Compliance Is Key in Medicare Part B Audits

Medicare is a beneficial program for Americans who are over age 65 or have certain disabilities, but providers sometimes find compliance issues a challenge. An understanding of Medicare Part B prescription requirements and how to properly submit claims will ensure organizations are reimbursed for Medicare Part B-covered medications, equipment, and supplies, such as nebulizer-inhalation medications, oral immunosuppressive drugs, and diabetic testing supplies. Occasionally, providers may unknowingly submit noncompliant or even fraudulent claims for the products and services they offer.

Audit Basics

The Centers for Medicare & Medicaid Services (CMS), the entity that oversees Medicare, contracts with private third-party organizations, including payment, program integrity, and recovery-audit contractors and benefit administrators, to manage the Medicare population of 67 million beneficiaries and mitigate the risk of audits.

Billing errors can result in audits and providers repaying claims. According to CMS, the error rate for improper payments for equipment is 22.5 percent. It is important to note that most prescriptions for home medical equipment (HME) rarely provide the required information for billing Medicare.

If information on a prescription is not the same as a detailed written order (DWO), any reimbursement is subject to recoupment. A physician’s order/certificate of medical necessity (CMN) is often required before billing, and orders must comply with Medicare Local Coverage Determinations (LCDs), which detail coverage criteria and required documentation.

Medicare Part B Prescription Requirements

General (Program Integrity Manual (PIM) 5.2.1)
All items billed to Medicare Part B require a prescription, and each item must have an order signed and dated by the treating physician and kept on file by the supplier to be available upon request. Items that fail to meet these requirements must be submitted with modifier EY (no physician or other licensed healthcare provider order for this item or service) on each affected Healthcare Common Procedure Coding System (HCPCS) code. The EY modifier informs the Durable Medical Equipment Medicare Administrative Contractor (DME MAC) that a physician’s order is not available for the item.

Additionally, items submitted with the EY modifier must be on a separate claim. Medicare does not cover DME without a physician’s or provider’s order, but some secondary insurers may.

Dispensing Orders (PIM 5.2.2)
With the exception of items that require written orders prior to delivery, equipment and supplies may be delivered upon receipt of a verbal or written dispensing order. A DWO is required for items dispensed from a preliminary dispensing order before claims can be submitted. The supplier must keep a record of the dispensing order, which must contain the following information:

  • Description of the item
  • Name of the beneficiary
  • Name of the prescribing physician
  • Date of order and start date (if different)
  • Signature of physician (written) or supplier (verbal)

Detailed Written Orders (PIM 5.2.3)
A DWO with a physician’s signature and date is required before billing and must contain the same information as a dispensing order with the addition of the date of the physician or supplier’s signature and a detailed description of the item that could include a narrative description or the item’s brand name and model number.

For items provided on a periodic basis, including drugs, the DWO must also include:

  • Item(s) to be dispensed
  • Dosage or concentration, if applicable
  • Route of administration
  • Frequency of use for test strips and lancets
  • Duration of infusion, if applicable
  • Quantity
  • Number of refills

Frequency-of-use information must contain detailed instructions for use and the specific amount to be dispensed. Reimbursement is based on the specific utilization amount only. Orders using PRN (as needed) for replacement frequency, use, or consumption are not acceptable (PIM 5.9).

Prescriptions are not considered part of the medical record. Medical information intended to demonstrate compliance with coverage criteria may be included on the prescription but must be corroborated by information in the medical record. The following rules apply to both dispensing orders and DWOs:

  • Signature and date stamps are not accepted. Signatures must comply with CMS requirements in PIM
  • For verbal orders, the order date is the date the physician contacted the supplier. For written orders, it is the date entered by the physician.
  • Dispensing orders and DWOs must be available upon request.

In addition, specific patient documentation must be signed and dated before claims are submitted. This includes proof the beneficiary has received a copy of the current Medicare Supplier Standards, Assignment of Benefits, Medical Release Authorization, and proof of delivery that explain the safe and proper use of item(s) as well as warranty and emergency contact information. Paper prescription pick-up logs do not meet Medicare proof-of-delivery requirements.

Affordable Care Act (ACA) Industry Regulations
The ACA provided regulations on the Durable Medical Equipment Prosthetics, Orthotics, and Supplies (DMEPOS) industry that require providers to have a written order prior to delivery (WOPD) and face-to-face documentation prior to the delivery of equipment on the HCPCS code.

Be Prepared

It is always best to be prepared for an audit, which includes having a clear understanding of documentation mandates and having easy access to the proper documentation. It is important to ensure your organization is familiar with CMS’s Medicare Program Integrity Manual requirements, as well as your state and federal requirements. It’s also beneficial to use pharmacy management software that helps automate document collection and storage, reconcile the date of service and the original fill date, and uses electronic signature capture to allow patients to sign once for all Medicare-required documentation.

With an understanding of the mandates and the tools you need readily available, your organization can be successful in the event of an audit.

Additional Resources:

Written by:
Emily Smith
Product Marketing Manager, RedSail Technologies
Emily Smith

Emily loves to learn and connect ideas in new ways, with a focus on customers' needs and empathy for their challenges. In her role as RedSail product marketing manager, Emily educates on innovation and encourages its use to improve pharmacy care.

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