1. Schaum, Kathleen D. MS

Article Content

Q: Is it true that more wound care providers are undergoing Medicare audits?


A: You are correct that numerous wound care providers are receiving Medicare audits by various levels of Medicare contractors: fiscal intermediaries, carriers, Medicare Administrative Contractors (MACs), Program Safeguard Contractors(, Comprehensive Error Rate Testing Program (, and Hospital Payment Monitoring Program ( For this year and the past few years, the Office of Inspector General's (OIG's) work plans and the Medicare contractors' work plans have targeted numerous topics that pertain to wound care providers, for example:


* submitting claims for medically unnecessary services by failing to follow Medicare contractors' local coverage determinations (LCDs),


* submitting duplicate claims or claims that do not follow National Correct Coding Initiative guidelines,


* submitting incorrect claims for ancillary services because of outdated charge description masters,


* circumventing multiple procedure discounting rules and global period rules,


* selecting improper Evaluation and Management (E&M) codes,


* using surgical excisional debridement codes that did not meet Medicare requirements,


* billing surgical excisional debridement and E&M visits on the same day when the patient did not have a significant, separately identifiable E&M service, and


* failing to meet and document coverage requirements for use of negative pressure wound therapy.



During the numerous Medicare audits that have been conducted, the most common situations that resulted in Medicare overpayments after the various audits were coding errors, medically unnecessary services provided, documentation errors, and noncovered services/other errors.


Despite the numerous audits conducted and actions taken against providers (criminal suits, civil monetary penalties, and/or administrative actions), the federal government has a growing concern that the Medicare Trust Funds may not be adequately protected against erroneous payment through current administrative procedures. Therefore, the federal government established a 3-year demonstration program for the Centers for Medicare & Medicaid Services (CMS) to identify overpayments and underpayments to providers of Medicare beneficiaries' care. This program is the Recovery Audit Contractor (RAC) program (


The RAC demonstration program began in 2005 and initially involved only 3 states: California, Florida, and New York. These 3 states were selected for the demonstration because they are the largest states in terms of Medicare utilization; approximately 25% of Medicare payments made each year is to providers in these states. In Florida, the focus was on physician claims and some coding reviews of inpatient hospital claims. In New York, the focus was on hospital inpatient claims and hospital outpatient claims. In California, the RAC focused on inpatient hospital claims and some durable medical equipment supplier claims and physician claims. In the summer of 2007, 3 additional states (Massachusetts, South Carolina, and Arizona) were added to the RAC demonstration program.


Note: Wound care services accounted for some of the major overpayments for inpatient hospital services during the demonstration program. Providers billed for "excisional" debridement, but the medical records failed to meetthe definition for this code. A RAC example of incorrect hospital coding of 86.22, excisional debridement, stated that the physician wrote "debridement was performed" in the medical record. The RAC referred to the Coding Clinic 1991Q3 guidance that states: "Unless the attending physician documents in the medical record that an excisional debridement was performed (definite cutting away of tissue, not the minor scissors removal of loose fragments), debridement of the skin should be coded to 86.26, nonexcisional debridement of skin. Any debridement of the skin that does not meet the criteria noted above oris described in the medical record as debridement and no other information is available should be coded as 82.26."


The RAC demonstration program proved to be successful in returning dollars to the Medicare Trust Funds and identifying monies that needed to be returned to providers. The RACs reviewed 930 million claims with a total dollar value of $239.6 billion. More than 96% of the improper payments were overpayments ($357.2 million) collected from providers, and the remaining 4% were underpayments ($14.3 million) repaid to providers. Almost 50% of the improper payments were the result of incorrect coding, and approximately 30% of the repayments were due to medically unnecessary services. Other repayments were a result of providers not having or not providing medical records as requested by RACs, billing separately for services already included in other payments, submitting duplicate claims, using outdated fee schedules, and submitting duplicate claims. Therefore, CMS has decided to expand the RAC program to all states and US territories by the beginning of 2009.


CMS will select 4 companies that will be the permanent RACs for one-fourth of the country. Because the permanent RAC program initiation may overlap with the transition from the old Medicare claims processing contractors to the new Medicare claims processing contractors (MACs), CMS will impose RAC 6-month "blackout periods":


* 3 months before a MAC begins processing claims for a given state and


* 3 months after a MAC begins processing claims for a given state.



Q: How can wound care providers prepare for a potential Medicare audit?


A: Wound care providers must take proactive measures to


* establish an internal compliance auditing and monitoring plan;


* review the OIG's annual work plan, reports, and advisory opinions related to wound management practice;


* review contractors' audit reports and findings;


* participate in CMS' open-door forum teleconferences; and


* assign someone to monitor the Medicare contractor's medical policy Web site. This person should locate all policies, bulletins, and articles that pertain to all services, procedures, and products that are provided to Medicare beneficiaries with chronic wounds.



All providers, billers, and coders of wound care should read and learn the guidelines that are provided in the LCDs written on topics such as evaluation and management services, chronic wound care, debridement, skin substitutes, etc. These LCDs usually provide explicit documentation requirements, many of which would not necessarily be included in the operative report but should be included in other areas of the medical record. For example, some LCDs require a recent HbA1C that is of a certain level. Other LCDs require that providers attempt to heal the wound with standard of care for a given period and document its failure before they will cover the application of dermal substitutes.


* Pay attention to topics that are covered in prepayment and postpayment reviews. These topics should provide a "heads-up" of issues that are concerning the contractors. Some common topics include proper use of modifiers, E&M/visit coding levels, and so on.


* Educate physicians to justify medical necessity for every visit/procedure by using specific diagnosis terminology.


* Improve documentation. Physicians specializing in the management of chronic wounds often fail to write or dictate operative reports immediately after surgical procedures (before the patient is transferred to the next level of care), such as surgical excisional debridements (11040-11044) and applications of skin replacements and skin substitutes (15002-15431). Table 1 illustrates the elements that should be included in operative reports.

Table 1 - Click to enlarge in new windowTable 1. DOCUMENTING OPERATIVE REPORTS


If an operative report is not placed in the medical record immediately after surgery, due to transcription or filing delays, then an operative progress note should be entered in the medical record immediately after surgery. The operative progress note should provide enough information for anyone required to manage the patient throughout the postoperative period. The operative progress note should contain, at a minimum, comparable operative report information: the name of the primary surgeon and assistants, procedures performed and description of each procedure findings, estimated blood loss, specimens removed, and postoperative diagnosis.


Note: When wound care providers undergo audits that deal with products, the providers immediately assume that Medicare is questioning the use of the product. In many cases, the audit is actually due to the lack of documentation and diagnosis codes that prove medical necessity for use of the product and/or lack of an operative report when the product is used as part of a surgical procedure. Therefore, as wound care providers make use of new technology to manage chronic wounds, they must understand the indications for the technology, the correct codes relevant to the technology, the directions for use as outlined in the package insert, and the utilization and documentation guidelines provided in pertinent LCDs and articles. These efforts should help wound care providers be prepared for Medicare audits.