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Oxygen Outlook
goes, if it ain’t broke, don’t fix it.
But the problem is that the current
model is broken, or, more to the point, it’s breaking in slow motion. Besides the much deeper cost impact that portable oxygen actually involves, providers must face up to the fact that those costs are making for an unsustainable business model. The reality of competitive bidding assures us of that fact, explains Joe Lewarski, vice president of global respira- tory and sleep for Drive Devilbiss.
Lewarski relates a dinner conversation he had with a senior healthcare execu- tive who related to him an earlier meeting with representatives from a small, family- owned oxygen provider in a relatively rural market. The meeting had occurred on the
Monday before the implementation date of the expansion of competitive bidding- derived rates to rural and non-bid areas of the country. The representatives said that they hoped CMS would not go through with the expansion — a policy that would severely undercut their business.
“At the end of the week they are going to get 40 to 50 percent reductions in their core product lines and their strategy on Monday was hope,” he says. “’I hope
they don’t do this by Friday.’ Third party payment, and Medicare and Medicaid, at least in the near term ... are still going to be where the majority of the healthcare spend and the majority of the patients are going to be — and you’ve got to find a way to operate within that system.”
Certainly, maintaining existing costs in
a declining reimbursement market is not
a sustainable model, which is a key reason why providers must move to portable oxygen. However, there’s a more impor- tant reason that will become increasingly pressing, Lewarski says: customers want it. More to the point, some of them demand it.
How can we tell? One need only type “portable oxygen concentrator” into Google. The results will show a thriving marketplace — a marketplace that most providers currently do not serve.
“There are literally tens if not hundreds of millions of dollars’ worth of transac- tions occurring on the internet and
in the retail segment,” Lewarski says. “However, whether it is e-commerce or
Oxygen Audit Outlook: TPE Audits
In addition to implementing the right respiratory business models in 2018, oxygen providers also need to keep a close eye on the challenges they will face on a regulatory front. Two of those issues remain static: the 36-month rental cap and competitive bidding. Those issues won’t likely see much change over the next year, except in the case of possible bidding relief for rural providers (see “News, Trends & Analysis,” on page 8).
But the big regulatory change oxygen providers can expect to see as 2018 unfolds is with audits. And there is a key audit program that respi- ratory providers must monitor.
“The biggest thing is the new TPE audit strategy that CMS is imple- menting,” says Wayne van Halem, president and founder of audit consulting firm The van Halem Group, which is a division of the VGM Group Inc. “CMS announced it in August, and we are just now seeing clients getting the audit notices now.”
TPE stands for Targeted Probe and Educate and it stems from an earlier Probe and Education program that went in effect in 2014, according to van Halem. It has been expanded to all suppliers, and it aims to identify providers who are billing for certain codes and have a higher error rates. Rather just doing widespread prepayment reviews, TPE auditors will view targeted prepayment reviews.
“What will happen is, the provider is going to get a letter that says, ‘You have been chosen for a Targeted Produce and Educate audit,’ or something along those lines,” van Halem explains. “Then, over the period of the next couple of weeks or months, depending on how much the provider is billing, it will receive prepayment notices on anywhere between 20 and 40 claims, so it’ll just look like the normal prepaid notices that they’re getting.
“Except now these are a part of this new audit program,” he continues. “[Auditors] will audit on those 20 to 40 claims. And the contractor calcu- lates, at the end, an error rate. If the error rate is under a certain amount, then they will simplify notify the provider, and the provider is essentially free to go about its business, and will very likely receive much fewer audits than they had in the past over the period of the next six, to 12 months.
But if the provider’s error rate is over a certain amount, then they have to go through a second round. The second round starts with an education session with the auditor, identifying the issues that they identified, and the auditor supplying some education on, from that. And then, the provider goes through another round of 20 to 40 audits.
“Again, they do the same thing: calcu-
late an error rate, and under a certain
amount, provider gets off, and if it’s over
a certain amount, provider stays on,” van
Halem explains. “And that goes through
a third round. If, after the third round,
the error rate is still not where they
anticipate it being, then that provider gets referred to CMS.
From that point onward, the outcome varies, van Halem says. CMS’s responses could include extrapolated overpayment, or referral to a RAC, or a ZPIC, for additional auditing, which is much more intensive. And there’s a hidden consequence that van Halem warns about: CMS has the authority, granted via the Affordable Care Act, to revoke billing privileges of a provider or supplier who shows a pattern or practice of improperly billing claims.
Fortunately, while oxygen providers must learn to work within this new program, other audits aren’t as large a concern for them, so they can focus their attention on the TPE program.
“Based upon the process, TPE audits can either be really good for a provider, or really bad,” he says. “So if [providers] go through it, and they can get the error rate under a certain amount, they’ll very likely sort of receive a reprieve from audits, for a certain period of time, which would be great. But if they can’t get that error rate down, they could subject to extrapolated overpayments, an expanded audit, or even a revocation.”
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“TPE audits can either be really good for a provider, or really bad,” says Wayne van Halem, president of The van Halem Group.