HEALTH LAW: Recording Credits for Replacement of Medical Devices as required by Medicare – Compliance

Tatyana Agarunov

On February 29th 2012, the Office of Inspector General (OIG) issued a report entitled "Piedmont Hospital did not Fully Comply with Medicare Requirements for Obtaining and Reporting Credits for Replacement Cardiac Medical Devices". The issue covered in this report is regarding full or partial credits providers receive from manufacturers of medical devices implanted during certain medical procedures. These devices include "peacemakers, cardioverter defibrillators, and neurostimulators." The providers may receive credit for devices that are covered by warranty or if the device is replaced because of recall. "To offset these credits, Medicare reduces the payment for the replacement of a device if (1) the device is replaced without cost to the provider or the beneficiary, (2) the provider receives full credit for the cost of the replaced device, or (3) the provider receives partial credit equal to or greater than 50 percent of the cost of the replacement device."

The Office of Inspector General found that Piedmont Hospital did not fully comply with Medicare requirements. Specifically, the issue is that the hospital should have applied for credits from the manufacturer for certain patient devices. One example provided by the Office of Inspector General stated that "Piedmont was overpaid $7,626 for two inpatient claims… These overpayments occurred because Piedmont did not (1) have a written policy on how to obtain credits available under the terms of manufacturers' warranties or (2) have controls to report the appropriate billing codes and charges to reflect credits due from manufacturers."

Furthermore OIG, recommended for Piedmont to:

• (1) Resubmit the two erroneous claims and correct the overpayments totaling $7,626
  
  
  (2) "Review the 530 inpatient claims and consider reviewing the 527 outpatient claims that were not included in our sample, and resubmit the claims to Cahaba as appropriate"
  
  
  (3) "Strengthen its procedures to obtain credits available from manufacturer and establish procedures to report to Cahaba the credits that Piedmont was entitled to, irrespective of whether the credits were obtained, for replaced devices in accordance with Medicare requirements."
  
  

The full report could be found at:

http://oig.hhs.gov/oas/reports/region4/41103065.pdf

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