On November 30, 2011, NHIC, the Jurisdiction A Durable Medical Equipment Medicare Administrative Contractor (DME MAC), posted the results of a widespread prepayment probe for lower-limb prostheses Healthcare Common Procedure Coding System (HCPCS) codes billed with a K3 functional level modifier and components/additions provided, which indicated an overall Charge Denial Rate (CDR), of 86.6 percent. The CDR is calculated by dividing the dollar amount of allowable charges for services determined to be billed in error by the total allowance amount of services medically reviewed. Based on these results, NHIC completed three subsequent widespread prepayment complex reviews of claims for these same codes, with the most recent two showing a continued decrease in CDRs, as follows:
- January 2012 to March 2012: 90.9 percent CDR
- April 2012 to July 2012: 74.2 percent CDR
- August 2012 to December 2012: 66 percent CDR
The most recent prepayment complex medical review involved 280 claims submitted by 162 suppliers for claims processed August 2012 to December 2012. Responses to the Additional Documentation Request (ADR) were not received for 21 (7 percent) of the claims. For the remaining 259 claims, 79 claims were allowed and 180 were denied resulting in a claim denial rate of 69 percent, and an overall CDR of 66 percent.
Based on review of the documentation received, the following are the reasons for denial. The percentages noted below reflect the fact that a claim could have more than one missing/incomplete item.
- Lack of medical record documentation: 44 percent of the denied claims were missing the clinical documentation to corroborate the prosthetist’s records and support medical necessity.
- Evaluation/assessment documentation: 3 percent of the denied claims were missing the evaluation/assessment documentation for the functional level of item(s) billed (prosthetist assessment).
- Clinical documentation did not support the functional level of the lower-limb prosthesis: 22 percent of the denied claims had clinical records that did not justify the functional level of the billed item.
- Proof of delivery: 3 percent of the denied claims were missing the proof of delivery.
Based on the results of this prepayment review, NHIC said it will continue to review claims for lower-limb prostheses HCPCS codes billed with a K3 functional level modifier and components/additions provided, and reminded suppliers that repeated failure to respond to ADR requests could result in a referral to the Jurisdiction A Program Safeguard Contractor/Zone Program Integrity Contractor.
NHIC has suggested that suppliers be aware of and reference the local coverage determination (LCD) for lower-limb prostheses L-11464 and related Policy Article A25310 as well as Chapter 10 of the DME MAC Jurisdiction A Supplier Manual so that supporting documentation for their claims is compliant with all requirements.