The Audit Gates Have Opened Wider


The Centers for Medicare & Medicaid Service (CMS) has approved eight new Recovery Audit Contractor (RAC) review areas effective September 8, 2020.  As I previously posted, CMS has re-engaged audits that it paused early in the ongoing coronavirus public health emergency.  As restrictions loosen and clinics and hospital adapt to the new normal, audits continue to ramp up with no indication of slowing.

The recently added review areas include a cross section of provider types:

  • Skilled Nursing Facility (SNF)
  • Outpatient Hospital
  • Outpatient Hospital, Professional Services
  • Durable Medical Equipment (DME) Physician / DME Supplier
  • Inpatient Hospital: Outpatient Hospital: Professional Services
  • Inpatient Hospital, Professional Services

The extensive review includes a laser focus on areas that are potentially problematic.  The following summary lists  provider-type focus areas and specific review areas for each provider type.

Skilled Nursing Facility

SNFs are a primary focus with  many new regulations implemented because  of the ongoing public health emergency.  The recently added RAC review  focuses on medical necessity and documentation requirements.  Specifically,  audits will focus on physician certification, recertification, need for treatment, and therapy plans of care.

A beneficiary must be certified by a provider to certify the SNF level of care is necessary.  Conditions treated at SNFs must require a plan of care and daily skilled care, and services must be reasonable and necessary.

Outpatient Hospital

Outpatient hospitals will undergo the following reviews:

  1. Nerve conduction studies with excess units
  2. Polysomnography (i.e., sleep study) medical necessity and documentation requirements.

Nerve conduction studies are subject to specific policy requirements, which are published by Medicare Administrative Contractors  in the jurisdictional (LCD).  Within the LCDs, the number of appropriate studies performed are identified. This is somewhat analogous to a medically unlikely edit.  CMS would not expect to see excess.  The rare episodes of care that with additional units, requires documentation that justifies additional testing.

Further, reviewers will examine documentation to ensure that conduction studies were reasonable and necessary.

Many MACs publish billing and coding guidance for nerve conduction studies and electromyography procedures.  This guidance facilitates creation of internal audit documents and  development of provider education programs.

Reviewers also will examine patients’ documented conditions to determine whether polysomnography was reasonable and necessary based on documented signs, symptoms, concerns, and/or complaints.

The Office of Inspector General identified studies that did not meet Medicare billing requirements in a  report[1] published in June 2019.  Major findings with respect  to  billing requirements failures included attending technicians or technologists who lacked  required credentials or training certificates.  Based on these findings, reviewers  will focus on validation of appropriate credentials for sleep technician staff and sleep centers.

Outpatient Hospital, Professional Services

The RAC review list includes bioengineered skin substitutes with a focus on excessive or insufficient units billed.

Skin substitutes facilitate restoration for many types of tissue damage.  HCPCS codes  generally reflect size and manufacturer of products for treatment of different wounds  of varying type and thickness.

Coding errors can occur because of incorrect HCPCS codes and/or units reported incorrectly.  Reviewers will examine records to ensure the size of skin substitutes applied to wounds is the size most appropriate to limit excess waste and its associated cost to CMS.   Providers can report  excess amounts of skin substitute wasted  by appending modifier JW on a separate claim line.  Reviewers will examine manufacturers’ packaged sizes and determine the most appropriate to fit specific wounds.

DME Physician / DME Supplier

RAC reviews are either complex or automated.  Complex reviews include a review of  medical records.  Automated reviews do include reviews of medical records or application of law, regulation, or guidance to identify noncompliance. Instead, automated reviews use software to detect aberrant billing.

Automated reviews to identify continuous glucose monitoring with excessive units are based on HCPCS code K0553, which denotes a 30-day supply.  More than one supply in a 30-day period is considered excessive.

This complex review of continuous glucose monitoring  medical necessity and documentation requirements will focus on HCPCS codes K0553 and K0554.   A diabetes diagnosis and  treating physician with sufficient training for use of the device must be documented.  Reviewers also will examine providers’ prescribed frequency of testing  to determine the number of lancets  prescribed.  The number of testing supplies billed should not exceed the number of tests ordered.

Inpatient Hospital: Outpatient Hospital – Professional Services

This audit focuses on a pacemaker study with limited approval.  CMS has approved review of leadless pacemakers to determine whether incorrect coding occurred.  This review will determine whether CMS paid for leadless pacemakers outside an approved Cover with Evidence Development (CED) study.  Leadless pacemakers are not covered when  provided outside a CMS approved study.

Inpatient Hospital, Professional Services

The focus here is ventricular assist device (VAD) medical necessity and documentation requirements.  CMS pays for VAD in very limited circumstances.   Reviews will determine whether documented conditions are among those  covered under current CMS policy.  CPT® codes subject to review are 33975–33983, and 33990–33993;  ICD-10-PC codes subject to review are 02HA0QZ– 02HA4RZ, 02PA0QZ–02PA4RZ, 02WA0QZ–02WAXRZ, 5A02116, 5A0211D, 5A02216, and 5A0221D.

How can these RAC reviews benefit you?

Continually monitoring audits and enforcement trends is essential.  Getting ahead of any potential issue is good medicine.  Prevention can eliminate a multitude of preventable headaches for practices and hospitals.  Although 100% avoidance may be an elusive goal,  you will be able to discover issues independent of a more costly and time-consuming third-party audit.


[1] U.S. Department of Health and Human Services Office of Inspector General, Medicare Payments to Providers for Polysomnography Services Did Not Always Meet Medicare Billing Requirements. Report No. A-04-17-07069, June 2019