Client Alert: CMS, Qlarant Scrutinizing Claims for Skin Substitutes for Chronic Wound Treatment

Patient Charts

Our firm is seeing an uptick in Medicare demand letters for the recovery of overpayment (recoupment demand) for skin substitutes, such as WoundFixTM, Biobrane, Dermagraft®, AmnioBand®, or AlloPatch®, used in the treatment of wounds. CMS auditors like Qlarant and Novitas are approaching wound care clinics, dermatologists, and physician practices alleging that medical records do not support the medical necessity of these expensive skin substitute products.

Investigations often begin with a demand for records. If this happens, contact a healthcare attorney immediately. How you respond and what records you provide are critical to the results of the investigation. Incomplete, insufficient, or untimely responses can result in demand for repayment, sometimes for amounts in the millions of dollars.

Avoid Recoupment Demands for Skin Substitute Treatments

One of the main areas of contention in cases involving skin substitute products is whether the beneficiary’s medical records indicate the medical necessity of the skin substitute. Complete and compliant medical records are critical for supporting a Medicare claim for your services.

Claim reviews and Medicare recoupment demands often cite incomplete documentation supporting the amount of skin substitute used or missing descriptions of the wound prior to and after the treatment.

Other best practices for medical records involving skin substitutes include:

  • Document previous treatments tried including why, and for how long, the wound failed to respond to standard care
  • Document measurements of the wound (length, width, and depth) immediately prior to placement of the skin substitute and before any subsequent placements.
  • Include a signed consent for the treatment in the medical records
  • Document the patient’s smoking history and that the patient received counseling on the effects of smoking on surgical outcomes
  • Document all co-morbidities preventing the wound from healing
  • Document how you applied the skin substitute (i.e., whether you applied it in layers)
  • Measure and document the dimensions of any undermining in the wound
  • Document the amount of utilized and wasted skin substitute and reason for wastage; include the manufacturer’s serial/lot/batch or other unit identification number of graft material
  • Consider whether to include an Advance Beneficiary Notice of Non-Coverage

What To Do If You Receive a Request for Information

Claim reviews often begin with a request for medical records from Qlarant or another CMS contractor. The letter will specify which medical records are requested and include instructions on how to provide the requested records in compliance with HIPAA. In most cases, the requested documentation must be submitted within 30 days of the date of the letter.

Upon receipt, Qlarant’s (or another Medicare contractor’s) clinical staff will review the medical records to determine if the services billed are reasonable and necessary and meet all other requirements for Medicare coverage.

If you receive a medical review records request, contact an attorney immediately.

A healthcare attorney can help you present the requested documentation on time and within the requested parameters – and help protect you from fraud, waste, or abuse allegations that could open you up to further investigations from the OIG, FBI, or Department of Justice.

Failure to respond is not a reasonable option. It could result in an automatic determination that an overpayment has been made.

What To Do If You Receive a Demand for Repayment

If you receive a demand for repayment or recoupment, you can dispute the determination but only if you act quickly. We have seen repayment demands for amounts in the millions of dollars. Contact an attorney promptly to preserve your options and submit your response on time.

To dispute the demand for repayment, providers can either:

  1. Submit a rebuttal to your MAC – A rebuttal is not intended to review supporting medical documentation nor argue against the overpayment decision. Instead, the rebuttal process allows the provider to submit a statement arguing why the recoupment should not be put into effect on the date specified in the demand notice. This option is best if you or your attorney identify errors in the Medicare contractor’s handling of the claims review. You have 15 days from the date of the demand letter to submit a “statement of opportunity to rebuttal.” You will receive notice of Medicare's answer within 15 days of receipt of your rebuttal.
  2. Or, request an appeal through the Medicare appeals process – If your MAC denies the rebuttal or you wish to skip the rebuttal process, you have 120 days from the date of the determination letter to file the first level of appeal. However, recoupment generally begins 40 days after the overpayment determination, so the appeal must be filed within 30 days of the date of the demand letter if you wish to stay recoupment activities.

How to Appeal a Medicare Repayment Decision

Medicare’s appeals process has five levels, each with strictly enforced deadlines.

  1. Level one is a request for redetermination by your MAC. To request a redetermination, you must file an appeal within 120 days of the date of the demand letter.
  2. Level two is reconsideration by a Qualified Independent Contractor (QIC). If you do not agree with your MAC’s redetermination decision, you may request reconsideration within 180 days of the decision. This appeal is conducted by a QIC that did not participate in the decision on the first level of the appeal process.
  3. Level three is an Administrative Law Judge (ALJ) hearing in the Office of Medicare Hearings and Appeals. You must file an ALJ hearing request within 60 days from the date you got the reconsideration decision letter or QIC dismissal notice. The amount in controversy (AIC) must meet a minimum threshold to be eligible for a hearing. Medicare updates the AIC threshold amounts annually. By law, the ALJ must provide a judgement within 90 days of receipt of the hearing request. In practice however, the average processing time can take months due to a backlog of claim appeals.
  4. Level four is a review by the Medicare Appeals Council. You must file your review request within 60 days from the date you got your ALJ decision or dismissal. The Council has 180 days from the date they get your review request to issue a decision.
  5. Level four is a judicial review in Federal District Court. If you disagree with the Council decision, or you want to escalate your appeal because the Council decision time frame passed, you may request judicial review. You must file a judicial review request within 60 days from the date you got the Council decision or after the Council decision time frame expires. Similar to level three, the amount remaining in controversy must meet or exceed the applicable AIC threshold.

Our firm represents providers during all phases of the Medicare appeals process. Contact legal representation as soon as possible to guide you through the process as efficiently as possible.

Contact Hendershot Cowart P.C. for Guidance Today

As previously mentioned, it is crucial to respond promptly and appropriately to demands for recoupment. You and your attorney must also consider any concurrent fraud investigations that may arise during this process. As legal counsel to physicians nationwide, our aim is to prevent or minimize potential penalties for our clients so they can keep their practices running smoothly and without unnecessary disruption.

Hendershot Cowart P.C. is a Texas-based healthcare law firm with a national reputation for excellence. We are ready to put our decades of experience to work for you. Schedule a consultation today.

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