Legal Lesson of the Month: In OIG Crackdown, Modifiers Matter

The Office of Inspector General (OIG) is the enforcement arm of Medicare, and it actively watches for issues of fraud and program abuse. This includes scrutinizing both ground and air ambulance services. Many of these audits result in scathing reports. Recently we have seen this watchful eye examine the ambulance industry as a whole not just once but three times, each time with reports detailing improper billing activities.

This column is the first of three in a series examining the OIG’s recent activity. This first installment looks at two of its recent reports. The second part will explore the actions taken in their wake, and the third will look at the most recent report and discuss its impact.

Although the first two of these OIG reports were published July and August of 2018 (A-09-17-03018 and A-09-17-03017, respectively), ambulance services are only recently seeing their effect, as overpayment demand letters are arriving in the mail now, almost a year later. The issues addressed in these audits and reflected in the overpayment demands involve 1) origin and destination modifiers, and what proper pairs of modifiers are deemed “covered” or “payable” by the Medicare program, and 2) transports billed at the emergency level for destinations other than a hospital. In both cases the OIG found the Medicare Administrative Contractors (MACs) made payments for claims that obviously should not have been paid, both for emergent and nonemergent ambulance transports, based on the modifier combinations submitted.

With respect to the August report, which focused on emergency HCPCS codes (A0427 and A0429), the OIG noticed payment for transports billed at the emergency level where the destinations were locations other than hospitals. The OIG observed, simply by data analysis, recipients were being paid by MACs for transportation to residences, scenes, diagnostic or therapeutic locations, residential facilities, and physician offices. The report noted these are not situations where emergency codes would be appropriate and that the MACs did not have edits in place that would have caught this discrepancy and automatically denied the claims. As a result the OIG determined the Medicare program made improper payments totaling $1.9 million.

In the July report, which focused on nonemergency transports, the OIG detected issues with the modifiers used—for example, ambulance transports from a patient’s residence to a diagnostic or therapeutic center, which is among noncovered destinations according to Medicare. In this report the OIG again noted the MAC did not have edits in place for this combination of modifiers. The OIG determined, again solely by data analysis, that Medicare made $8.7 million in improper payments for transports to noncovered destinations.

While the MAC committed an error (not having proper edits in place) that caused a payment for a service that should not have been made, the OIG was quick to point out it’s ambulance services’ responsibility to catch these errors and make repayments. The OIG also directed the MACs to seek repayment for these “impossible” emergency transports and modifier combination errors from the ambulance service suppliers. That effort is what triggered the overpayment demand letters (many of them giving very little explanation of the reason for the overpayment). Please note that for some reason most MACs are not issuing one letter for all claims that may have inappropriate modifiers; instead we are seeing ambulance services receive multiple overpayment demand letters, some going back to claims paid four years ago or more.

These claims are being denied purely on the basis of modifier combinations used for certain HCPCS codes. There may be a basis for some of these claims to remain paid, but that will likely take research and making the necessary arguments on appeal. At the end of the day, the OIG is correct: It is up to us to police our payments and return any that should not have been paid. In the second of this multipart series, we’ll share some examples of the overpayment recovery efforts we’ve seen, strategies to deal with such efforts, and steps you can take.

Dan Pedersen and Christopher Kelly are lawyers with Page, Wolfberg & Wirth LLC who focus on regulatory healthcare law as it relates to the EMS and ambulance industry. This article is not intended as legal advice. For more information or for assistance with any overpayment appeals, reach Dan and Chris at 717/691-0100 or e-mail dpedersen@pwwemslaw.com or ckelly@pwwemslaw.com.