Simple Recoupments May Cause Medicare Revocation

Did you know that a recoupment for a single patient can trigger the revocation of a DME supplier’s Medicare number? I am seeing more suppliers suffering terrible consequences from simple oversights, and I don’t want it to happen to you.

Here is a hypothetical example – based real events – of how a simple recoupment leads to loss of Medicare billing privileges.

The Setup: Local DME Supplier Services a Traveling Medicare Beneficiary

While on vacation in Charleston, South Carolina, a Medicare beneficiary from Detroit, Michigan trips on the uneven cobblestones common in the historic downtown area. An emergency room doctor diagnoses a fractured hip and prescribes a wheelchair. A local DME supplier in South Carolina rents the wheelchair to the patient and bills Medicare.

Even though the supplier is servicing the patient in South Carolina, Medicare routes the claim to Jurisdiction B based on the patient’s permanent address. Jurisdiction B – not C, which covers South Carolina – pays the rental claims until the patient returns the chair several months later.

Here is the hiccup …

The patient went back to the hospital at some point during the wheelchair rental for unrelated reasons. As a result, Jurisdiction B sent the DME supplier a post-payment overpayment notice for the wheelchair claim that overlapped the hospital stay.

The Skeleton Dance

To this point, the story sounds familiar and ultimately benign. For the supplier, however, the situation turns serious in a very hip-bone-connected-to-the-thigh-bone sequence:

1. The supplier routinely allows the DME MACs to offset overpayments from future payments, so they do not monitor overpayment notices closely.
2. The Jurisdiction C supplier doesn’t have any other patients in Jurisdiction B, so there are no current payments against which Jurisdiction B can offset the small wheelchair rental overpayment.
3. After 80 days pass, Jurisdiction B files a claim for the offset against the supplier’s surety bond, and the surety complies.
4. The supplier has a $50,000 surety bond in effect, the minimum coverage required as a condition of Medicare enrollment. That means any surety bond settlement effectively draws down coverage below the minimum coverage required by the 30 Supplier Standards.
5. When the supplier’s available surety bond coverage falls below the minimum, the National Provider Enrollment (NPE) contractor terminates the supplier’s PTAN number effective as of the date coverage dipped below the minimum.
6. The DME MACs move to recoup all payments made after the retroactive effective date of the revocation.

Ipso facto, a small recoupment oversight can lead to terrible things.

The Moral of the Story

Even I may have thought the above tale far-fetched in the past, but there is no doubt that Medicare is getting more aggressive with its compliance enforcement. Fortunately, suppliers can take a few simple steps to protect themselves from similar fates:

1.  If your surety allows it, increase coverage to more than $50,000 to insulate against intermittent recoveries.
2. Instruct personnel to monitor overpayment notices closely, paying special attention to notices from DME MACs other than the supplier’s home jurisdiction responsible for the bulk of Medicare activity. Keep in mind that CGS and Noridian service two jurisdictions each, and not all letters from the contractor should be treated equally.