prosthetic limb claims. This has resulted in many contractors deeming as an "overpayment" any case where the physician's notes do not independently corroborate the prosthetist's clinical file, even when the totality of the patient file is well documented and completely appropriate in every respect. The fact that the prosthetist does not have any control over what and how the physician chooses to document in his or her own file does not seem to make any difference to the contractors.

Appealing O&P Overpayment Determinations

It remains to be seen how accommodating the Administrative Law Judges (ALJs) will be when these appeals make their way up to the ALJ level of review, which is just beginning to occur. Based on our law firm's experience, a large number of O&P overpayment determinations are in the administrative appeals process and are making their way to an ALJ hearing. While extrapolation of claims-where huge overpayments are alleged-are occurring, and prepayment review is sometimes inappropriately imposed, the bulk of the claim denials at issue involve allegedly insufficient documentation of medical necessity.

One of the primary defenses that can be made against these claims denials is the date of the Dear Physician letter itself. For all cases with dates of delivery prior to August 2011, there is a viable argument that O&P practitioners cannot be held to a heightened documentation standard before CMS informed them of it. The one potential problem with this argument is that CMS does not consider this to be a new standard. CMS' position is that it has always required appropriate physician documentation, and the Dear Physician letter simply clarifies this long-standing requirement. This is not the first time CMS has made this argument. In fact, it is one of the most frequent arguments CMS uses to thwart challenges from providers that CMS changed its standards without appropriate public notice and comment.

For claims that are overturned with dates of service after August 2011, the legal argument for coverage gets more complicated, but there are still viable arguments for challenging these claims depending on the facts and circumstances of each case. Perhaps the most obvious is an argument based simply on equity. It is perfectly acceptable to argue to an ALJ that it is patently unfair for CMS to recoup significant reimbursement from O&P practitioners when the totality of the file demonstrates that the care was reasonable and necessary, the patient benefitted (and probably still benefits) from the care provided, and the denial occurred due to recordkeeping that is largely outside of the prosthetist's control. Various ALJs will come to different conclusions when making determinations based on this argument.

In addition, an independent documentation standard cannot be enforced based on a Dear Physician letter alone. Such letters are meant to educate providers, not formally implement CMS policy. While this new documentation was eventually added to the Local Coverage Determinations (LCDs) for lowerlimb prostheses, there is a gap between the date of the Dear Physician letter and the publication of the LCD. This opens up the argument for claims with delivery dates between the time the Dear Physician letter was issued and the publication of the LCD.

Another argument involves CMS' Program Integrity Manual (PIM). The PIM explicitly states that the medical record is not limited to the physician's files and that it may include records from "other healthcare professionals." Under Medicare law effective since 2007, orthotists and prosthetists are acknowledged as being among this category of healthcare professionals. As such, documentation created with respect to a prosthetist's or orthotist's patients is a critical component of patients' medical records and should be considered in the medical necessity determination. This is an important argument when trying to convince an ALJ that he or she must consider the prosthetist's clinical notes, not just the physician's file.

There are many other legal arguments to raise in the course of the appeals process, many of which stem from the reasons for denial set forth in the redetermination and reconsideration stages. It is important to note that no new evidence can be submitted after the Qualified Independent Contractor (QIC) considers the case at the reconsideration level. Therefore, fully developing the arguments early in the appeals process is critical to ensuring the ALJ will hear the strongest evidence for coverage and payment.

The advice of legal counsel is not required for every case to be challenged through the appeals process, but specialty Medicare counsel can be extremely helpful where prosthetic and orthotic care audits create large overpayment demands, huge extrapolation demands for repayment, and, of course, whenever potential false claims liability is involved. For instance, if a ZPIC conducts a full-scale audit on your claims or a Federal Bureau of Investigation (FBI) agent appears at your doorstep with a warrant to search your files, a discussion with an attorney who has O&P Medicare expertise is highly advised.

Reality Sets In

Even as senior CMS officials contemplate ways to resolve the many complaints and strong advocacy from the O&P profession, the reality is that physicians of all types who prescribe O&P care will need to improve their documentation in the future, and O&P practitioners will have to take additional documentation steps to ensure their claims remain paid even after an audit occurs. Best practices are beginning to emerge from O&P practitioners, including the following procedures:

  1. Reach out to physician referral sources and share the Dear Physician letter with them. This letter can be downloaded at www.naaop.com. Take the time to get their attention (without, of course, offering them anything of value in return), discuss the new documentation standards with them, and request that they comply with these standards in their medical records.
  2. Discuss with them the implementation of a process whereby the physician's prescription will be accompanied by copies of the physician's notes or a printout of an electronic file establishing the medical necessity of the O&P care prescribed, including the functional level for lowerlimb prostheses. The physician's file should contain sufficient clinical factors, recorded by the physician, to justify the functional level and the overall medical necessity of the care provided.
  3. Discuss with the physician a process whereby the work on the prosthesis or orthosis will commence once the O&P clinician receives this documentation-not only the signed prescription and a signed, detailed written order, but also a copy of the physician's medical records corroborating the medical necessity of the O&P care provided.
  4. Systematically review the LCDs for the services you provide, the Medicare Benefit Policy Manual, the PIM, and the policy articles and other guidance published by the DME MACs. Refine your documentation process to ensure compliance with all current requirements. Also make sure to educate your staff and periodically perform this same review to stay up to date. Record in your business records that you performed this review as part of your compliance program in case you ever need to demonstrate your good faith efforts.

OIG Recommendations for "Improving" the ALJ Appeal Level

The ALJ appeal level has been the last refuge and the most favorable venue for providers seeking to overturn Medicare claims denials. The ALJ hearing is intended to be a nonadversarial hearing. Providers are able to speak directly with a third-party decision maker without being cross-examined. The government's position is represented by the written decision rendered by the QIC. The government (in the form of a representative from the DME MAC or other Medicare contractor) rarely participates in ALJ hearings in person, although Medicare contractors are permitted to participate if they give proper notice. Anecdotal evidence suggests that ALJs routinely decide Medicare medical necessity cases in favor of providers.

While many Medicare providers can attest to much-needed improvements at the ALJ level of the appeals process (such as better records management and better adherence to deadlines), most providers are unlikely to be in favor of OIG's November 2012 recommendations. In the report titled "Improvements Are Needed at the Administrative Law Judge Level of Medicare Appeals," OIG notes the high reversal rate for providers at the ALJ level. However, rather than determining that the lower-level contractors may have been too zealous in their denials, OIG appears to take the position that ALJs require reeducation on the "proper" interpretation of coverage policies and that the threshold for appealing should be higher. OIG made the following recommendations:

  • ALJs should be given less leeway in determining when additional evidence is admissible.
  • Appeals for providers who are under investigation for fraud should be postponed.
  • A fee for filing an appeal should be implemented.
  • A "quality-assurance" process for reviewing ALJ decisions should be implemented.
  • CMS and its contractors should participate more in ALJ hearings.

All of these recommendations are designed to further protect the Medicare trust fund. But the reality of these provisions is that they further tip the balance of power in favor of the federal government and place legitimate Medicare providers, including O&P practitioners, under even greater pressure.

Providers are more likely to support the recommendations for standardizing case files and creating electronic case files. OIG also recommended considering whether specialization among ALJs would improve the appeals process, although some level of specialization already exists. It is not clear whether additional steps to have ALJs specialize would be an advantage or a disadvantage to providers.

It is important for providers to monitor HHS actions carefully with respect to the ALJ level of the appeals process. Much of the appeals process is set forth in the federal regulations and would require a notice-and-comment period to be revised, but there are steps HHS and CMS could take without such a formal process. Providers who are familiar with the appeals process should remain alert to any significant changes or differences noted in the coming months and inform their associations- like NAAOP-so these experiences can help shape the profession's government relations agenda.

Conclusion

If O&P practitioners take the steps detailed in this article to maximize their compliance with Medicare requirements, the incidence and severity of Medicare prosthetic limb audits to their practices should begin to subside. However, with a new OIG report released in December 2012 on L-0631 back orthoses, the field can expect additional rounds of Medicare audits on orthoses as well as prostheses, again, with varying levels of intensity depending upon the area of the country in which the O&P provider is located. Even if Medicare audits on O&P claims continue unabated, the steps outlined above should help O&P practitioners in their efforts to convince ALJs to reverse Medicare denials for O&P care in favor of the O&P professionals who provide these services and the patients who receive them.

Peter W. Thomas, JD, is general counsel for the National Association for the Advancement of Orthotics and Prosthetics (NAAOP). Christina A. Hughes, JD, MPH, is an associate at Powers Pyles Sutter and Verville, Washington DC. Thomas and Hughes are actively engaged in O&P Medicare appeals of all kinds in all regions of the country. They are available for consultation at or and by phone at 202.466.6550.