Department of Health and Human Services


OFFICE OF 

INSPECTOR GENERAL 

MEDICARE PAYMENTS 


FOR NEGATIVE PRESSURE 


WOUND THERAPY PUMPS 


IN 2004


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. 
Δ EXECUTIVE SUMMAR 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. supplierprepared 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 

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EXE CUTIVE S U MMAR 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 supplierprepared 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. 

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EXE CUTIVE S U MMAR 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 patient’s 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 CMS’s 

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 option—requiring the supplier to obtain 

pertinent parts of the patient’s medical record prior to submitting a 

claim—as an important mechanism to curb inappropriate payments. 

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iv

Δ T ABLE OF CONTENTS 

EXECUTIVE SUMMARY ..................................... i

INTR O D U C T I ON ........................................... 1

FINDI NGS ................................................. 8

Almost one-quarter of pump claims were 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

RECOM M E NDATI O NS ..................................... 13

Agency Comments and Office of Inspector General Response . . . 14 

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

A: LMRP for Negative Pressure Wound Therapy Pumps ...... 16

B: Detailed Methodology ................................ 26

C: Confidence Intervals for Selected Estimates .............. 30

D: Agency Comments................................... 31

ACKN O W LEDGMENTS .................................... 35

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Δ DESIGN INTRODU C TION 

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 

granulation tissue.1 

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 Services’s 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. 

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1 
INTROD UCT ION 

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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2 
INTROD UCT ION 

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 patient’s 

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 ulcer’s 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 physician’s 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 
INTROD UCT ION 

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 

patient’s 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 supplierprepared statement by itself is not sufficient documentation of medical 

necessity. It further states that there must be information in the 

patient’s 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 patient’s 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. 

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4 
INTROD UCT ION 

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 patient’s 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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5 
INTROD UCT ION 

For the medical review, we selected a simple random sample of 

400 pump claims from CMS’s 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 provider’s 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 

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6 
INTROD UCT ION 

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 President’s Council on Integrity and 

Efficiency and the Executive Council on Integrity and Efficiency. 

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7 
Δ 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 wound therapy 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 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 

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8 
F I NDING 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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F I NDING 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. 

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F I NDING 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 supplierprepared 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. 

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F I NDING 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. 

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12 
Δ R RECOMME E C O MMENDA NDAT I O N S TIONS 

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. 

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13 
R E C O MMENDA 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 patient’s 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 CMS’s 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 option—requiring the supplier 

to obtain pertinent parts of the patient’s medical record prior to 

submitting a claim for the pump—as an important mechanism to curb 

inappropriate payments. CMS notes that suppliers are already 

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14 
R E C O MMENDA T I O N S 

required to submit information from the patient’s 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 patient’s 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 patient’s medical record may help to ensure that suppliers 

are submitting appropriate claims. Appendix D provides the full text of 

CMS’s comments. 

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15 
Δ APPENDIX~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. 

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APP 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 patient’s 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 

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17 
APP 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 patient’s 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. 

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APP 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 ulcer’s 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. 

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19 
APP 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 patient’s 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 

physician’s 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 patient’s 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. 

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APP 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. 

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APP 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. 

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APP 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 patient’s medical 

records will reflect the need for the care provided. The patient’s medical records include the 

physician’s 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 patient’s 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 patient’s medical record, 

must indicate regular evaluation and treatment of the patient’s 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 patient’s 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 patient’s medical records may be requested by the DMERC in order to 

corroborate that wound healing is/was occurring as represented on the supplier’s claims for 

reimbursement.) 

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23 
APP 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, 

physician’s 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. 

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APP 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. 

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Δ APPENDIX~B 

Detailed Methodology 

Sample Selection 

We selected a simple random sample of 400 claim line items for the 

pump from CMS’s 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 pump—K0538 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 physician’s contact information from CMS’s 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). 

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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. 

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APP 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 provider’s 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, nurse’s aide, 

physical therapist, and nutrition notes, as well as any physician orders. 

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APP 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 supplierprepared 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. 

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APP 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. 

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Δ APPENDIX~C 

Confidence Intervals for Selected Estimates 

Estimate Description n Point Estimate 

95-Percent 

Confidence Interval 

Percentage of all pump claims that did not meet 

Medicare coverage criteria 378 24.1% 19.8 – 28.4 % 

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 

supplier documentation requirements

 399 1.5% 0.3 – 2.7 % 

Percentage of claims in which the information on the 

supplier-prepared statement was not fully supported 

by the medical record 

348* 44.3% 39.0 – 49.5 % 

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. 

Estimate Description n Point Estimate 

95-Percent 

Confidence Interval 

Amount allowed for all pump claims that did not meet 

Medicare coverage criteria 378 $20,721,994 $17,003,520 – $24,440,469 

Amount allowed for supplies associated with pump 

claims that did not meet Medicare coverage criteria 378 $5,937,137 $4,475,555 – $7,398,719 

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. 

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Δ APPENDIX~D 

Agency Comments 

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APP E N D I X ~ D 

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APP E N D I X ~ D 

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APP E N D I X ~ D 

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Δ ACKNOWLEDGMENTS 

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. 

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