Kusserow on Compliance: OIG reports concern and interest in billing for ventilators

The HHS Office of Inspector General (OIG) issued a report to CMS expressing concerns about the recent substantial increase in Medicare billing for noninvasive pressure support ventilators (coded as E0464). The agency analyzed Medicare claims data on noninvasive multimodal ventilators, CPAP devices, RADs, and related supplies from 2009 through 2015 and found an increase of 85 times over this period of time. The OIG noted that ventilator technology has evolved so that it is possible for a single device to treat numerous conditions by operating in several different modes—e.g., basic continuous positive airway pressure (CPAP) mode, respiratory assist device (RAD) mode, and traditional ventilator mode. Medicare covers ventilators and RADs for similar respiratory diagnoses, but the selection of the appropriate device is based on the severity of the beneficiary’s condition. RADs are covered for beneficiaries with less severe conditions, whereas ventilators are covered for more severe conditions. CPAP devices are covered for the treatment of obstructive sleep apnea.


  1. The OIG could not find a reasonable explanation for the increase.
  2. A large proportion of the beneficiaries with E0464 ventilators had recently switched to these devices from using a CPAP device or RAD.
  3. Emergence of this multimodal device, when combined with Medicare coverage and payment policies that favor reimbursement for ventilators, appear to create incentives for suppliers to provide and bill for a ventilator when the device is actually being used as a RAD or CPAP device.
  4. Increased billing trend is being driven primarily by three national suppliers that have rapidly expanded their market share and that accounted for 54 percent of the nationwide growth in ventilator claims from 2012 to 2015.
  5. There has been a dramatic shift in the use of ventilators to treat respiratory conditions rather than neuromuscular conditions.
  6. Medicare also paid $25 million for E0464 ventilator claims with indicators of inappropriate billing (e.g., billing for multiple devices or billing to treat obstructive sleep apnea).

The OIG called upon CMS to monitor the providers with the largest market shares of ventilator beneficiaries or exploring the causes and implications of the shift in diagnoses on ventilator claims, as well as have increased contractor reviews (both prepayment and postpayment) of ventilator claims for improper payments. The results of this report will result in closer scrutiny of these claims and it also may increase interest in future audits and investigations in this area, particular those national suppliers that dominate the market.

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

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Copyright © 2016 Strategic Management Services, LLC. Published with permission.

Primary care reform efforts showing progress

Four out of seven regions shared in savings with CMS and nearly 95 percent of all practices met quality of care requirements in the second year of CMS’ Comprehensive Primary Care (CPC) initiative. CPC is a multi-payer program launched by the Center for Medicare and Medicaid Innovation (CMMI) in October 2012 to advance primary care by paying clinicians to deliver accessible, comprehensive, and coordinated care in seven regions across the country. Throughout 2015, CPC generated $57.7 million in gross savings in Medicare Part A and Part B expenditures, which was equivalent to the $58 million paid in care management fees to the practices involved. More than half of the participating CPC practices will also receive a share of over $13 million in earn shared savings. According to CMS, the results reflect the work of 481 practices that served over 376,000 Medicare beneficiaries and more than 2.7 million patients overall in 2015.

Four of the seven regions participating in CPC – the states of Arkansas, Colorado, and Oregon, and the Greater Tulsa region in Oklahoma – realized net savings and will share in those savings with CMS; the savings generated in these four regions covered the net losses in the other three CPC regions. In addition to the Medicare savings, CPC practices had lower than expected hospital admission and readmission rates, as well as favorable performance on patient experience.

Gross savings nearly doubled from the first performance year in 2014; practices in four regions were eligible to receive shared savings, compared to one region in 2014. CMMI’s Comprehensive Primary Care Plus (CPC+) will begin on January 1, 2017, with 14 selected regions.

Quality measures

CMS included electronic clinical quality measures (eCQM) for the first time in Medicare shared savings determinations for CPC. CMS noted that these practices with eCQM also exceeded national benchmarks; the eCQM data are recorded in the electronic health record in the routine course of clinical care, enabling real time quality improvement efforts.

The majority of CPC practices that reported eCQM surpassed the median national performance for 10 out of 11 eCQMs in the measure set, with 97 percent of CPC practices successfully reporting nine eCQMs.

CPC initiative

CPC is the largest test of advanced primary care in U.S. history, exploring the potential of primary care clinicians redesigning practices to deliver better care to patients, as well as supporting physicians’ ability to innovate and deliver care to meet patients’ needs and preferences.

Cloud services providers subject to HIPAA when handling ePHI

Entities subject to Health Insurance Portability and Accountability Act (HIPAA) (P.L. 104-191) compliance may use cloud services to store and process electronic protected health information (ePHI). According to HHS’ health information privacy guidance, to do so, the covered entity or the entity’s business associate must enter into a HIPAA-compliant business associate agreement (BAA) or contract with the entity’s chosen cloud services provider (CSP).

CSP requirements

CSPs are legally separate entities from the covered entity, and offer online access to shared computing resources. Functions include data storage to software solutions, such as electronic medical record systems. When a HIPAA-covered entity retains a CSP’s services to handle ePHI, that CSP becomes a business associate under HIPAA, even if the CSP is a subcontractor under another business associate. Even if the ePHI processed or stored by the CSP is encrypted and the CSP does not have an encryption key, the CSP is subject to HIPAA rules.

Business associate agreement

A BAA establishes the permitted and required uses and disclosures of ePHI for the CSP, and is a requirement under HIPAA. A covered entity must have clear understanding of the services provided by the CSP to ensure that a risk analysis can be conducted and the appropriate provisions are included in the BAA. More specific business expectations may be included in a service level agreement (SLA), and the SLA’s provisions should be consistent with HIPAA and the BAA.

The BAA can also establish the way the CSP is to report security incidents to the covered entity. The Security Rule (45 C.F.R. Part 160, 164) requires that business associates identify and respond to security incidents, mitigate the effects, document incidents, and report the incidents. The BAA must require such reporting, but the rule is flexible and allows the parties to determine the frequency, level of detail, and format of reports.

Highlight on Delaware: ACA rates increasing for Delawareans

Monthly premiums will increase 18 to 35 percent for Delawareans who purchase individual and small group health insurance on the health insurance marketplace in 2017. However the increase faced by individuals will depend on their plan and, in cases of individuals eligible for federal subsidies, the impact of the premium hike is limited because tax credits will increase as premiums rise.


Highmark Blue Cross Blue Shield of Delaware and Aetna Life Insurance Co. are the only two companies that will offer individual or small group plans to Delawareans on the marketplace in 2017. When requesting rate increases, Highmark asked for a 32.5 percent increase in individual plan rates—a demand 4 percent higher than the year before.  Aetna sought increases between 23.9 and 25 percent for individual plans. Although Delaware Department of Insurance Commissioner Karen Weldin Stewart negotiated lower rates with the insurers, CMS encouraged Stewart to accept the rate increases so that the insurers would not leave the marketplace. Aetna has pulled ACA plans from 11 other states. The acceptance of the higher rates was a calculated compromise to maintain exchange options for Delaware consumers. Even with the compromise, across the state, plan choices are limited. Between the two companies, there are 20 individual plans and 11 plans for small businesses in 2017.

Premium increases

The premium increases for individual plans vary from 18 to 35 percent. As an example of the cost increases, a 21-year-old nonsmoker could experience about a $64 increase. In other cases, the increases are more severe, for example, smokers over the age of 60 could pay over $300 more than they did in 2016. Consumers can compare rates at the Delaware Department of Insurance website. In the case of enrollees earning between 100 and 400 percent of the federal poverty level (FPL), tax credits are available to make the cost of insurance premiums more affordable.


Despite concerns over the rate increases, HHS press secretary Jonathan Gold assured Delawareans that affordable plans will continue to be available, noting that many individuals will be able to select a plan that costs less than $75 per month.  Gold cautioned that “headline rate changes” can be misleading because “tax credits reduce the cost of coverage below the sticker price and shopping helps consumers find the best deal.”