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From the Reimbursement Team: Another Audit Contractor………Whaaaat?

Strategic Health Solutions (SHS) is a supplemental medical review contractor hired by CMS. When you go to their website, under contracts SMRC, is a slogan in large font, “Protecting the Medicare Trust Fund”. I chuckle at this because here we have another specialty review contractor that is being paid by CMS to perform audits and “protect the Medicare trust fund”. I mean isn’t this what we are all trying to do already?! Does CMS need to pay another contractor to constantly find these so called errors? We have all seen the error rates continuously remain in the 70, 80, 90 percentile range. I think this means the system is broken and has flaws. CMS needs to take another look at these error rates and try to find ways to fix the broken system. And stop pointing fingers at suppliers whom are trying to protect the Medicare trust fund.

Let’s begin with a little history, SHS is a contractor that performs medical reviews of Medicare Part A and Part B, and DME suppliers throughout the U.S. CMS presented a five year contractor that started in January 2013. The reviews are being performed to determine whether Medicare claims were billed in compliance with coverage, coding, payment and billing practices. CMS determines the selection of topics and time frames to be reviewed with issues identified by Office of Inspector General (OIG), Government Accountability Office (GAO), Comprehensive Error Rate Testing (CERT) program, CMS internal data analysis, and a few other reporting factors.

While SHS is and has been performing reviews for Part A and B, I have been keeping my eye on the DME portion for a few years now. They were initially hired to look at the PMDs in the states that did not have the prior authorization demonstration project. The next review that occurred was on the male vacuum erection devices (VED). By the way, the VED is no longer a covered item under Medicare guidelines. Diabetic test strips was also one of their reviews that is now completed. The suppliers that received the ADR letter for diabetic test strips had to submit information on 100 claims from the year 2011. Even though this review came after the diabetes product went to a national competitive bid item, CMS still felt the need to perform the review.

Current projects, as they call them, or medical reviews are occurring on oxygen equipment, CPAP devices, and nebulizer equipment, all of which started in September 2015.

The articles, which are included at the bottom, on the different equipment states the following according to the Medicare FFS Improper Payments Report:

Equipment Improper Payment Report Year Observed Improper Payment Rate Overall Medicare FFS Payment Rate Projected Impproper Payment Amount During the Report Period
Oxygen 2014 62.1% 1.9% $951.9 billion
CPAP 2013 56.1% 1.0% $370 million
Nebulizers 2013 36.2% 0.8% $293 million

If you were looking for another talking point when speaking to your members of Congress, here it is! Share the letters that show the ridiculously small percentage of the overall Medicare FFS payment rate. Let Congress know the issues you are dealing with on a day to day basis. And, now you have to deal with this contractor in addition to other auditing contractors. Tell Congress the system is broken and the finger needs to stop pointing at the DME supplier trying to add quality of life to patients by keeping them at home with quality home medical equipment. Otherwise, the patients will end up in the hospitals and nursing home facilities.

You now have a little history on SHS and their role with CMS. I reviewed the completed projects and current projects along with talking points to share with Congress. Now let’s review the letter. I am aware that many of you are already familiar with the ADR letters because I have received the telephone calls and emails. The letter states you have 45 days from the date of the notice to respond to the request and may have anywhere from 30-40 claims. If you need an extension don’t be afraid to ask for one. I have heard on some cases they are allowing a 15 day extension. The person in your office that distributes the mail needs be made aware of this contractor and will be sure to get the letter to the correct person in your office immediately. Who is responsible for receiving these letters is it the compliance officer, billing manager, general manager, owner, etc. Here are more helpful tips once you have read the letter and know what they are asking for:

  • Know the due date
  • Start collecting the data
  • Keep a spreadsheet and check for duplicates
  • Make sure medical records are signed and dated, and are the correct copies (and are date stamped received)
  • Put the claims in order per their request on the letter
  • Check for any previous audits on the same patient same HCPCS code for same DOS, if so, include the favorable letter
  • Include a table of contents
  • Number the pages to keep it organized, i.e. 1 of 20, 2 of 20, etc.
  • Review the information before it’s mailed (checks and balances)
  • Copy everything you send so you know exactly what they received
  • Suggest “snail” mailing to be sure they actually received everything
  • Get a confirmation of delivery

Remember more isn’t always better. Only send the information they are requesting.

If you haven’t received a letter from Strategic Health Solutions, be prepared as it may be coming your way. They haven’t listed their “potential projects” but I imagine we can take a good guess. Share this information with your staff, referrals, and patients to keep them involved. And don’t forget your Congress people.

In summary, when you receive a referral for any type of equipment, try to get as much documentation up front as possible. You need to make sure the coverage criteria has been met and all the checks and balances have taken place. Don’t let any equipment out of your store until you are absolutely sure you have the correct information. The “good ole days” are gone. You need to make sure you get paid and keep the money for the services you provide. Learn to say NO or pay cash!

Current Projects





Nebulizer – ADR

Oxygen – ADR

Completed Projects

Diabetic Test Strips

Power Mobility Devices

DME Part 2 Provider

Male Vacuum Erection Devices

Ronda Buhrmester, CRT