As we have written about several times previously, billing Medicare for skin substitutes used in wound care has come under significant scrutiny by various federal agencies, including the Department of Justice, HHS’ Office of Inspector General (OIG), and CMS and its contractors. Recently, Medicare instituted substantial changes to its reimbursement methodology, a move that it predicts will cut Medicare Part B spending on skin substitutes by up to ninety percent. But those changes have not and likely will not stop the deluge of overpayment audits that wound care providers have faced in recent months. Because Medicare’s prior reimbursement methodology resulted in high reimbursement for certain skin substitute products, overpayment demands covering just a handful of patients are often in in the seven figures.
As that first wave of overpayment demands works its way through the administrative appeal process, there is a distinct possibility that CMS and its contractors may soon initiate a second round of audits and, this time around, engage in statistical sampling and overpayment extrapolation. This could turn already significant sample overpayment demands into astronomical extrapolated demands.
Medicare regulations do permit – and in fact encourage – contractors to use statistical sampling where certain requirements are met. The Medicare Program Integrity Manual (MPIM) provides that statistical sampling may be used when the contractor has determined that “a sustained or high error rate” exists. Unfortunately, although the MPIM does give a list of non-exhaustive factors that a contractor may consider when determining whether such a “sustained or high” error rate exists, the phrase is not precisely defined. This leaves Medicare contractors with fairly broad discretion in deciding statistical sampling is appropriate. For providers who have already undergone an initial skin substitute audit in which the contractor found a high error rate, the contractor could now initiate a second audit and, based on that allegedly high error rate, pursue statistical sampling and extrapolation.
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Our attorneys are actively representing numerous physicians and physician practices in connection with Medicare audits and overpayment appeals related to skin substitute claims, along with a team of expert consultants including statisticians. If you are facing such an audit or overpayment demand, please contact us today.