Medicare DMEPOS Audit Improvement and Reform (AIR) Act of 2014

To amend title XVIII of the Social Security Act to improve audit effectiveness and efficiency in paying for durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) under the Medicare program, and for other purposes. 1. Short title This Act may be cited as the Medicare DMEPOS Audit Improvement and Reform (AIR) Act of 2014 2. Improving Medicare audit effectiveness and efficiency for durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) (a) Medicare administrative contractor payment outreach and education program for DMEPOS suppliers (1) In general Section 1874A of the Social Security Act ( 42 U.S.C. 1395kk–1 (A) in subsection (a)(4)— (i) by redesignating subparagraph (G) as subparagraph (H); and (ii) by inserting after subparagraph (F) the following new subparagraph: (G) Payment outreach and education program for suppliers of durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) Implementing a payment outreach and education program for DMEPOS suppliers under subsection (h). ; and (B) by adding at the end the following new subsection: (h) Payment outreach and education program for DMEPOS suppliers (1) In general In order to reduce improper payments under part B for durable medical equipment, prosthetics, orthotics, and supplies, each medicare administrative contractor that has responsibility for payment under such part for durable medical equipment, prosthetics, orthotics, and supplies furnished in an area (in this subsection referred to as a Medicare DMEPOS contractor DMEPOS payment outreach and education program (2) Forms of activities The activities under a DMEPOS payment outreach and education program shall include the following: (A) Emails and other electronic communications. (B) Webinars. (C) Telephone calls. (D) In-person training. (E) Other forms of communications and assistance determined appropriate by the Secretary. (3) Information to be provided through activities The information to be provided under a DMEPOS payment outreach and education program, with respect to payment for DMEPOS under part B, shall include all of the following information: (A) A list of suppliers’ most frequent payment errors and most expensive payment errors over the last quarter. (B) Specific instructions regarding how to correct or avoid such errors in the future. (C) A notice of all new topics that have been approved by the Secretary for audits conducted by Medicare contractors in relation to payment for DMEPOS under part B. (D) Specific instructions to prevent future issues related to such new audits. (E) Other information determined appropriate by the Secretary. (4) Error rate reduction training (A) In general The activities under a DMEPOS payment outreach and education program shall include error rate reduction training. (B) Requirements Such training shall— (i) be provided at least annually; and (ii) focus on reducing improper Medicare payments for DMEPOS. (C) Invitation A Medicare DMEPOS contractor with responsibility for payment for DMEPOS in an area shall ensure that all DMEPOS suppliers, physicians and practitioners who prescribe DMEPOS, and discharge planners and case managers who coordinate DMEPOS for individuals in the area are invited to attend the training described in subparagraph (A) either in person or online. (5) Priority A Medicare DMEPOS contractor shall give priority to activities under the DMEPOS payment outreach and education program that will reduce improper Medicare payments based on technical errors, medical necessity, and fraud for DMEPOS that— (A) have the highest rate of improper payment under part B; (B) have the greatest total dollar amount of such improper payments; (C) are due to clear misapplication or misinterpretation of policies under this title; (D) are clearly due to common and inadvertent clerical or administrative errors; or (E) are due to other types of errors that the Secretary determines could be prevented through activities under the program. (6) Information on improper payments from medicare contractors (A) In general In order to assist Medicare DMEPOS contractors in carrying out DMEPOS payment outreach and education programs, the Secretary shall provide each such contractor with a complete list of improper payments for DMEPOS identified by recovery audit contractors (and other contractors performing audit activities relating to payment for DMEPOS) with respect to suppliers located in the area being serviced by the Medicare DMEPOS contractor. Such list shall not include claims for payments that have been denied and are being appealed by the supplier under section 1869. Such information shall be provided on a quarterly basis. (B) Information The information described in subparagraph (A) shall include the following information: (i) The suppliers of DMEPOS that have the highest rate of improper payments under part B for DMEPOS. (ii) The suppliers of DMEPOS that have the greatest total dollar amounts of such improper payments. (iii) The DMEPOS furnished in the area that has the highest rates of such improper payments. (iv) The DMEPOS furnished in the area that is responsible for the greatest total dollar amount of such improper payments. (v) Other information the Secretary determines would assist Medicare DMEPOS contractors in carrying out the DMEPOS payment outreach and education program. (C) Format of information The information furnished to Medicare DMEPOS contractors by the Secretary under this paragraph shall be transmitted in a manner that permits such contractors to easily identify the DMEPOS suppliers for which targeted outreach, education, training, and technical assistance would be most effective. In carrying out the preceding sentence, the Secretary shall ensure that— (i) the information with respect to improper payments made to such a supplier clearly displays the NPI or other identifier of the supplier, the amount of the improper payment, and any other information the Secretary determines appropriate; and (ii) the information is in an electronic, easily searchable database. (7) Communications All communications with a supplier under a DMEPOS payment outreach and education program are subject to the standards and requirements of subsection (g). (8) Advance notice for policy changes and clarifications The Secretary shall not implement a policy change or clarification for DMEPOS audit requirements earlier than 6 months after the date of publication of such change or clarification in the Federal Register. (9) Funding After application of paragraph (1)(C) of section 1893(h), the Secretary shall retain a portion of the amounts recovered by Medicare DMEPOS contractors under this title with respect to DMEPOS which shall be available to the Centers for Medicare & Medicaid Services Program Management Account for purposes of carrying out this subsection and to implement corrective actions to help reduce the error rate of payments for DMEPOS under part B. The amount retained under the preceding sentence shall not exceed an amount equal to 25 percent of the amounts recovered under section 1893(h) with respect to DMEPOS. (10) Durable medical equipment, prosthetics, orthotics, and supplies and DMEPOS defined In this subsection, the terms durable medical equipment, prosthetics, orthotics, and supplies DMEPOS (A) durable medical equipment (as defined in section 1861(n)) and supplies used with such equipment, other than implantable items for which payment may be made under section 1833(t); (B) prosthetic devices (as described in section 1861(s)(8)), including items described in section 1842(s)(2)(D); (C) orthotics and prosthetics (as described in section 1861(s)(9)); (D) surgical dressings (as described in section 1861(s)(5)); (E) home dialysis supplies and equipment (as described in section 1861(s)(2)(F)); and (F) therapeutic shoes for diabetics (as described in section 1861(s)(12)). . (2) Funding conforming amendment Section 1893(h)(2) of the Social Security Act ( 42 U.S.C. 1395ddd(h)(2) or section 1874A(h)(9) paragraph (1)(C) (3) Transparency Section 1893(h)(8) of the Social Security Act ( 42 U.S.C. 1395ddd(h)(8) (A) in the first sentence, by inserting before the period at the end the following: , on the use of medicare administrative contractors in conducting audits with respect to durable medical equipment, prosthetics, orthotics, and supplies under section 1874A, and on the overturn rates for each level of appeal (B) by striking Report Report.— (A) In general The Secretary ; and (C) by adding at the end the following new subparagraph: (B) Inclusion of certain information (i) In general For reports submitted under this paragraph for 2015 or a subsequent year, each such report shall include, with respect to each recovery audit contractor (and each medicare administrative contractor) that is responsible for audits relating to payment for durable medical equipment, prosthetics, orthotics, and supplies, information on the result of all appeals relating to audits for durable medical equipment, prosthetics, orthotics, and supplies for each individual level of appeals with respect to each of the categories of audits described in clause (ii) carried out by recovery audit contractors under this subsection or by medicare administrative contractors under section 1874A. For purposes of such reports and public reporting regarding such reports, such information relating to audits for orthotics and prosthetics shall be grouped separately from the information relating to audits for durable medical equipment and supplies. (ii) Categories of audits For purposes of clause (i), each of the following is a separate category of audit: (I) Automated. (II) Complex. (III) Medical necessity review. (IV) Part B. . (b) Adjustment of record request maximum based on error rates Section 1893 of the Social Security Act ( 42 U.S.C. 1395ddd (j) Adjustment of maximum record request threshold for audits for payment for durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) based on supplier error rates (1) Identification of error rates The Secretary shall determine the audited claims error rates for payment for durable medical equipment, prosthetics, orthotics, and supplies and identify— (A) those DMEPOS suppliers with a relatively high error rate with respect to claims for DMEPOS; and (B) those DMEPOS suppliers with a relatively low error rate with respect to such claims or with a steadily decreasing error rate for such claims. (2) Factors in identification (A) Analysis For purposes of identifying the groups of DMEPOS suppliers under paragraph (1), the Secretary shall analyze the following as they relate to the total number and amount of claims submitted by product category and by each DMEPOS supplier: (i) The improper payment rates of the supplier. (ii) The amount of improper payments made to the supplier. (iii) The frequency of errors made by the supplier over time. (iv) Other information determined appropriate by the Secretary. In performing such analysis, the Secretary shall exclude claims for payment that have been denied and are being appealed by a DMEPOS supplier under section 1869. (B) Assignment based on composite score Using a statistically valid sample, the Secretary shall assign DMEPOS suppliers under paragraph (1) based on a composite score determined using the analysis under subparagraph (A) as follows: (i) Suppliers with high, expensive, and frequent errors shall receive a high score and be identified as high error suppliers under paragraph (1)(A). (ii) Suppliers with few, inexpensive, and infrequent errors shall receive a low score and be identified as low error suppliers under paragraph (1)(B). (iii) Only a small proportion of the total suppliers in any area shall be assigned to either group identified under either such paragraph. (C) Timeframe of identification (i) In general Any identification of a DMEPOS supplier under paragraph (1) shall be for a period of 12 months. (ii) Reevaluation The Secretary shall reevaluate each such identification at the end of such period. (iii) Use of most current information In carrying out the reevaluation under clause (ii) with respect to a supplier, the Secretary shall— (I) consider the most current information available with respect to the supplier under the analysis under subparagraph (A); and (II) take into account improvement or regression of the supplier. (3) Adjustment of maximum record requests based on error rate performance The Secretary shall establish procedures under which, for those DMEPOS suppliers that are identified— (A) under paragraph (1)(A) (relating to a relatively high error rate), the Secretary shall increase the maximum record request made by Medicare DMEPOS contractors in auditing claims of such suppliers for DMEPOS; and (B) under paragraph (1)(B) (relating to a relatively low or decreasing error rate), the Secretary shall decrease the maximum record request made by Medicare DMEPOS contractors of such suppliers. (4) Best performing suppliers have reduced random audits In the case of a DMEPOS supplier that the Secretary identifies under paragraph (1)(B) for a year as having an audited claims error rate that is less than 15 percent for a category of DMEPOS, the Secretary shall not conduct more than 1 random audit of a claim per product category for the year for such category. (5) Restoration of clinical inference and judgment With respect to the conduct of payment audits of DMEPOS suppliers respecting DMEPOS under part B, the Secretary shall use clinical inference and clinical judgment in the evaluation of medical records and orders when conducting such audits in the same manner as the Secretary interpreted and applied such clinical judgment to claim reviews before 2009 pursuant to the Secretary’s instruction to contractors. (6) Treatment of certain documentation created by orthotists and prosthetists For purposes of determining under this title the reasonableness and medical necessity of prosthetic devices and orthotics and prosthetics, documentation created by orthotists and prosthetists relating to the need for such devices, orthotics, and prosthetics shall be considered part of the medical record. (7) Definitions In this subsection: (A) Durable medical equipment, prosthetics, orthotics, and supplies and DMEPOS The terms durable medical equipment, prosthetics, orthotics, and supplies DMEPOS (B) DMEPOS supplier The term DMEPOS supplier (C) Medicare DMEPOS contractor The term Medicare DMEPOS contractor . (c) Application of timely filing limits to reoccurring DMEPOS claims subject to payment audits Section 1842(b)(3)(B) of the Social Security Act ( 42 U.S.C. 1395u(b)(3)(B) , except that the reopening of a claim by a Medicare DMEPOS contractor (as defined in section 1893(j)(7)) in a post-payment audit or a claim denial in a prepayment audit for DMEPOS (as defined in such section) shall toll the timely claim filing limits under this part such that the Secretary may not prohibit a DMEPOS supplier (as defined in such section) from taking an appeal from the determination of a claim in a pre- or post-payment audit, or the submission or resubmission for payment of any claims that follow sequentially from the audited claim on the basis that the timely claim filing limits have expired (d) Maximum audit documentation review period of 3 years for Medicare contractors (1) R AC Section 1893(h)(4)(B) of the Social Security Act ( 42 U.S.C. 1395ddd(h)(4)(B) 4 fiscal years 3 fiscal years (2) In overpayment of claims The last sentences of subsections (b) and (c) of section 1870 of the Social Security Act (42 U.S.C. 1395gg) are each amended by striking fifth year five-year third year three-year (3) Limitation on audit documentation review period Section 1874A(a) of the Social Security Act ( 42 U.S.C. 1395kk–1(a) (7) Limitation on audit documentation review period The Secretary shall limit the audit documentation review period for medicare administrative contractors to 3 years. . (4) Effective date The amendments made by this subsection shall apply with respect to payments made for items and services furnished on or after the date of the enactment of this Act.

Summary: Medicare DMEPOS Audit Improvement and Reform (AIR) Act of 2014 - Amends title XVIII (Medicare) of the Social Security Act (SSA) to establish a Medicare Administrative Contractor Payment Outreach and Education Program for DMEPOS (durable medical equipment, prosthetics, orthotics, and supplies) suppliers. Requires each Medicare administrative contractor responsible for DMEPOS payments, in order to reduce improper payments to DMEPOS suppliers under Medicare part B (Supplementary Medical Insurance), to provide suppliers, physicians and practitioners who prescribe DMEPOS, and discharge planners and case managers who coordinate DMEPOS for individuals in the contractor's area with error rate reduction training as well as: a list of suppliers' most frequent payment errors and the most expensive payment errors over the last quarter, specific instructions regarding how to correct or avoid such errors in the future as well as to prevent future issues related to new audits, and a notice of all new topics that have been approved by the Secretary of Health and Human Services (HHS) for audits. Sets forth the structure for audits of DMEPOS suppliers, requiring a contractor to give priority to activities under the DMEPOS payment outreach and education program that will reduce improper Medicare payments based on technical errors, medical necessity, and fraud. Requires annual reports to Congress on the use of recovery audit contractors under the Medicare Integrity Program to include certain information on the results of audit appeals related to DMEPOS. Requires the Secretary to: (1) increase the maximum record requests made by Medicare DMEPOS contractors in auditing claims of suppliers with a relatively high audited claims error rate for DMEPOS payments, and (2) decrease the maximum record requests for suppliers with a relatively low error rate. Directs the Secretary to limit the audit documentation review period for Medicare administrative contractors to three years.