Department of Health and Human Services

OFFICE OF 

INSPECTOR GENERAL 

M P
EDICARE  AYMENTS 

N P
FOR  EGATIVE  RESSURE 

W T P
OUND  HERAPY  UMPS 

2004

IN 
Daniel R. Levinson

Inspector General 

June 2007 

OEI-02-05-00370
 Office of Inspector General 

http://oig.hhs.gov 
The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, 
as amended, is to protect the integrity of the Department of Health and Human Services 
(HHS) programs, as well as the health and welfare of beneficiaries served by those 
programs.  This statutory mission is carried out through a nationwide network of audits, 
investigations, and inspections conducted by the following operating components: 
Office of Audit Services 
The Office of Audit Services (OAS) provides all auditing services for HHS, either by 
conducting audits with its own audit resources or by overseeing audit work done by others. 
Audits examine the performance of HHS programs and/or its grantees and contractors 
in carrying out their respective responsibilities and are intended to provide independent 
assessments of HHS programs and operations in order to reduce waste, abuse, and 
mismanagement and to promote economy and efficiency throughout HHS. 
Office of Evaluation and Inspections 
The Office of Evaluation and Inspections (OEI) conducts national evaluations to provide 
the Department, Congress, and the public with timely, useful, and reliable information 
on significant issues.  Specifically, these evaluations focus on preventing fraud, waste, or 
abuse and promoting economy, efficiency, and effectiveness in departmental programs.  
To promote impact, the reports also present practical recommendations for improving 
program operations. 
Office of Investigations 
The Office of Investigations (OI) conducts criminal, civil, and administrative 
investigations of allegations of wrongdoing in HHS programs or to HHS beneficiaries 
and of unjust enrichment by providers.  The investigative efforts of OI lead to criminal 
convictions, administrative sanctions, or civil monetary penalties. 
Office of Counsel to the Inspector General 
The Office of Counsel to the Inspector General (OCIG) provides general legal services to 
OIG, rendering advice and opinions on HHS programs and operations and providing all 
legal support in OIG's internal operations. OCIG imposes program exclusions and civil 
monetary penalties on health care providers and litigates those actions within HHS. 
OCIG also represents OIG in the global settlement of cases arising under the Civil False 
Claims Act, develops and monitors corporate integrity agreements, develops compliance 
program guidances, renders advisory opinions on OIG sanctions to the health care 
community, and issues fraud alerts and other industry guidance.    E X E C U T I V E   S U M M A R Y  

OBJECTIVE 
To determine the extent to which claims for negative pressure wound 
therapy pumps (the pump) met Medicare coverage criteria and supplier 
documentation requirements in 2004. 
BACKGROUND 
The pump is a portable or stationary device used for the treatment of 
ulcers or wounds that have not responded to traditional wound 
treatment methods.  Medicare covers the pump and its supplies under 
Part B as durable medical equipment.   
Medicare-allowed payments for the pump increased 444 percent 
between 2001 and 2005, from $25 million to $136 million.  This increase 
raises concerns about whether the pump is being prescribed 
appropriately in accordance with Medicare coverage criteria. 
This study is based on a medical review of a random sample of   
378 pump claims from the Centers for Medicare & Medicaid Services 
(CMS) National Claims History file that had a date of service in 2004.  
Registered nurses with experience in wound care reviewed the medical 
records for these claims to determine whether they met Medicare 
coverage criteria. 
We also conducted a separate review of the documentation provided by 
the supplier to determine whether each claim met Medicare supplier 
documentation requirements.  The reviewers also determined whether 
the information on the forms provided by the supplier, i.e. supplier-
prepared statements, was supported by the information in the medical 
record.  Lastly, we interviewed staff from the four Durable Medical 
Equipment Regional Carriers (DMERC) and the Statistical Analysis 
Durable Medical Equipment Regional Carrier. 
FINDINGS 
Almost one-quarter of pump claims in 2004 did not meet Medicare 
coverage criteria, resulting in approximately $21 million in improper 
payments.  Medicare allowed $90 million in 2004 for pumps.  Based on 
an independent review of medical records, 24 percent of the claims for 
these pumps did not meet Medicare coverage criteria, resulting in an  
  OEI-02-05-00370  MEDICARE PAYMENTS FOR NEGATIVE PRESSURE WOUND THERAPY PUMPS 
i  E X E C U T I V E   S U M M A R Y  
estimated $21 million in improper payments in 2004.  An additional 
$6 million in improper payments were made for supplies associated with 
these claims. 
Reviewers determined that 15 percent of all pump claims in 2004 did 
not have sufficient documentation to determine whether the claims met 
Medicare coverage criteria.  Another 6 percent of all pump claims were 
undocumented, while an additional 3 percent were not medically 
necessary.   
Virtually all pump claims met supplier documentation requirements. 
About 2 percent of claims in 2004 did not meet supplier documentation 
requirements.  In these cases, the supplier did not provide proof of 
delivery, or the supplier did not have a record of providing the pump to 
the patient on the date of service in our sample.  For all other claims, 
the supplier had a signed and dated order by the treating physician and 
proof of delivery. 
For 44 percent of the claims, the information on the supplier-
prepared statement was not fully supported by the medical record. 
Supplier-prepared statements are forms that are completed by the 
physician or treating clinician that contain clinical information relating 
to the initial order or continued rental of the pump.  Medicare policy 
states that there must be information in the medical record to 
substantiate information provided on a supplier-prepared statement.  
For 44 percent of the claims that had a supplier-prepared statement and 
a medical record, the reviewers determined that the information on the 
statement was not fully supported by the medical record.  Additionally, 
the reviewers found discrepancies between the medical record and the 
supplier-prepared statement for 7 percent of the claims. 
DMERCs had some safeguards in place to prevent improper 
payments.  Based on our interviews with staff at each of the DMERCs, 
we found that all four DMERCs had some safeguards in place to prevent 
or recoup improper payments for pump claims. Staff at all four 
DMERCs reported conducting medical reviews of pump claims, 
although their approaches differed. Two DMERCs focused their reviews 
solely on claims for the fifth and successive months of pump use. One 
DMERC reviewed only the supplier-prepared statements. 
  OEI-02-05-00370  MEDICARE PAYMENTS FOR NEGATIVE PRESSURE WOUND THERAPY PUMPS 
ii  E X E C U T I V E   S U M M A R Y

RECOMMENDATIONS   
Based on the results of our review, we recommend that CMS ensure 
that claims for the pump meet Medicare coverage criteria and are paid 
appropriately.  To accomplish this, CMS should conduct additional 
medical reviews of pump claims that are based on the medical record 
and not only the supplier-prepared statement.  CMS should also educate 
suppliers and wound care providers about the appropriate use of the 
pump and what needs to be documented in the medical record.   
In addition, CMS should consider the following options to address this 
recommendation.  CMS should consider establishing advance coverage 
determinations of pump claims from suppliers that have a high number 
of claims that have been denied or have a pattern of overutilization.  
CMS should consider requiring a face-to-face examination of the patient 
by the physician and/or requiring the supplier to obtain from the 
physician pertinent parts of the patients medical record that clearly 
support the medical necessity of the pump.  Lastly, CMS should 
consider strengthening the coverage criteria for the pump and 
increasing prepayment reviews of these claims. 
In addition to these recommendations, we forwarded information on the 
insufficiently documented, undocumented, and medically unnecessary 
claims identified in our sample to CMS for appropriate action.  
AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 
RESPONSE 
CMS concurs with our three recommendations to ensure that claims for 
the pump meet Medicare coverage criteria and are paid appropriately.  
CMS states that it will work with its contractors to:  (1) prioritize 
medical reviews of pump claims with other high-risk services,  
(2) require that medical reviews of pump claims be based on the entire 
medical record, and (3) direct its contractors to develop an education 
article based on our findings.  It does not concur with the five additional 
options we recommended for consideration.  We understand CMSs 
concerns that implementing some of our options may impose delays in 
the provision of the pump.  However, we continue to recommend that 
CMS consider the third optionrequiring the supplier to obtain 
pertinent parts of the patients medical record prior to submitting a 
claimas an important mechanism to curb inappropriate payments. 
  OEI-02-05-00370  MEDICARE PAYMENTS FOR NEGATIVE PRESSURE WOUND THERAPY PUMPS 
iii    T A B L E   O F   C O N T E N T S  
EXECUTIVE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i

I N T RO DUC T IO N  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  1

F I N D IN G S  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  8

Almost one-quarter of pump claimswere paid in error. . . . . . . . . .  8

Virtually all claims met supplier documentation requirements. .  10 

Forty-four percent of claims did not support supplier-prepared

  statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  10

DMERCs had some safeguards in place . . . . . . . . . . . . . . . . . . . .  11

R E C O MMEN D A T ION S  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  13

Agency Comments andOffice of Inspector General Response . . .  14 

APPENDIXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  16

A:  LMRP for Negative Pressure Wound TherapyPumps  . . . . . .  16

B:  DetailedMethodology. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  26

C:  Confidence Intervalsfor SelectedEstimates . . . . . . . . . . . . . .  30

D:  AgencyComments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  31

A C K NO WL E D G M E N T S  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  35

  OEI-02-05-00370  MEDICARE PAYMENTS FOR NEGATIVE PRESSURE WOUND THERAPY PUMPS 
iv   I N T R O D U C T I O N  

D E S I G N    
OBJECTIVE 
To determine the extent to which claims for negative pressure wound 
therapy pumps (the pump) met Medicare coverage criteria and supplier 
documentation requirements in 2004. 
BACKGROUND 
The pump is a portable or stationary device used for the treatment of 
ulcers or wounds that have not responded to traditional wound 
treatment methods.  The device applies controlled negative or 
subatmospheric pressure to the affected site and assists in removing 
fluid, increasing blood flow to the site, and stimulating the growth of 
1 
granulation tissue.
Utilization of the pump has increased dramatically in recent years. 
Medicare-allowed payments for the rental of the pump increased   
444 percent between 2001 and 2005, from $25 million to $136 million.2 
This increase raises concerns about whether the pump is being 
prescribed appropriately in accordance with Medicare coverage criteria.  
The Negative Pressure Wound Therapy Pump 
Medicare covers the pump under Part B as durable medical equipment 
(DME).3 The pump is classified as a capped rental item and can be 
billed on a monthly basis for up to 4 months, as long as it is considered 
medically necessary.  In certain circumstances, a physician may request 
an extension after the fourth month.  Medicare pays the same amount 
for the first month as it does for each subsequent month; Medicare 
payments for the pump averaged about $1,673 per month in 2005.4 
Medicare also covers two types of supplies used in conjunction with the 
pump. It covers a specialized dressing set that creates a seal around the 
wound site to maintain subatmospheric pressure.  This dressing set 
1 Granulation tissue is a specialized tissue that is rich in tiny blood vessels and is created 
by the body as a response to injury. 
2 Based on data from the Centers for Medicare & Medicaid Servicess National Claims 
History file. Allowed dollars for the pump totaled $90 million in 2004, the year from which 
we drew our sampled claims for this study. 
3 The DME is defined as equipment furnished by a supplier or a home health agency that 
can withstand repeated use, is primarily and customarily used to serve a medical purpose, 
is generally not useful to an individual in the absence of an illness or injury, and is 
appropriate for use in the home (42 CFR  414.202). 
4 Medicare allowances for the pump vary by State. 
  OEI-02-05-00370  MEDICARE PAYMENTS FOR NEGATIVE PRESSURE WOUND THERAPY PUMPS 
1  I N T R O D U C T I O N  
includes a resilient open-cell foam surface dressing, drainage tubing, 
and an occlusive dressing.5  Medicare also covers a canister that collects 
the drainage of fluids from the wound.  The Centers for Medicare & 
Medicaid Services (CMS) added the pump and its supplies to its list of 
Medicare-covered DME on October 1, 2000.   
As it does with most DME items, the supplier bills Medicare for the 
pump and its associated supplies.  If a physician determines that the 
pump is medically necessary, the physician writes a prescription for the 
pump and provides it to the supplier.  The supplier delivers the item to 
the beneficiary and bills Medicare on a monthly basis for the use of the 
pump in the subsequent month.  
At the time of our review, one company manufactured and supplied the 
pump that was approved for billing under Medicare. This supplier was 
responsible for billing 99.6 percent of all pump claims in 2004.6 In 2005, 
another pump was approved for billing under Medicare, and now 
multiple suppliers may bill Medicare for the pump. 
Medicare Coverage Criteria 
General provisions of the Social Security Act (the Act) govern Medicare 
reimbursement for all services, including pumps. 
	 Section 1862(a)(1)(A) of the Act states that no payment may be 
made for items or services that are not reasonable and 
necessary for the diagnosis or treatment of illness or injury or to 
improve the functioning of a malformed body member.7 
	 Section 1833(e) of the Act requires that providers furnish such 
information as may be necessary in order to determine the 
amounts due to receive Medicare payment.8 
Regulations that reflect these provisions of Medicare law appear at  
42 CFR  411.15 and 424.5(a)(6). 
Coverage criteria for the pump are found in the Local Medical Review 
Policy (LMRP), entitled LMRP for Negative Pressure Wound Therapy 
Pumps. LMRPs issued by each Durable Medical Equipment Regional 
Carrier (DMERC) are identical and include criteria for reasonable and 
5 Occlusive dressing seals the wound completely to prevent infection and to prevent 
moisture from escaping through the dressing. 
6 The remaining claims were billed in error by other suppliers.   
7 42 U.S.C. 1395y(a)(1)(A). 
8 42 U.S.C. 1395l(e). 
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necessary that are described below.9  One of the LMRPs is included in 
Appendix A. 
The LMRP includes specific criteria for initial and continued coverage of 
the pump and its supplies.  To receive initial coverage, the patient must 
have a certain type of ulcer or wound.  Also, a complete wound therapy 
program should have been addressed prior to the application of the 
pump. For all ulcers and wounds, this therapy program must include 
several general measures, such as documentation in the patients 
medical record of evaluation, care, and wound measurements by a 
licensed medical professional.10 
For continued coverage, a licensed medical professional must, on a 
regular basis, directly assess the wound(s) being treated with the pump 
and supervise or directly perform the dressing change.11  On at least a 
monthly basis, a licensed medical professional must document changes 
in the ulcers dimensions and characteristics.12  The LMRP also states 
that the pump and its supplies will not be covered under certain 
circumstances, such as instances in which there has not been any 
measurable degree of wound healing in the prior month.13 
Supplier Documentation Requirements  
The Medicare Program Integrity Manual requires that to submit a 
claim for DME, the supplier must keep on file a number of documents.14 
For the pump, we focused on the requirements that the supplier must 
have a written physicians order and must maintain proof of delivery 
9 Effective December 7, 2003, CMS contractors began converting existing LMRPs into 
Local Coverage Determinations.  The difference between LMRPs and Local Coverage 
Determinations is that Local Coverage Determinations consist only of reasonable and 
necessary information, while LMRPs may also contain other provisions.  The LMRP that 
covered service dates in 2004 has now been converted to LCD for Negative Pressure Wound 
Therapy Pumps, effective date July 1, 2006.  Available online at 
http://www.cms.hhs.gov/mcd/viewlcd.asp?lcd_id=5008&lcd_version=20&show=all. Accessed 
on November 7, 2006. 
10 The policy also states that the pump will be denied at any time as not medically 
necessary under certain circumstances, such as the presence of a fistula to an organ or body 
cavity within the vicinity of the wound.  
11 This criterion can be found in the Continued Coverage section of the LMRP.  Available 
online at http://coverage.cms.fu.com/mcd%5Farchive/search.asp. Accessed on August 24, 
2005. 
12 Ibid. 
13 Coverage beyond 4 months is given individual consideration based on additional 
required documentation. 
14 CMS, Medicare Program Integrity Manual, chapter 5, section 2.1, Rev. 30, 
September 27, 2002. 
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3  I N T R O D U C T I O N  
documentation.15  In addition, the supplier may not dispense any DME 
until it has obtained a written order.16 
The LMRP includes more specific supplier documentation requirements 
for the pump. It states that the supplier of the pump and supplies must 
obtain from the treating clinician an assessment of wound healing 
progress, based upon the wound measurements as documented in the 
patients medical record, to determine whether the equipment and 
supplies continue to qualify for Medicare coverage.17  Additionally, 
during 2004, the LMRP required that for the fifth and successive 
months, the supplier must include additional documentation with the 
claim. 
Supplier-Prepared Statements 
To meet Medicare requirements, the supplier of the pump developed a 
series of forms that are completed by the physician or the treating 
clinician to determine whether Medicare coverage criteria are met. 
These forms are supplier-prepared statements and include a series of 
checkoff boxes that closely follow the criteria specified in the LMRP.  
The forms include a prescription form, a clinical form, and a patient 
demographic form.  The supplier also has a wound progress form that 
the clinician completes each month that the pump is used and another 
form that is completed if the pump is used beyond the fourth month. 
The Medicare Program Integrity Manual states that the supplier-
prepared statement by itself is not sufficient documentation of medical 
necessity.  It further states that there must be information in the 
patients medical record that supports the medical necessity of the item 
and the information on the supplier-prepared statement.18 
Medical Record 
Both the Medicare Program Integrity Manual and the LMRP state 
that the patients medical records must contain sufficient 
15 CMS, Medicare Program Integrity Manual, chapter 5, section 2.1, Rev. 30, 
September 27, 2002. 
16 CMS, Medicare Program Integrity Manual, chapter 5, section 1.1, Rev. 3,     
November 22, 2000. 
17 Suppliers must add a KX modifier when they bill for the pump if the coverage criteria 
have been met.  If the coverage criteria are not met, the supplier may submit additional 
documentation with the claim to justify coverage.  The KX modifier is used for both initial 
and continued claims. 
18 CMS, Medicare Program Integrity Manual, chapter 5, section 2, Rev. 3,        
November 22, 2000. 
  OEI-02-05-00370  MEDICARE PAYMENTS FOR NEGATIVE PRESSURE WOUND THERAPY PUMPS 
4  I N T R O D U C T I O N  
documentation of medical necessity and may include physician, 
hospital, nursing home, home health agency (HHA), and records from 
other health care professionals.19  The Medicare Program Integrity 
Manual further requires that if the medical record does not support the 
medical necessity for the item, the supplier may be liable for the dollar 
amount involved.20 
In addition, the LMRP specifies that the medical record must include 
documentation of the history, previous treatment regimens, and current 
wound management for which the pump is being billed.  Documentation 
must indicate regular evaluation and treatment of the patients wounds. 
Documentation of measurements of wound characteristics indicating 
healing progress must be entered at least monthly.21 
Claims Processing 
At the time of the study, four DMERCs were responsible for processing 
and paying all DME claims.  The Statistical Analysis Durable Medical 
Equipment Regional Carrier (SADMERC) was responsible for 
identifying billing trends and offering guidance to suppliers on billing.   
In 2006, the DMERC functions were transferred to DME Medicare 
Administrative Contractors (MAC) and program safeguard contractors 
(PSC).  MACs process claims and conduct provider outreach and 
education, while PSCs conduct program safeguard activities, including 
medical reviews and fraud investigations.  Also, CMS, through its 
Provider Communications Group, works with MACs on a national level 
to educate providers on various issues, such as billing.   
METHODOLOGY 
We based this study on data from several sources:  (1) a medical record 
review of a random sample of pump claims, (2) a review of supplier 
documentation for these claims, and (3) interviews with staff at the four 
DMERCs and the SADMERC.  A detailed description of the 
methodology is provided in Appendix B. 
19 CMS, Medicare Program Integrity Manual, chapter 5, section 2, Rev. 3, issued 
November 22, 2000; LMRP for Negative Pressure Wound Therapy Pumps (L5008), 
Documentation Requirements. 
20 CMS, Medicare Program Integrity Manual, chapter 5, section 2.1, Rev. 30, 
September 27, 2002. 
21 This criterion can be found in the Documentation Requirements section of the LMRP.  
Available online at http://coverage.cms.fu.com/mcd%5Farchive/search.asp. Accessed on 
August 24, 2005. 
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For the medical review, we selected a simple random sample of   
400 pump claims from CMSs National Claims History file that had a 
service date in 2004.  We excluded one claim from our sample because of 
an ongoing investigation by the Office of Inspector General. Fifty-eight 
percent of the remaining 399 claims were for the initial month, and   
42 percent were for subsequent months.   
Our review was based on 378 of the 399 claims in our sample, for a 
response rate of 95 percent.  We did not include 21 claims in our 
analysis because we were unable to locate current addresses for the 
providers, we received the records after the review was conducted, or 
the record was missing some specific information that may have been 
found in another providers medical record, which we were unable to 
obtain in our study timeframe. 
We requested the medical records from the physician who prescribed 
the pump and any HHAs and/or skilled nursing facilities (SNF) that 
billed Medicare for services provided to the beneficiary on the sampled 
claim. We included the medical records from these providers because 
they may have documentation about the wounds for which the pumps 
were being billed.  
We used a contractor to conduct the medical review.  The reviewers 
included three registered nurses, each of whom had at least 5 years of 
wound care experience.  The reviewers used a standardized instrument 
to review the medical record and determine whether each sampled 
claim met Medicare coverage criteria.  The objective of the review was to 
determine whether the medical record substantiated the claim. The 
reviewers did not refer to the supplier-prepared statements in 
determining whether the medical record supported the claim.   
We analyzed the data from the medical review to determine the 
proportion of claims that did not meet Medicare coverage criteria. We 
looked for differences between the error rates for initial claims and 
continued claims.  We also identified the supplies associated with the 
inappropriate pump claims that were billed within 30 days after the 
service date of the pump claim.  We reasoned that if the pump claim 
were inappropriate, any supplies billed during this time period were 
also inappropriate. We calculated the total dollars paid in error for the 
pump claims and the associated supplies. 
In collaboration with the reviewers, we conducted a separate review of 
the documentation provided by the supplier.  To accomplish this, we 
requested all of the documentation from the supplier related to each of 
  OEI-02-05-00370  MEDICARE PAYMENTS FOR NEGATIVE PRESSURE WOUND THERAPY PUMPS 
6  I N T R O D U C T I O N  
the sampled claims.  The supplier provided documentation for 396 of the 
399 claims in our sample. This documentation usually consisted of 
proof-of-delivery receipts and supplier-prepared statements such as 
monthly progress forms. 
We reviewed the documentation to determine whether it met Medicare 
supplier documentation requirements.  Specifically, we determined 
whether there was a signed and dated physician order, proof of delivery, 
and additional documentation for claims that extended beyond   
4 months. The contractor then reviewed the supplier-prepared 
statement for each claim to determine whether the information on the 
statement was supported by the medical record. 
Lastly, we interviewed staff at all four DMERCs and at the SADMERC.  
Our questions focused on the types of program safeguards each DMERC 
had in place to prevent and recoup improper payments for pump claims. 
Standards 
Our review was conducted in accordance with the Quality Standards 
for Inspections issued by the Presidents Council on Integrity and 
Efficiency and the Executive Council on Integrity and Efficiency. 
  OEI-02-05-00370  MEDICARE PAYMENTS FOR NEGATIVE PRESSURE WOUND THERAPY PUMPS 
7    F I N D I N G S  
Almost one-quarter of pump claims in 2004 did  Medicare allowed $90 million in 
not meet Medicare coverage criteria, resulting in  2004 for wound therapy pumps. 
Based on an independent review 
approximately $21 million in improper payments 
of medical records, 24 percent of 
the claims for these pumps did not meet Medicare coverage criteria, 
resulting in an estimated $21 million in improper payments in 2004.   
The majority of these improper payments were for claims with 
insufficient documentation.  There was no statistically significant 
difference in the overall error rate between claims for initial coverage 
and claims for continued coverage. Table 1 below describes the error 
rates and the estimated dollars paid in error.  Appendix C provides the 
confidence intervals for the key estimates. 
An additional $6 million in improper payments were made for supplies 
associated with the pump claims that did not meet Medicare coverage 
criteria.  Medicare pays for supplies, including canisters and wound 
dressings, that are used in conjunction with the pump.  These improper 
payments were for supplies that were billed within 30 days after the 
service date of the pump claims that did not meet Medicare coverage 
criteria.
Table 1: Coverage and Documentation Errors for 
Negative Pressure Wound Therapy Pumps, 2004 
Type of Error  Claims  Allowed Amount 
Insufficient documentation  14.8%     $12,800,567 
Undocumented  5.8%           $4,993,943 
Medically unnecessary  3.4%       $2,927,484 
Total Errors  24.1% *    $20,721,994 
* Total does not equal the sum of individual rows because of rounding.
 Source: Office of Inspector General medical review results, 2006. 
Insufficient documentation.  Nearly 15 percent of all pump claims in 2004 
did not have sufficient documentation to determine whether the claims 
met Medicare coverage criteria.  In almost half of these cases, there was 
no documentation in the medical record indicating that the pump was 
ordered or used.  In other cases, the type of wound for which the pump 
was prescribed was not clearly indicated, or the size of the wound was 
  OEI-02-05-00370  MEDICARE PAYMENTS FOR NEGATIVE PRESSURE WOUND THERAPY PUMPS 
8  F I N D I N G S  
relatively small and the reviewers could not determine whether the 
pump was medically necessary. 
For continued coverage, the majority of the claims that were 
insufficiently documented did not include any documentation of changes 
in the dimensions or characteristics of the wound or did not show that 
the wound was healing.  Some of the records also did not indicate that a 
licensed medical professional was directly assessing the wound being 
treated with the pump or supervising or directly performing the 
dressing changes on a regular basis, as required. 
Undocumented.  About 6 percent of all pump claims in 2004 were 
undocumented.  For these claims, neither the physician who ordered the 
pump nor the HHA nor the SNF that we identified submitted any 
documentation that corresponded to the time period of our review.  In 
one instance, the physician acknowledged that the patient was never 
placed on the pump.  In another instance, the physician stated that she 
did not have any records to substantiate the order.   
Medically unnecessary. Reviewers determined that 3 percent of all 
pump claims in 2004 were not medically necessary.  In one instance, 
documentation showed that there was a fistula to an organ or body 
cavity within the vicinity of the wound.  According to the LMRP, 
coverage must be denied if such a condition exists.22  In another 
instance, the claim was not medically necessary because the pump was 
used on a patient who had unna boots placed on the wound.  An unna 
boot is a dressing that envelops the wound like a cast and cannot be 
used in conjunction with the pump.   
For continued coverage, nearly all of the claims that were not medically 
necessary did not have a measurable degree of healing over the past 
month.  In a few of these cases, the wound size actually increased.    
22 LMRP for Negative Pressure Wound Therapy Pumps (L5008),   B(2). 
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9  F I N D I N G S  

Medicare requires suppliers to keep 
Virtually all pump claims met supplier  
on file a number of documents, 
documentation requirements 
including the physician order and 
proof of delivery, for each claim.  It also requires that the supplier 
possess the physician order before delivering the pump.23 About 
2 percent of claims in 2004 did not meet these requirements. In each 
case, the supplier either did not provide proof of delivery or did not have 
a record of providing the pump to the patient on the date of service in 
our sample. 
For all other claims, the supplier had the appropriate documentation, 
i.e., a signed and dated order by the treating physician and proof of 
delivery.  In addition, when we compared the dates on the physician 
order and the proof of delivery, we found that the pump had been 
delivered on or after the date on the physician order in every case, as 
required. The supplier also had the additional required documentation 
to justify continued coverage for all of the claims for the fifth and 
successive months.   
Supplier-prepared statements are 
For 44 percent of the claims, the information on 
completed by the physician or 
the supplier-prepared statement was not fully 
treating clinician and contain 
supported by the medical record  
clinical information relating to the 
initial order or continued coverage 
of the pump. According to the Medicare Program Integrity Manual, 
there must be information in the medical record to substantiate the 
information provided on a supplier-prepared statement.24  The supplier 
provided prepared statements for 99 percent of the claims in our 
sample. For the claims that had both a supplier-prepared statement 
and a medical record, the reviewers compared the information on the 
statement to the information in the medical record.25 
For 44 percent of these claims, the reviewers determined that the 
information on the supplier-prepared statement was not fully supported 
by the medical record. The supplier-prepared statements commonly had 
23 CMS, Medicare Program Integrity Manual, chapter 5, section 1.1, Rev. 3,    
November 22, 2000. 
24 Ibid. 
25 The reviewers compared the information on the clinical form and on the wound 
progress form to the information in the medical record.  The reviewers conducted this 
analysis for the claims that had supplier-prepared statements and medical records.  This 
analysis included a total of 348 claims.  
  OEI-02-05-00370  MEDICARE PAYMENTS FOR NEGATIVE PRESSURE WOUND THERAPY PUMPS 
10  F I N D I N G S  
wound measurements that were not noted in the medical record.  Other 
types of information that were not supported by the medical record 
included the type of wound, other therapies tried prior to the pump 
order, an indication that the pump was being used, or an indication that 
regular assessments of the wound were being conducted.   
Additionally, for 7 percent of the claims that had a supplier-prepared 
statement, the reviewers found discrepancies between the information 
on the supplier-prepared statement and the medical record.  In these 
instances, the number, type, location, and/or existing measurements of 
the wound in the medical record did not match the information on the 
supplier-prepared statement.  For example, in one instance, the 
supplier-prepared statement indicated that the wound was a pressure 
ulcer but the medical record indicated that the wound was a nonhealing, 
infected, postamputation wound.  In another example, the reviewer 
noted that the measurements recorded in the medical record were 
much smaller than the measurements recorded in the supplier-
prepared statement, despite the fact that the measurements were taken 
3 days apart. 
Based on our interviews with the 
DMERCs had some safeguards in place to 
medical director and other officials 
prevent improper payments 
at each of the DMERCs, we found 
that all four DMERCs had some safeguards in place to prevent or 
recoup improper payments for pump claims.  All of the DMERCs had 
automated computer edits to flag issues for possible review, such as an 
edit for the KX modifier, which the supplier adds to the claim if all of 
the criteria in the LMRP are met.26  Staff at the DMERCs also reported 
having other edits in place that were more general in nature. These 
edits included checks to determine whether the claim included a 
diagnosis code, whether the beneficiary was covered by Medicare, and 
where the service or item was provided. 
Additionally, staff at all four DMERCs reported conducting medical 
reviews of pump claims, although their approaches differed. In the past 
5 years, one DMERC conducted postpayment reviews of pump claims 
and another conducted both postpayment and prepayment reviews.  The 
remaining two DMERCs conducted prepayment reviews, but the 
26 If the criteria are not met, the supplier must include additional documentation with 
the claim to justify coverage.  Claims that do not have the KX modifier are automatically 
flagged for possible review. 
  OEI-02-05-00370  MEDICARE PAYMENTS FOR NEGATIVE PRESSURE WOUND THERAPY PUMPS 
11  F I N D I N G S  
reviews covered only claims for the fifth and successive months of pump 
use.  Also, the number of pump claims each DMERC reviewed in 2004 
varied. One DMERC reviewed 7,900 pump claims, while another 
DMERC did not review any claims during this time period. 
To conduct these medical reviews, all four DMERCs requested the 
documentation from the supplier.  Three of the DMERCs relied on the 
supplier to collect the medical records from the providers, and they 
based their reviews on these records.  The fourth DMERC reviewed only 
the supplier-prepared statement for each claim.  All four DMERCs 
commented that they relied on a combination of the coverage criteria 
and clinical judgment to determine whether the pump was medically 
necessary and met Medicare coverage criteria.  They also noted that 
their reviews or claim denials occasionally resulted in education to the 
supplier with the expectation that the supplier would then, in turn, 
educate physicians when needed.   
  OEI-02-05-00370  MEDICARE PAYMENTS FOR NEGATIVE PRESSURE WOUND THERAPY PUMPS 
12    R E C O M M E N D A T I O N S  

R E C O M M E N D A T I O N S  
We found that based on a review of medical records, 24 percent of all 
pump claims in 2004 did not meet Medicare coverage criteria, resulting 
in an estimated $21 million in improper payments.  We also found that   
44 percent of the claims had information on the supplier-prepared 
statement that was not fully supported by the medical record.   
Based on the results of our review, we recommend that CMS, through 
its Provider Communications Group and DME contractors: 
Ensure that claims for the pump meet Medicare coverage criteria and are 
paid appropriately 
CMS should conduct the following activities to address this 
recommendation: 
	 CMS should instruct PSCs to conduct additional medical 

reviews of pump claims and to focus on claims for the initial 

month as well as for subsequent months. 

	 CMS should instruct PSCs to review the medical record and not 
only the supplier-prepared statements to determine whether a 
claim meets Medicare coverage criteria.   
	 CMS, through its Provider Communications Group, should work 
with MACs to educate suppliers and providers about the criteria 
required for Medicare coverage of the pump.  Education should 
be focused on the information that needs to be documented in 
the medical record. 
CMS should also consider the following options to address this 
recommendation:  
	 Establish advance coverage determinations of pump claims from 
suppliers that have a high number of claims that have been 
denied or a pattern of overutilization, pursuant to  1834(a)(15) 
of the Act. 
	 In a manner similar to the requirements for power mobility 
devices, (1) require a face-to-face examination of the patient by 
the physician before writing the order for the pump and at 
regular intervals for continued coverage and (2) require the 
supplier to obtain a written report of these examinations and 
other relevant documentation from the physician that clearly 
supports the medical necessity for the pump. 
  OEI-02-05-00370  MEDICARE PAYMENTS FOR NEGATIVE PRESSURE WOUND THERAPY PUMPS 
13  R	 E C O M M E N D A T I O N S  
	 As an alternative to the previous suggestion, require the 
supplier to obtain from the physician or treating clinician 
pertinent parts of the patients medical record that clearly 
support the medical necessity of the pump.  Such documentation 
could include a digital picture of the wound that includes a scale 
to document the size of the wound. 
	 Further strengthen the coverage criteria for the pump to ensure 
that the pump is provided only when it is medically necessary.  
	 Increase prepayment reviews of pump claims. 
In addition to these recommendations, we forwarded information on the 
insufficiently documented, undocumented, and medically unnecessary 
claims identified in our sample to CMS for appropriate action.  
AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 
RESPONSE 
CMS concurs with our three recommendations to ensure that claims for 
the pump meet Medicare coverage criteria and are paid appropriately.  
CMS states that it will work with PSCs to prioritize medical reviews of 
pump claims with other high-risk services.  It will also require that 
medical reviews of pump claims be based on the entire medical record. 
Finally, it will direct its contractors to develop an education article 
based on our findings.  
CMS does not concur with the five additional options we recommended 
for consideration. Specifically, it notes that advance coverage 
determinations and face-to-face examinations may impose significant 
delays or difficulties in the provision of the pump, which is often 
prescribed in urgent situations.  It believes that the alternative option 
we proposed, requiring suppliers to obtain medical records to support 
medical necessity, is sufficiently addressed by current requirements. It 
also believes that our findings do not support changes to the coverage 
criteria and increased prepayment reviews.   
We understand CMSs concerns that implementing advance coverage 
determinations or face-to-face examinations may impose significant 
delays in the provision of the pump.  However, we continue to 
recommend that CMS consider the third optionrequiring the supplier 
to obtain pertinent parts of the patients medical record prior to 
submitting a claim for the pumpas an important mechanism to curb 
inappropriate payments.  CMS notes that suppliers are already 
  OEI-02-05-00370  MEDICARE PAYMENTS FOR NEGATIVE PRESSURE WOUND THERAPY PUMPS 
14  R E C O M M E N D A T I O N S  
required to submit information from the patients medical record to 
support the medical necessity of the item.  We note that section 5.7 of 
the Program Integrity Manual specifically states that the 
documentation in the patients medical record does not have to be 
routinely sent to the supplier or the DMERC, and that the DMERC may 
request the information in selected cases.  Based on our review, we 
found that in practice, the supplier typically asks the ordering physician 
to complete a supplier-prepared statement and that for 44 percent of the 
claims, the supplier-prepared statement was not supported by the 
medical record. Therefore, requiring that suppliers obtain pertinent 
parts of the patients medical record may help to ensure that suppliers 
are submitting appropriate claims. Appendix D provides the full text of 
CMSs comments. 
  OEI-02-05-00370  MEDICARE PAYMENTS FOR NEGATIVE PRESSURE WOUND THERAPY PUMPS 
15    A P P E N D I X ~ A  

LMRP for Negative Pressure Wound Therapy (NPWT) Pumps 
This Appendix contains the coverage and payment rules, the supplier documentation 
requirements, and the HCPCS codes effective in 2004 as they appeared in LMRPs issued by all 
four DMERC regions.27  We have included only sections of these LMRPs that are relevant to our 
study. Full copies of LMRPs from all DMERC regions can be found at 
http://coverage.cms.fu.com/mcd%5Farchive/search.asp. 
LMRP Information 
A "Local Coverage Determination" (LCD), as established by Section 522 of the Benefits 
Improvement and Protection Act, is a decision by a fiscal intermediary or carrier whether to 
cover a particular service on an intermediary-wide or carrier-wide basis in accordance with 
Section 1862(a)(1)(A) of the Social Security Act (i.e., a determination as to whether the service is 
reasonable and necessary). The difference between LMRPs and LCDs is that LCDs consist only 
of "reasonable and necessary" information, while LMRPs may also contain category or statutory 
provisions. 
The final rule establishing LCDs was published November 11, 2003. Effective December 7, 2003, 
CMS's contractors will begin issuing LCDs instead of LMRPs. Over the next 2 years (until 
December 31, 2005) contractors will convert all existing LMRPs into LCDs and articles. Until 
the conversion is complete, for purposes of a 522 challenge, the term LCD will refer to both 1.) 
Reasonable and necessary provisions of an LMRP and, 2.) an LCD that contains only reasonable 
and necessary language. Any non-reasonable and necessary language a contractor wishes to 
communicate to providers must be done through an article. 
Indications and Limitations of Coverage and/or Medical Necessity 
For any item to be covered by Medicare, it must: 1) be eligible for a defined Medicare benefit 
category, 2) be reasonable and necessary for the diagnosis or treatment of illness or injury or to 
improve the functioning of a malformed body member, and 3) meet all other applicable Medicare 
statutory and regulatory requirements. For the items addressed in this medical policy, the 
criteria for "reasonable and necessary" are defined by the following indications and limitations 
of coverage and/or medical necessity. 
27 The HCPCS codes contained in these LMRPs were revised, effective April 1, 2004.  
This Appendix contains the permanent codes that became effective on that date.  Our 
sample included claims from 2004 associated with the HCPCS codes in effect both before 
and after the LMRP revision. 
  OEI-02-05-00370  MEDICARE PAYMENTS FOR NEGATIVE PRESSURE WOUND THERAPY PUMPS 
16  A P P E N D I X   ~   A  
For an item addressed in this policy to be covered by Medicare, a written signed and dated order 
must be received by the supplier prior to delivery of the item. If the supplier delivers the item 
prior to receipt of a written order, it will be denied as noncovered. If the written order is not 
obtained prior to delivery, payment will not be made for that item even if a written order is 
subsequently obtained. If a similar item is subsequently provided by an unrelated supplier who 
has obtained a written order prior to delivery, it will be eligible for coverage. 
EQUIPMENT: 
INITIAL COVERAGE:  
An NPWT pump and supplies are covered when either criterion A or B is met: 
A) Ulcers and Wounds in the Home Setting:  
The patient has a chronic Stage III or IV pressure ulcer, neuropathic (for example, diabetic) 
ulcer, venous or arterial insufficiency ulcer, or a chronic (being present for at least 30 days) ulcer 
of mixed etiology. A complete wound therapy program described by criterion 1 and criteria 2, 3, 
or 4, as applicable depending on the type of wound, should have been tried or considered and 
ruled out prior to application of NPWT. 
1) For all ulcers or wounds, the following components of a wound therapy program must include 
a minimum of all of the following general measures, which should either be addressed, applied, 
or considered and ruled out prior to application of NPWT:  
a) Documentation in the patients medical record of evaluation, care, and wound measurements 
by a licensed medical professional, and 
b) Application of dressings to maintain a moist wound environment, and 
c) Debridement of necrotic tissue if present, and 
d) Evaluation of and provision for adequate nutritional status. 
2) For Stage III or IV pressure ulcers: 
a) The patient has been appropriately turned and positioned, and 
  OEI-02-05-00370  MEDICARE PAYMENTS FOR NEGATIVE PRESSURE WOUND THERAPY PUMPS 
17  A P P E N D I X   ~   A  
b) The patient has used a group 2 or 3 support surface for pressure ulcers on the posterior trunk 
or pelvis (see DMERC medical policy on support surfaces), (a group 2 or 3 support surface is not 
required if the ulcer is not on the trunk or pelvis) and  
c) The patients moisture and incontinence have been appropriately managed.

3) For neuropathic (for example, diabetic) ulcers:  

a) The patient has been on a comprehensive diabetic management program, and

b) Reduction in pressure on a foot ulcer has been accomplished with appropriate modalities. 

4) For venous insufficiency ulcers:

a) Compression bandages and/or garments have been consistently applied, and  

b) Leg elevation and ambulation have been encouraged. 

B) Ulcers and Wounds Encountered in an Inpatient Setting: 

1) An ulcer or wound (described under A above) is encountered in the inpatient setting and, 
after wound treatments described under A-1 through A-4 have been tried or considered and 
ruled out, NPWT is initiated because it is considered in the judgment of the treating physician, 
the best available treatment option. 
2) The patient has complications of a surgically created wound (for example, dehiscence) or a 
traumatic wound (for example, pre-operative flap or graft) where there is documentation of the 
medical necessity for accelerated formation of granulation tissue which cannot be achieved by 
other available topical wound treatments (for example, other conditions of the patient that will 
not allow for healing times achievable with other topical wound treatments).  
In either situation B-1 or B-2, NPWT will be covered when treatment continuation is ordered 
beyond discharge to the home setting. 
If criterion A or B above is not met, the NPWT pump and supplies will be denied as not 

medically necessary. 

  OEI-02-05-00370  MEDICARE PAYMENTS FOR NEGATIVE PRESSURE WOUND THERAPY PUMPS 
18  A P P E N D I X   ~   A  
NPWT pumps (E2402) must be capable of accommodating more than one wound dressing set for 
multiple wounds on a patient. Therefore, more than one E2402 billed per patient for the same 
time period will be denied as not medically necessary. 
OTHER EXCLUSIONS FROM COVERAGE: 
An NPWT pump and supplies will be denied at any time as not medically necessary if one or 
more of the following are present: 
- the presence in the wound of necrotic tissue with eschar, if debridement is not attempted;  
- untreated osteomyelitis within the vicinity of the wound; 
- cancer present in the wound;  
- the presence of a fistula to an organ or body cavity within the vicinity of the wound. 
NPWT pumps and their supplies, which have not been specifically designated as being qualified 
for use of HCPCS codes E2402, A6550 and A6551 for billing to the DMERC via written 

instructions from the SADMERC, will be denied as not medically necessary.  

CONTINUED COVERAGE: 

C) For wounds and ulcers described under A or B above, once placed on an NPWT pump and 

supplies, in order for coverage to continue a licensed medical professional must do the following: 

1) On a regular basis, 

a) directly assess the wound(s) being treated with the NPWT pump, and  

b) supervise or directly perform the NPWT dressing changes, and  

2) On at least a monthly basis, document changes in the ulcers dimensions and characteristics. 

If criteria C-1 and C-2 are not fulfilled, continued coverage of the NPWT pump and supplies will 

be denied as not medically necessary. 
  OEI-02-05-00370  MEDICARE PAYMENTS FOR NEGATIVE PRESSURE WOUND THERAPY PUMPS 
19  A P P E N D I X   ~   A  
WHEN COVERAGE ENDS: 
D) For wounds and ulcers described under A or B above, an NPWT pump and supplies will be 
denied as not medically necessary with any of the following, whichever occurs earliest: 
1) Criteria C1-C2 cease to occur, 
2) In the judgment of the treating physician, adequate wound healing has occurred to the degree 
that NPWT may be discontinued,  
3) Any measurable degree of wound healing has failed to occur over the prior month. There must 
be documented in the patients medical records quantitative measurements of wound 
characteristics including wound length and width (surface area), or depth, serially observed and 
documented, over a specified time interval. The recorded wound measurements must be 
consistently and regularly updated and must have demonstrated progressive wound healing 
from month to month, 
4) 4 months (including the time NPWT was applied in an inpatient setting prior to discharge to 
the home) have elapsed using an NPWT pump in the treatment of any wound. Coverage beyond 
4 months will be given individual consideration based upon required additional documentation,  
5) Once equipment or supplies are no longer being used for the patient, whether or not by the 
physicians order.  
SUPPLIES: 
- Coverage is provided up to a maximum of 15 dressing kits (A6550) per wound per month 
unless there is documentation that the wound size requires more than one dressing kit for each 
dressing change.  
- Coverage is provided up to a maximum of 10 canister sets (A6551) per month unless there is 
documentation evidencing a large volume of drainage (greater than 90 ml of exudate per day). 
For high volume exudative wounds, a stationary pump with the largest capacity canister must 
be used. Excess utilization of canisters related to equipment failure (as opposed to excessive 
volume drainage) will be denied as not medically necessary.  
The medical necessity for use of a greater quantity of supplies than the amounts listed must be 
clearly documented in the patients medical record and may be requested by the DMERC. If this 
documentation is not present, excess quantities will be denied for lack of medical necessity. 
  OEI-02-05-00370  MEDICARE PAYMENTS FOR NEGATIVE PRESSURE WOUND THERAPY PUMPS 
20  A P P E N D I X   ~   A  
HCPCS MODIFIER: 
EY - No physician or other health care provider order for this item or service 
KX - Specific required documentation on file. 
EQUIPMENT 
E2402  NEGATIVE PRESSURE WOUND THERAPY ELECTRICAL PUMP, 
    STATIONARY OR PORTABLE 
SUPPLIES 
A6550    DRESSING SET FOR NEGATIVE PRESSURE WOUND THERAPY  
    ELECTRICAL PUMP, STATIONARY OR PORTABLE, EACH 
A6551  CANISTER SET FOR NEGATIVE PRESSURE WOUND THERAPY  
    ELECTRICAL PUMP, STATIONARY OR PORTABLE, EACH 
ICD-9 Codes that Support Medical Necessity  
Not specified. 
Diagnoses that Support Medical Necessity 
Not specified.     
ICD-9 Codes that DO NOT Support Medical Necessity 
Not specified 
ICD-9 Codes that DO NOT Support Medical Necessity Asterisk Explanation 
Diagnoses that DO NOT Support Medical Necessity 
Not specified.     
Reasons for Denials 
Items listed in this policy will be denied as not medically necessary when provided for 
conditions other than those listed in the Indications and Limitations of Coverage and/or 
Medical Necessity section unless it specifically states in that section that they will be denied 
as noncovered.  
Non-covered ICD-9 Codes 
Non-covered Diagnoses 
Not specified. 
  OEI-02-05-00370  MEDICARE PAYMENTS FOR NEGATIVE PRESSURE WOUND THERAPY PUMPS 
21  A P P E N D I X   ~   A  
Coding Guidelines 
EQUIPMENT: 
Negative pressure wound therapy (NPWT) is the controlled application of subatmospheric 
pressure to a wound using an electrical pump (described in the definition of HCPCS code E2402) 
to intermittently or continuously convey subatmospheric pressure through connecting tubing to 
a specialized wound dressing (described in the descriptor of HCPCS code A6550) which includes 
a resilient, open-cell foam surface dressing, sealed with an occlusive dressing that is meant to 
contain the subatmospheric pressure at the wound site and thereby promote wound healing. 
Drainage from the wound is collected in a canister (described in the definition of HCPCS code 
A6551). 
HCPCS code E2402 describes a stationary or portable NPWT electrical pump which provides 
controlled subatmospheric pressure that is designed for use with NPWT dressings, (A6550) to 
promote wound healing. Such an NPWT pump is capable of being selectively switched between 
continuous and intermittent modes of operation and is controllable to adjust the degree of 
subatmospheric pressure conveyed to the wound in a range from 25 to greater than or equal to 
200 mm Hg subatmospheric pressure. The pump is capable of sounding an audible alarm when 
desired pressures are not being achieved (that is, where there is a leak in the dressing seal) and 
when its wound drainage canister (A6551) is full. The pump is designed to fill the canister to full 
capacity. 
SUPPLIES: 
HCPCS code A6550 describes a dressing set which is used in conjunction with a stationary or 
portable NPWT pump (E2402), and contains all necessary components, including but not limited 
to a resilient, open-cell foam surface dressing, drainage tubing, and an occlusive dressing which 
creates a seal around the wound site for maintaining subatmospheric pressure at the wound.  
HCPCS code A6551 describes a canister set which is used in conjunction with a stationary or 
portable NPWT pump (E2402) and contains all necessary components, including but not limited 
to a container, to collect wound exudate. Canisters may be various sizes to accommodate 
stationary or portable NPWT pumps. 
Suppliers should contact the Statistical Analysis Durable Medical Equipment Regional Carrier 
(SADMERC) for guidance on the correct coding of these items. 
  OEI-02-05-00370  MEDICARE PAYMENTS FOR NEGATIVE PRESSURE WOUND THERAPY PUMPS 
22  A P P E N D I X   ~   A  
General Information 
Documentation Requirements 
Section 1833(e) of the Social Security Act precludes payment to any provider of services unless 
"there has been furnished such information as may be necessary in order to determine the 
amounts due such provider" (42 U.S.C. section 1395l(e)). It is expected that the patients medical 
records will reflect the need for the care provided. The patients medical records include the 
physicians office records, hospital records, nursing home records, home health agency records, 
records from other healthcare professionals and test reports. This documentation must be 
available to the DMERC upon request. 
An order for each item billed must be signed and dated by the treating physician, kept on file by 
the supplier, and made available to the DMERC upon request. Items delivered before a signed 
written order has been received by the supplier must be submitted with an EY modifier added to 
each affected HCPCS code. 
Documentation of the history, previous treatment regimens (if applicable), and current wound 
management for which an NPWT pump is being billed must be present in the patients medical 
record and be available for review if requested by the DMERC. This documentation must 
include such elements as length of sessions of use, dressing types and frequency of change, and 
changes in wound conditions, including precise measurements, quantity of exudates, presence of 
granulation and necrotic tissue and concurrent measures being addressed relevant to wound 
therapy (debridement, nutritional concerns, support surfaces in use, positioning, incontinence 
control, etc.). 
Documentation of wound evaluation and treatment, recorded in the patients medical record, 
must indicate regular evaluation and treatment of the patients wounds, as detailed in the 
Coverage and Payment Section. Documentation of quantitative measurements of wound 
characteristics including wound length and width (surface area), and depth, and amount of 
wound exudate (drainage), indicating progress of healing must be entered at least monthly. The 
supplier of the NPWT equipment and supplies must obtain from the treating clinician, an 
assessment of wound healing progress, based upon the wound measurement as documented in 
the patients medical record, in order to determine whether the equipment and supplies continue 
to qualify for Medicare coverage. (The supplier need not view the medical records in order to bill 
for continued use of NPWT. Whether the supplier ascertains that wound healing is occurring 
from month to month via verbal or written communication is left to the discretion of the 
supplier. However, the patients medical records may be requested by the DMERC in order to 
corroborate that wound healing is/was occurring as represented on the suppliers claims for 
reimbursement.)  
  OEI-02-05-00370  MEDICARE PAYMENTS FOR NEGATIVE PRESSURE WOUND THERAPY PUMPS 
23  A P P E N D I X   ~   A  
When billing for NPWT, an ICD-9-CM diagnosis code (specific to the fifth digit or narrative 
diagnosis), describing the wound being treated by NPWT, must be included on each order and on 
each claim for the equipment and related supplies. 
Suppliers must add a KX modifier to a code only if all of the criteria in the Indications and 
Limitations of Coverage and/or Medical Necessity section of this policy have been met. If the 
coverage criteria for the KX modifier are not met, the supplier may submit additional 
documentation with the claim to justify coverage, but the KX modifier must not be used. 
A KX modifier must not be used with an NPWT pump and supplies for wounds (described under 
A or B in the Coverage and Payment Rules Section) in the fifth and successive months, but 
additional documentation may be submitted for individual consideration. The claim must 
include a statement from the treating physician describing the initial condition of the wound 
including measurements, efforts to address all aspects of wound care (listed in A-1 through A-4). 
Each subsequent monthly claim must also include updated wound measurements and what 
changes in wound therapy are being applied to effect wound healing. 
When billing for quantities of supplies greater than those described in the policy as the usual 
maximum amounts, each claim must include documentation supporting the medical necessity 
for the higher utilization. This information must be attached to a hard copy claim or entered in 
the narrative field of an electronic claim. Additionally, there must be clear documentation in the 
patient's medical records corroborating the medical necessity of this amount. 
Refer to the Supplier Manual for more information on documentation requirements. 
Other Comments 
A licensed health care professional, for the purposes of this policy, may be a physician, 
physicians assistant (PA), registered nurse (RN), licensed practical nurse (LPN), or physical 
therapist (PT). The practitioner should be licensed to assess wounds and/or administer wound 
care within the state where the beneficiary is receiving NPWT. 
Lack of improvement of a wound, as used within this policy, is defined as a lack of progress in 
quantitative measurements of wound characteristics including wound length and width (surface 
area), or depth measured serially and documented, over a specified time interval. Wound 
healing is defined as improvement occurring in either surface area or depth of the wound.  
  OEI-02-05-00370  MEDICARE PAYMENTS FOR NEGATIVE PRESSURE WOUND THERAPY PUMPS 
24  A P P E N D I X   ~   A  
The staging of pressure ulcers used in this policy is as follows: 
Stage I - Observable pressure related alteration of intact skin whose indicators as compared to 
the adjacent or opposite area on the body may include changes in one or more of the following: 
skin temperature (warmth or coolness), tissue consistency (firm or boggy feel) and/or sensation 
(pain, itching). The ulcer appears as a defined area of persistent redness in lightly pigmented 
skin, whereas in darker skin tones, the ulcer may appear with persistent red, blue, or purple 
hues. 
Stage II - Partial thickness skin loss involving epidermis, dermis, or both. The ulcer is 
superficial and presents clinically as an abrasion, blister, or shallow crater.  
Stage III - Full thickness skin loss involving damage to, or necrosis of, subcutaneous tissue that 
may extend down to, but not through, underlying fascia. The ulcer presents clinically as a deep 
crater with or without undermining of adjacent tissue.  
Stage IV - Full thickness skin loss with extensive destruction, tissue necrosis, or damage to 
muscle, bone, or supporting structures (e.g., tendon, joint capsule). Undermining and sinus 
tracts also may be associated with Stage IV pressure ulcers. 
  OEI-02-05-00370  MEDICARE PAYMENTS FOR NEGATIVE PRESSURE WOUND THERAPY PUMPS 
25    A P P E N D I X ~ B  
Detailed Methodology 
Sample Selection 
We selected a simple random sample of 400 claim line items for the 
pump from CMSs National Claims History file.28  First, we identified 
the two Healthcare Common Procedure Coding System (HCPCS) codes 
that suppliers used in 2004 to bill for the pumpK0538 and E2402.29 
We then identified all of the allowed claims associated with these 
HCPCS codes that had a service date in 2004.30  The universe consisted 
of 53,507 claims that represented $89,999,824 in allowed payments.   
From our sample of 400 claims, we excluded a claim because of an 
ongoing investigation by the Office of Inspector General.  Fifty-eight 
percent of the remaining 399 claims were for the initial month, and   
42 percent were for subsequent months.   
Medical Record Request 
Given the wide array of types of medical care that beneficiaries may 
require when using the pump, we compiled as comprehensive a medical 
record as possible for each claim. We requested the medical records for 
the claims in our sample from the physician who prescribed the pump 
and any HHAs and/or SNFs that billed Medicare for services provided 
to the beneficiary on the sampled claim. 
We identified the physician who ordered the pump by using the Unique 
Physician Identification Number (UPIN) listed on each claim.  We then 
obtained the physicians contact information from CMSs UPIN 
Validation File. For the claims that did not have a valid UPIN, we 
obtained the physician contact information from the documentation 
provided by the supplier.  We requested the medical record from each 
physician beginning from the initial evaluation of the wound(s) for 
which the pump was ordered through 30 days after the service date on 
the claim. We specifically asked the physician to include any 
documentation from other providers related to the treatment of the 
relevant wound(s).  
28 Multiple line items for individual services and procedures may be billed within a 
single claim. For this report, we refer to claim line items as claims.  
29 In 2004, the temporary HCPCS code for the pump, K0538, was in effect from  
January 1 to March 31.  The permanent HCPCS code, E2402, was in effect from April 1 to 
December 31. 
30 We did not include claims from outside the 50 States and the District of Columbia. 
  OEI-02-05-00370  MEDICARE PAYMENTS FOR NEGATIVE PRESSURE WOUND THERAPY PUMPS 
26  A P P E  N  D   I X    ~   B  
We identified any HHAs and/or SNFs that billed Medicare for services 
provided to the beneficiary on the sampled claim in the 3 months prior 
to the service date.  From each HHA and SNF, we requested the 
medical record from 2 months prior to the service date on the claim 
through 30 days after the service date.  We requested that each provider 
submit all documentation of the evaluation and management of the 
wound(s) for which the pump was ordered.31 
We used a contractor to collect the medical records.  For the claims that 
had out-of-date or incomplete contact information for the physician, 
HHA, and/or SNF, the contractor searched online phonebooks, State 
licensing boards, physician association directories, and called prior 
medical practices to obtain updated contact information. Once an 
address was verified, the contractor made at least three attempts to 
obtain the medical record from each provider. On the last attempt, the 
contractor sent a certified letter or called the provider to verify that they 
received the request. 
Response to OIG Medical Record Request 
We included 378 of 399 claims in our analysis, for a response rate of  
95 percent. We received useable medical records for 356 claims.  For 
another 22 claims, despite numerous attempts, neither the physician 
who ordered the pump nor the HHA or SNF that we contacted 
submitted any documentation that corresponded to the time period of 
our review. In our analysis, we considered these claims to be 
undocumented.  
We did not include the remaining 21 claims in our analysis. For 11 of 
these claims, we were not able to locate a current address for either the 
physician, HHA, or SNF.  For an additional two claims, we received the 
records after the review had been conducted.  For another eight claims, 
we determined that the medical record was missing some specific 
information that may have been found in another providers medical 
record, which we were unable to obtain in our study timeframe.  
Medical Record Review 
We used a contractor to conduct the medical review.  The reviewers 
included three registered nurses, each of whom had at least 5 years of 
wound care experience.  The reviewers used a standardized instrument 
31 For the SNF records, we specifically requested all physician, nursing, nurses aide, 
physical therapist, and nutrition notes, as well as any physician orders. 
  OEI-02-05-00370  MEDICARE PAYMENTS FOR NEGATIVE PRESSURE WOUND THERAPY PUMPS 
27  A P P E  N  D   I X    ~   B  
to review the medical record and determine whether each sampled 
claim met Medicare coverage criteria.  The review instrument included 
questions based on the criteria in the LMRP.  For example, it asked 
about the characteristics of the wound for which the pump was 
prescribed and any existing conditions that are specifically excluded 
from coverage.  It also included specific questions depending upon the 
type of wound and depending upon whether the claim was for initial or 
continued coverage.  The reviewers did not consider the supplier-
prepared statements submitted by the supplier in making their 
determinations.  
Test review. To test our instrument and to further train our reviewers, 
the reviewers conducted a preliminary medical review of 20 claims that 
we randomly selected from the universe of all claims in 2004.  This 
sample was separate from the sample of 400 used for the actual 
review.32 
Final sample review.  Using the final instrument, the contractor 
reviewed the medical records for the sampled claims.  The reviewers 
entered the information directly into a computer-based system that 
included automated skip patterns and quality control checks.  
Analysis of data.  We analyzed the results of the medical review using 
Statistical Analysis System software and identified the proportion of 
claims that were medically unnecessary, insufficiently documented, and 
undocumented.  As part of our analysis, we looked to see whether there 
were any statistically significant differences in the error rates between 
initial claims and continued claims. 
We also identified the supplies associated with the inappropriate pump 
claims that were billed within 30 days after the service date of the pump 
claim. We reasoned that if the pump claim was inappropriate, any 
supplies billed during this time period were also inappropriate. We 
calculated the total dollars paid in error for the pump claims and the 
associated supply claims and projected this amount to the universe of 
all pump claims and associated supply claims in 2004.  
Review of Supplier Documentation   
We conducted a separate review of the documentation provided by the 
supplier. To accomplish this, we requested all of the documentation 
32 All claims in 2004 were given a chance for selection in both samples.  There was no 
overlap of claims between the samples.   
  OEI-02-05-00370  MEDICARE PAYMENTS FOR NEGATIVE PRESSURE WOUND THERAPY PUMPS 
28  A P P E N D I X   ~   B  
from the supplier related to each of the sampled claims.  The supplier 
provided documentation for 396 of the 399 claims in our sample. The 
documentation included the forms and supplier-prepared statements 
described in the Background section.   
We reviewed the documentation to determine whether it met Medicare 
supplier documentation requirements.  Specifically, we determined 
whether there was a signed and dated physician order and proof of 
delivery.  We also determined whether there was documentation of 
wound healing and of continued need for coverage for claims that 
extended beyond 4 months.  The contractor then reviewed the supplier 
documentation, i.e., the supplier-prepared statements, to determine 
whether the information on these statements was supported by the 
medical record. 
Structured Interviews with DMERC Staff 
We conducted structured telephone interviews with staff at the four 
DMERCs and the SADMERC.  We spoke with the medical director and 
other staff at three of the DMERCs.  At the fourth DMERC, we spoke 
with the medical review manager and other staff.  At the SADMERC, 
we spoke with the medical director and other staff.  Our questions 
focused on the types of program safeguards each DMERC had in place 
to prevent and recoup improper payments for pump claims.  We also 
asked about any analysis conducted on the pump claims and education 
efforts provided to suppliers or physicians.  Finally, we reviewed 
supplemental documentation provided by DMERCs and the SADMERC.   
  OEI-02-05-00370  MEDICARE PAYMENTS FOR NEGATIVE PRESSURE WOUND THERAPY PUMPS 
29    A P P E N D I X ~ C  
Confidence Intervals for Selected Estimates 
95-Percent     
Estimate Description  n  Point Estimate  Confidence Interval 
Percentage of all pump claims that did not meet 
378  24.1%     19.8  28.4 % 
Medicare coverage criteria 
Percentage of insufficiently documented claims  378  14.8%     11.2  18.4 % 
Percentage of undocumented claims  378  5.8%    3.5  8.2 % 
Percentage of medically unnecessary claims  378  3.4%    1.6  5.3 % 
Percentage of claims that did not meet Medicare 
 399  1.5%    0.3  2.7 % 
supplier documentation requirements
Percentage of claims in which the information on the 
supplier-prepared statement was not fully supported  348*  44.3%     39.0  49.5 % 
by the medical record 
Source: Office of Inspector General medical review results, 2006. 

*This is the total number of claims that had both supplier-prepared statements and medical records.  

95-Percent 
Estimate Description  n  Point Estimate  Confidence Interval 
Amount allowed for all pump claims that did not meet 
378  $20,721,994  $17,003,520  $24,440,469 
Medicare coverage criteria 
Amount allowed for supplies associated with pump 
378  $5,937,137   $4,475,555  $7,398,719 
claims that did not meet Medicare coverage criteria 
Amount allowed for insufficiently documented claims  378  $12,800,567   $9,701,155  $15,899,978 
Amount allowed for undocumented claims  378  $4,993,943   $2,963,783  $7,024,104 
Amount allowed for medically unnecessary claims  378  $2,927,484    $1,358,427  $4,496,541 
Source: Office of Inspector General medical review results, 2006. 
  OEI-02-05-00370  MEDICARE PAYMENTS FOR NEGATIVE PRESSURE WOUND THERAPY PUMPS 
30    A P P E N D I X ~ D  
Agency Comments 
  OEI-02-05-00370  MEDICARE PAYMENTS FOR NEGATIVE PRESSURE WOUND THERAPY PUMPS 
31  A P P E N D I X   ~   D  

  OEI-02-05-00370  MEDICARE PAYMENTS FOR NEGATIVE PRESSURE WOUND THERAPY PUMPS 
32  A P P E N D I X   ~   D  

  OEI-02-05-00370  MEDICARE PAYMENTS FOR NEGATIVE PRESSURE WOUND THERAPY PUMPS 
33  A P P E N D I X   ~   D  

  OEI-02-05-00370  MEDICARE PAYMENTS FOR NEGATIVE PRESSURE WOUND THERAPY PUMPS 
34    A C K N O W L E D G M E N T S  

This report was prepared under the direction of Jodi Nudelman, 
Regional Inspector General for Evaluation and Inspections in the New 
York regional office, and Meredith Seife, Deputy Regional Inspector 
General. 
Judy Kellis served as the team leader for this study.  Central office staff 
who contributed include Kevin Farber, Scott Horning, Scott Manley, 
and Barbara Tedesco. 
  OEI-02-05-00370  MEDICARE PAYMENTS FOR NEGATIVE PRESSURE WOUND THERAPY PUMPS 
35