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Why Audits are Happening in Wound Care & How to (Maybe) Avoid Them

Particular modalities have come under the microscope in this industry. Is your clinic performing them appropriately as per medical necessity?

The Medicare program will go bankrupt in either 2016 (yes, next year) or 2024, depending on how you calculate the effect of the Patient Protection and Affordable Care Act (ACA). This estimate is according to the 2012 annual report of the Federal Hospital Insurance and Federal Supplementary Medical Insurance trust funds’ boards of trustees. The high cost of wound care is a major contributor to the hemorrhaging of Medicare funds. In 2012, the U.S. Wound Registry (USWR) published data on the costs over time in outpatient wound care.1 That data included an analysis of 5,240 outpatients living with wounds who, over a five-year period, accrued a total “cost to the system” of $29,249,500 — in outpatient charges only. If we assume that 6.5 million people in the U.S. live with chronic ulcers, then extrapolating these data would yield a cost of at least (approximately) $25 billion on the outpatient side alone.

Currently, one of the major sources of Medicare revenue is the recoupment from the many auditing programs run by the Centers for Medicare & Medicaid Services (CMS).2 For example, from March 2005-March 2008, Recovery Audit Contractors (RACs) collected more than $1.03 billion in Medicare “improper payments.” Improper payments by Medicare are a significant contributor to the impending bankruptcy of the system, and Medicare estimates that more than 30 percent of the payments it makes are “improper.” While intentional fraud does exist, Medicare considers improper payments to include services that did not meet Medicare’s medical necessity criteria (eg, did not follow coverage criteria) and services that were not supported with proper medical documentation.

In 2009, Congress enacted the Fraud Enforcement and Recovery Act, which made “retention of an overpayment” a basis for False Claims Act (FCA) liability. The FCA was expanded with the overpayment provision in the ACA. Before the overpayment provision there was no explicit statutory obligation to return overpayments from the Medicare and Medicaid programs. Today, there is a duty to repay whenever a provider identifies an overpayment. So, if you as a provider realize you have been overpaid, you must pay that money back. In addition, Medicare has ramped up programs to go after overpayments with a variety of auditing programs. The question is probably not, “What if you are audited?” It’s “When will you be audited?” However, there are reasons other than fear of auditing for providers to ensure their wound clinic documentation and billing are in order. This article will address those issues, discuss some of the more common modalities that raise red flags for auditing, and provide suggestions to help wound care providers potentially avoid audit.

Audits & Healthcare Reform

As has been discussed in the pages of Today’s Wound Clinic (TWC) many times before, we are on the cusp of major healthcare reform. On Sept. 28, 2015, CMS made available the 2014 Supplemental Quality and Resource Use Reports (QRURs) to every medical group practice and solo practitioner nationwide. These reports provide information to providers (identified in the Supplemental QRURs by their taxpayer identification numbers) on the management of their Medicare fee-for-service patients based on “episodes of care.” An “episode” is a resource use measure that includes the set of services (think, “charges”) provided to treat, manage, diagnose, and follow up on a clinical condition or treatment. This is the beginning of the movement that will make outpatient payment look a lot more like inpatient diagnosis-related groups. We are just beginning to enter the world of true “bundled payments” in which providers will share a fixed amount of money for the entire episode of care, and CMS is now looking to see which providers use the most “resources” (“spend the most money”) caring for patients living with certain diseases. The point is that while we may currently still be paid on a volume basis, CMS is tracking how much we charge for patients with different diagnoses. “Big-spender providers” are going to be penalized unless they can prove their patients were extremely high risk (another reason for this author’s development of a risk-stratification tool for patients living with wounds). CMS is genuinely attempting not to penalize doctors who care for very sick patients. However, wound care providers must make sure they are not wasting Medicare dollars by providing expensive treatments to patients who might get well without them. This is also the reason for the worrisome language in recent local coverage determination (LCD) policies pertaining to hyperbaric oxygen therapy (HBOT), which state HBOT will be covered only for patients who show “no clinical signs of improvement.” CMS wants to limit resource use to only the patients who need it, and at the moment they don’t have very good tools to do that.

There is a famous story about an interview with the notorious American bank robber Willie Sutton, Jr. When asked why he robbed banks, he replied, “Because that’s where the money is.” If you want to know which services are under scrutiny by CMS, look those involving a lot of revenue. In wound care, that is most likely HBOT and debridements. Cellular products could wind up on that list as well.

Target No. 1: HBOT

Why is HBOT a likely target for recoupment efforts? A recent TWC article reviews some high-profile fraud cases in the hyperbaric community.3 HBOT remains an obvious target for auditing because it is a high-dollar service and its use is drastically growing. However, there have been public revelations that HBOT providers do not do a very good job of implementing Medicare coverage policy. (As one who’s subspecialty board certified in undersea and hyperbaric medicine and still practice hyperbaric medicine, this author sees this as an issue of great concern.) According to USWR data, one of the most common diagnoses for which HBOT is used in this country is the treatment of diabetic foot ulcers (DFUs). The “value proposition” for HBOT in DFUs (which has randomized controlled trial [RCT] data to support it) is that HBOT, in conjunction with revascularization, improves the healing rate of Wagner Grade III ulcers and decreases major amputation rate (possibly in exchange for more distal, minor amputations), thus increasing quality of life years for DFU patients. What’s more, unlike the RCTs of nearly all cellular- and tissue-based products, the RCTs performed using HBOT were actually generalizable trials that enrolled sick patients living with severe peripheral arterial disease and Wagner Grade III (limb-threatening) ulcers rather than the Wagner Grade I ulcers enrolled in the trials of other advanced products. HBOT is the only advanced therapeutic that has been shown to increase tissue oxygen levels after a course of treatment. CMS covers HBOT for Wagner Grade III ulcers that have failed to improve after 30 days of standard wound care. Standard wound care includes: assessment of vascular status/correction of vascular problems, optimization of nutrition and glucose control, debridement as needed, moist dressings, appropriate offloading, and treatment of infection. Auditors have a lot of leeway when it comes to interpreting whether this standard has been met.

However, according to USWR data a significant percentage of patients are receiving HBOT for Wagner Grade II ulcers. Furthermore, a recent analysis of HBOT effectiveness by Margolis et al4 found HBOT to be ineffective in real-world practice. A large percentage of the patients in the Margolis study also received HBOT for Wagner II ulcers, and it is not clear that the criteria for “appropriate conservative care” were met prior to the initiation of HBOT. Three states are also now in a Medicare prior authorization program whereby the medical records of patients have to be reviewed prior to the initiation of nonemergent HBOT to ensure payment. This program is reportedly not going well (from the perspective of the providers) as auditors are reviewing charts to see if the care provided meets the LCD coverage criteria.

Target No. 2: Debridement

In May 2007, the Office of Inspector General (OIG) published a report on surgical debridement services ( The OIG had seen a dramatic increase in the number of Medicare claims submitted for the surgical debridement of wounds under Current Procedural Terminology® codes 11040-11044 and performed an audit in 2004 (results published in 2007). The OIG concluded that in 2004, Medicare paid out $188 million for surgical debridement services — 64 percent of which did not meet Medicare program requirements. Many services were miscoded. OIG also found that 47 percent of miscoded services were not actually surgical debridements at all. For example, 20 percent of these services billed as debridements were routine foot care (eg, removal of a benign hyperkeratosis lesion, such as a corn or callus) that should not have been billed as a surgical debridement. In addition, 29 percent of surgical debridements were either not documented at all or insufficiently documented. Some of these services might have been part of an inappropriate pattern. For example, one patient had 43 debridements involving muscle within a nine-month period. The OIG recommended that CMS strengthen its program safeguards to prevent improper payments for surgical debridement services. This report was likely the origin of subsequent policies published by various Medicare Administrative Carriers (MACs) that limit the number of surgical debridements per year (in some cases up to five) and specify that the removal of biofilm is not justification for a billed surgical debridement. According to many LCDs, surgical debridements are not “medically necessary” when documentation indicates the wound is without infection, necrosis, or nonviable tissues and has pink to red granulated tissue.

CMS has also implemented the Comprehensive Error Rate Testing (CERT) program. Statistical anomalies in billing are targets for CERT audits. The CERT program pulls random samples of electronic claims. CMS outlines how records are requested for the CERT program through its Improper Medicare Fee-for-Service Payments Report available online at Remember that Medicare is making billing data public. For example, the OIG has given RACs the names of 17,000 physicians who are billing high evaluation and management (E&M) levels of service. CMS has noted a 17 percent increase in Level IV and V E&M codes and has targeted physicians who bill these the most frequently. CMS has also published debridement data on hospital-based outpatient departments (HOPDs; see Table 1). TWC_Fife_Table1_1015

Notice the change from 2010 to 2011 in one HOPD at a hospital system in Texas. In “Hospital 4” of this system, the annual billed debridements increased from 17 to 827 in the span of one year after this facility went under the direction of a management company. The wound center in “Hospital 3,” which also had debridement procedures in the hundreds, was under a management contract, but the wound centers in “Hospital 2” and “Hospital 6” were not. (“Hospital 1” and “Hospital 5” did not have outpatient wound clinics.) This is not to imply that simply because these charges occurred they were somehow improper. However, the dramatic change in number of debridements from one year to the next in “Hospital 4” is a statistical anomaly that could trigger a CERT audit. Facilities with debridement patterns like this need to have their records in order.

Health Information Technology Data: The Trojan Horse

Bonus money for achieving health information technology Meaningful Use by doctors is contingent on submission of quality data to CMS. The HIPAA 5010 standard that certified electronic health records (EHRs) must meet will allow (and is now beginning to mandate) that the actual encounter be transmitted to the payer, not just the bill. However, payers are not going to hire thousands of certified coders to review these documents — they are going to parse them with computer programs to decide whether to pay the billed level of service. That’s why having an EHR that can internally audit your documentation and tell you what level of service your documentation can justify is so important. If your EHR requires you to “select” your level of service after you complete your documentation, then it does not have the ability to internally audit the documentation to support your billing. Would you buy a “turbo tax” program that asked you how much you wanted to pay in taxes after you put in the data rather than told you how much you owed? Internal auditing functions like this are a major reason that free text (typing) doctors’ notes is a dangerous practice when it comes to the activities that support billing.

How to Not Lose Money in an Audit

Wound care clinicians must ensure that the medical record(s) of the patient(s) being discussed give full details to how the patient(s) meets the coverage indications and that the chart(s) include the information on any interventions required by an LCD. This means that it is critically important to ensure the designated record set includes all necessary information. When wound and HBOT programs are run as separate entities the necessary documentation from the wound clinic might not be transmitted to CMS to justify hyperbaric medicine services (even though these interventions have been properly performed). Specify what constitutes the designated record set at your organization (eg, paper records stored in medical record folders, EHRs, photographs and where they are stored, data from other departments). If the wound clinic has the documents that support the need for HBOT, you need those, too.

The clinician must make a clear case in the medical record as to why services are medically necessary. Lack of concordance between the documentation provided by the nurse versus that provided by the doctor is a major area of risk. This is accentuated when the nursing documentation in the chart is separate from the advanced practitioner’s (AP’s) chart area so that the AP may not actually read and know what the nurse said. If the nurse says “the wound is 100 percent granulated” and the AP performs and bills for a surgical debridement of necrotic material, that chart is at risk for recoupment. This is yet another argument against the concept of “two people charting at the same time,” since that is only possible if these two vital areas of the chart are separate from each other. Two people charting at the same time (meaning, separating the doctor’s and the nurse’s notes) is a dangerous practice that has led to monetary recoupment. Another way that clinicians and hospital administrators leave themselves open to recoupment is when there is a lack of concordance between ulcer type or description and billed level of debridement. If your EHR is not able to provide reports that alert you to inconsistencies like this, you are going to need to be vigilant at ensuring the level of debridement and the stage or grade of an ulcer makes logical sense. Beware of written policies that may be interpreted as “establishing benchmarks for procedures.” If audited, you certainly do not want to have written policies that suggest “weekly” debridements are performed or that any procedure is done based on calendar days rather than on the needs of the patient. If you use an EHR, remember that the medical record is not the screen with which you interact and is instead a file-based representation of today’s encounter. The encounter record must be locked against alteration and then stored securely in either paper or electronic format. Consider hiring an auditor to review your records and highlight potential weaknesses. It is better to know that information in advance of any outside audits. While recoupment programs are a source of concern, improving the quality of documentation and being more careful about adhering to coverage policies can benefit both the patient and the provider as the healthcare system moves from a volume-based to a value-based payment system. TWC_Fife_Table2_1015

Caroline E. Fife, MD, FAAFP, CWS, FUHM, is chief medical officer at Intellicure Inc.; executive director of US Wound Registry; medical director of St. Luke’s Wound Clinic, The Woodlands, TX; and co-chair of the Alliance of Wound Care Stakeholders.


1. Fife CE, Carter MJ, Walker D, Thomson B. Wound care outcomes and associated cost among patients treated in U.S. outpatient wound centers: data from the U.S. Wound Registry. Wounds. 2012; 24(1) 10-17.

2. Fife C. The ABCs of Medicare auditing. TWC. 2012;6(6):12-16.

3. Le J. Lessons to learn from federal convictions of HBOT fraud. TWC. 2015;9(2):27-31.

4. Margolis DJ, Gupta J, Hoffstad O, Papdopoulos M, Glick HA, Thom SR, Mitra N. Lack of effectiveness of hyperbaric oxygen therapy for the treatment of diabetic foot ulcer and the prevention of amputation: a cohort study. Diabetes Care. 2013;36:1961–1966.

Caroline E. Fife, MD, FAAFP, CWS, FUHM
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