Pacific Medical, Inc., Received Some Unallowable Medicare Payments for Orthotic Braces

From January 1, 2015, through March 31, 2017 (audit period), Pacific Medical, Inc., which is located in Tracy, California, did not always comply with Medicare requirements when billing for selected orthotic braces (i.e., back, knee, and ankle-foot braces). For 89 of the 100 sampled claims, Pacific Medical complied with the requirements. However, for the remaining 11 claims, it did not comply with the requirements. Specifically, Pacific Medical billed for orthotic braces that were not medically necessary for nine claims and could not provide medical records for two claims.

These deficiencies occurred because Pacific Medical did not always obtain sufficient information from the beneficiaries' medical records to assure itself that the claims for orthotic braces met Medicare requirements. On the basis of our sample results, we estimated that Pacific Medical received at least $247,493 in unallowable Medicare payments for orthotic braces.

We recommended that Pacific Medical (1) refund to the durable medical equipment Medicare administrative contractors $247,493 in estimated overpayments for orthotic braces; (2) exercise reasonable diligence to identify and return any additional similar overpayments outside of our audit period, in accordance with the 60-day rule, and identify any returned overpayments as having been made in accordance with this recommendation; and (3) obtain as much information from beneficiary medical records as it determines necessary to assure itself that claims for orthotic braces meet Medicare requirements.

Pacific Medical did not concur with our first recommendation but concurred with our second and third recommendations to the extent that it continues to conduct self-audits and respond to ongoing recovery audit contractor audits. After reviewing Pacific Medical's comments, we maintain that our recommendations remain valid.