By Sandra J. Stoll, JD
An audit of an orthotic braces supplier determined, based on sample results, that the supplier received at least $6.9 million in unallowable Medicare payments. The supplier did not obtain sufficient information from the beneficiaries’ medical records to assure itself that the claims for orthotic braces met Medicare requirements for medical necessity.
The HHS Office of Inspector General (OIG) conducted an audit from July 1, 2016, through December 31, 2018. The objective of the audit was to determine whether the supplier complied with Medicare requirements when billing for orthotic braces. During the audit period, the supplier received approximately $7.7 million in Medicare Part B payments for orthotic braces provided to 5,254 Medicare beneficiaries. The report concluded that the supplier had received improper payments (OIG Report, No. A-09-19-03012, July 2020).
For the frame of time examined, Medicare paid approximately $4 billion for orthotic braces provided to Medicare beneficiaries. Prior OIG audits and evaluations in this area found that some suppliers of durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) billed for orthotic braces that did not comply with Medicare requirements and that orthotic braces were vulnerable to fraud, waste, and abuse. During the audit period, the Centers for Medicare & Medicaid Services’ (CMS’s) Comprehensive Error Rate Testing (CERT) program, which measures improper Medicare fee-for-service payments, found that orthotic braces were among the top 20 DMEPOS items with the highest improper payment rates. Several DMEPOS suppliers were selected for audit based on (1) Medicare Part B payments to the suppliers and (2) other risk factors, including the percentage of Medicare payments for orthotic braces.
Findings. The report covers one of those suppliers, Freedom Orthotics, Inc. The OIG found that for all 100 sampled beneficiaries, the supplier had billed for orthotic braces that were not medically necessary. On the basis of the sample results, OIG estimated that the supplier received at least $6.9 million in unallowable Medicare payments. As the OIG noted, Medicare pays for an orthotic brace if it is medically necessary and supported by the beneficiary’s medical record. Payment must not be made to a supplier for an item or a service unless "there has been furnished such information as may be necessary in order to determine the amounts due such provider" (the Act § 1833(e)).
The report states that although the supplier had adequate documentation related to the physician orders and proof of delivery for the orthotic braces, it did not obtain sufficient information from the beneficiaries’ medical records to assure itself that the claims for orthotic braces met Medicare requirements.
Recommendation. The OIG recommended that the supplier refund the amount of the estimated overpayments. It also recommended that the supplier exercise reasonable diligence to identify, report, and return any overpayments in accordance with the 60-day rule and identify any of those returned overpayments as having been made in accordance with the Recommendation. Finally, the OIG recommended that the supplier obtain as much information from beneficiary medical records as it determines necessary to assure itself that claims for orthotic braces meet Medicare requirements for medical necessity.
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