By Nina Youngstrom
Managing Editor of Report on Medicare Compliance
An Excerpt Taken from an Issue of Report on Medicare Compliance
The HHS Office of Inspector General continues to find overpayments for manufacturer credits for replaced medical devices, possibly because it’s not the easiest compliance problem for hospitals to solve. Identifying and reporting device credits requires something along the lines of Hands Across America—a lot of people have to be involved to pull it off—but hospitals are hammering away at compliance improvements in this area.
“This is not a simple process, nor is there one solution,” says Jesse Schafer, explant control manager for Mayo Clinic. His position—a joint creation of the integrity and compliance office and the supply chain department—is an attempt to address the formidable challenge of identifying and tracking explanted medical devices and passing on the credits to Medicare, as required by CMS. Mayo Clinic has analyzed the obstacles to compliance and developed a workflow to help ensure that explanted devices are followed from shipping to the manufacturer through claim adjustment,
Schafer says.
Manufacturer credits for explanted medical devices often turn up in OIG audits (RMC 5/8/17, p. 1). When patients need their medical devices replaced because they malfunctioned or are recalled, manufacturers may refund all or some of the cost of the replacement device, depending on its age (and whether warranties apply). CMS requires hospitals to pass on credits to Medicare, which foots the bill for surgeries to implant replacement devices. Medicare uses credit information on claims to reduce payments for inpatient and outpatient procedures performed to replace or fix faltering devices, such as pacemakers and defibrillators. If hospitals neglect to pass on the credits, they may face recoupment in an OIG audit, and the dollars can swell through
extrapolation.
In a way, the area sounds straightforward—hospitals are obliged to give Medicare the credits they receive from manufacturers when devices are replaced—but getting from Point A to B can be harrowing. It’s not always easy to determine which devices are eligible for credits, and some credits don’t have to be passed along to
Medicare. But there are ways to improve the process, Schafer says.
“Mayo Clinic’s approach is to send back all devices” when they’re removed because of malfunctions, early battery depletion, recalls and advisories or other eligible conditions, he says. “We are putting the onus on the vendor to approve or reject. We are proactive in returning any devices that are potentially eligible for warranty, which places the hospital in the best position for the vendor to make a final determination on eligibility.”
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