AMARILLO, TX – Every year the Office of Inspector General (“OIG”) releases a Work Plan that discusses the OIG’s priorities for the upcoming 12 months. In October 2024, the OIG announced that it is focusing on Medicare payments to DME suppliers for oxygen and oxygen equipment.

According to the OIG, CMS has identified high rates of improper oxygen and oxygen equipment payments through its Comprehensive Error Rate Testing (“CERT”) program.  CMS created the CERT program to measure the error rate of improper fee-for-service payments. The CERT contractor reviews a sample of processed claims, and if a claim is determined not to meet Medicare’s coverage, coding, and billing rules… or the DME supplier fails to submit medical records in response to a CERT letter…, the claim is considered a total or partial improper payment. The OIG is focusing on this space in response to the findings by the CERT program.

Upon request, a DME supplier must provide documentation, including records from the treating physician, indicating that oxygen and oxygen equipment were reasonable and necessary for a beneficiary’s condition. Through its Work Plan, the OIG intends to determine whether Medicare paid DME suppliers for oxygen and oxygen equipment in accordance with Medicare requirements.

Under the Work Plan, the OIG will send request letters to identified DME suppliers sometime this year. The expected issue date of the OIG report is in 2026.

If the OIG identifies errors and holes in documentation, and the claim is considered a total or partial improper payment, the DME supplier should comply with the Six-Year Lookback and the 60-Day rule.

Navigating CMS Overpayment Regs: Understanding the Six-Year Lookback and 60-Day Rule
CMS has established specific guidelines for handling overpayments, including the Six-Year Lookback and 60-Day Rule. These rules are designed to (i) safeguard the Medicare program’s integrity and (ii) ensure suppliers adhere to CMS guidelines when submitting claims.

The 60-Day Rule: Timely Action Matters
As of January 1, 2025, a Final Rule has revised key aspects of the 60-Day Rule. The original rule mandated that providers and suppliers report and refund overpayments within 60 days of identification, with noncompliance potentially resulting in claims being classified as “false claims” under the federal False Claims Act (“FCA”). Initially, “identified” meant that a provider or supplier had determined, or should have determined through reasonable diligence, that it had received an overpayment and had quantified the amount.

CMS acknowledged that providers and suppliers could take up to six months to investigate and quantify noncompliant claims. The Final Rule introduces more stringent requirements. It aligns with the FCA’s “knowledge” standard, meaning identification occurs when a provider or supplier has actual knowledge of overpayment or acts with reckless disregard or deliberate ignorance of a potential overpayment.

The Final Rule eliminates the need to quantify an overpayment. When a provider or supplier knowingly receives or retains an overpayment, the 60-day period to report and refund begins immediately, even if the overpayment amount has not been quantified. This period can be suspended for up to 180 days while providers and suppliers identify related overpayments from the same issue as the initially identified overpayment. The removal of the quantification requirement and the limitation of the 180-day tolling period to related overpayments will pose challenges for providers and suppliers.

The Six-Year Lookback Rule: Retrospective Compliance
The Six-Year Lookback Rule complements the 60-Day Rule by requiring providers and suppliers to assess and return overpayments identified within six years of receipt. This extended timeframe is intended to ensure that historical errors—whether related to billing discrepancies, coding inaccuracies, or misapplied payments—are adequately addressed.

Providers and suppliers should implement robust auditing mechanisms to identify and rectify these financial discrepancies. By conducting periodic internal reviews, providers and suppliers can minimize risks associated with unintentional retention of overpayments.

Compliance Strategies for Providers and Suppliers
To navigate these requirements effectively, providers and suppliers can adopt several key strategies:

• Establish an Overpayment Identification Process: Regularly review billing records and reimbursement data to detect errors.
• Develop an Internal Reporting Protocol: Ensure staff members understand the importance of reporting overpayments as soon as they are identified.
• Utilize Technology for Automated Monitoring: Leverage healthcare analytics tools to enhance accuracy in claims processing.
• Engage in Periodic Compliance Training: Educate personnel about CMS guidelines and the repercussions of noncompliance.
• Consult Legal and Financial Experts: Seek professional advice to ensure adherence to federal mandates and reduce regulatory risks.

When a DME supplier receives an audit letter, it must comply with the letter. The DME supplier should not ignore the letter or respond in a cavalier fashion. The DME supplier can also seek legal assistance in responding to the letter.

Jeffrey S. Baird, JD, is chairman of the Health Care Group at Brown & Fortunato, PC, a law firm based in Texas with a national healthcare practice. He represents pharmacies, infusion companies, HME companies, manufacturers, and other healthcare providers throughout the United States. Mr. Baird is Board Certified in Health Law by the Texas Board of Legal Specialization and can be reached at (806) 345-6320 or [email protected].

Jacque K. Steelman, JD is a member of the Health Care Group at Brown & Fortunato, PC, a law firm with a national healthcare practice based in Texas. She represents pharmacies, infusion companies, HME companies, manufacturers, and other healthcare providers throughout the United States. Ms. Steelman can be reached at (972) 684-5789 or [email protected].