Healthcare providers who use skin substitutes, allografts, and other similar wound care products are experiencing a significant increase in audits from Medicare contractors.
These high-cost wound care products, which often require repeated applications, are leading to increased audits for several reasons. Providers may be flagged due to elevated utilization rates, but other factors include the high reimbursement associated with these treatments, concerns about non-compliance with Medicare’s coverage guidelines, and questions about whether the products are being used appropriately for their intended purposes. Medicare contractors are closely scrutinizing claims for potential improper payments, unnecessary billing, or fraud.
The audits are being carried out by several Medicare contractors, including Medicare Administrative Contractors (MACs), Unified Program Integrity Contractors (UPICs), Recovery Audit Contractors (RACs), and the Supplemental Medical Review Contractor (SMRC), who are specifically targeting products such as amniotic tissue, placental, and skin substitutes.
Common reasons for denial include the following:
Failure to Align with LCD Guidelines
Local Coverage Determinations (LCDs) outline specific guidelines for the coverage and payment of wound care products. If a claim doesn’t align with these LCD guidelines, it will likely be denied. Proper documentation that matches the specific requirements of the LCD is critical to avoiding denials.
Experimental/Investigational
Medicare contractors have started to raise the argument that there is not enough peer-reviewed, evidence-based literature to support the use of amniotic products for wound treatment. If a product is used in a non-homologous manner, and there is not sufficient scientific evidence proving its efficacy, Medicare may refuse reimbursement, considering the treatment experimental or investigational.
Lack of Beneficiary-Specific Documentation
Each treatment plan must be specific to the patient and their wound type. Generic or cloned documentation often leads to claim denials. Some providers are given a scripted note from a skin graft company and their vendors to incorporate into their documentation, however, if not used properly, it can do more harm than good.
Inadequate Documentation of Alternative Treatment Options
Medicare contractors often deny claims based on a lack of conservative treatment. Providers must clearly document why alternative options were either not viable or ineffective in the patient’s case prior to utilizing the wound care product.
Failure to Document Amount Used and Wasted
Claims can also be denied if providers fail to document the exact amount of product used, or any waste. Clear records of how much product was used in each application, wastage, and any leftover product, are necessary for claim approval.
Addressing Denials Through the Appeal Process
Medicare denials related to wound care products can be addressed effectively through the appeals process, which includes five stages:
- Redetermination
- Reconsideration
- Administrative Law Judge (ALJ) Review
- Medicare Appeals Council Review
- Federal Court Review
It is important to understand that each stage provides an opportunity to correct documentation issues, clarify medical necessity, rebut denial reasons, and submit additional evidence to support the treatment’s effectiveness. However, at the second level, the record closes, so it is imperative that healthcare counsel and any potential experts to rebut findings or extrapolations are retained before filing a Reconsideration.
Case Study: Successful ALJ Decision
Frier Levitt recently secured a fully favorable decision from an ALJ for a provider who utilized a fresh amniotic membrane graft to treat chronic wounds.
This success resulted from our careful preparation, where we developed strong legal and coding arguments to address key denial reasons such as medical necessity, proper coding, and adherence to Medicare guidelines. By collaborating with an independent expert coder, we conducted a thorough review of the medical documentation, identifying strengths and potential issues in the claim. This in-depth analysis allowed us to demonstrate that the wound care treatment was both necessary and supported by sufficient documentation. The ALJ ultimately ruled in the provider’s favor, confirming the medical necessity of the treatment and securing reimbursement.
It should be noted that this result was achieved at the third level of the Medicare appeals process, which is another example of why you do not accept the MAC and QIC’s decisions in the early levels of the appeals process.
Why Early Intervention is Key
Navigating Medicare audits and overpayment demands can be complex and time-consuming. Providers facing these challenges should seek expert legal advice early in the process, particularly since deadlines for submissions are written in stone in these cases.
Frier Levitt attorneys specialize in both pre-payment and post-payment audits, and we have extensive experience in handling cases with substantial overpayment demands ranging up to eight figures.
If your practice receives an audit demand from a CMS contractor or any payor, contact Frier Levitt today. Our seasoned attorneys can support you through the audit process. Do not wait until your practice receives an overpayment demand as the initial productions are just as crucial to avoiding exposure.
