“In nearly every facility we venture into, we consistently find errors in the implantable medical device
credit reporting area,” said a U.S.
Department of Health and Human
Services Office of Inspector General
(OIG) auditor, who was kind enough
to personally answer some of my
questions during a concomitant audit
conducted by the federal agency and
my own auditing staff. In the end,
our findings were 99% similar, and
I felt obliged to email this useful
contact to tell her, “How right you were, lots
of mistakes.” That was five years ago, and in
all of my work conducted nationwide in this
reporting requirements “space,” providers are
still making the same mistakes.
This two-part article asserts that much
needed help can be found by looking at
past provider mistakes, so let’s start at the
beginning. To set the tone, the Provider
Reimbursement Manual establishes that
“…charges should be related consistently
to the cost of the services and uniformly
applied to all patients whether inpatient or
outpatient.”1 Specific to devices, the Medicare
Claims Processing Manual goes on to state:
“Accordingly, hospital charges with
respect to medical devices must be
reasonably related to the cost of the
medical device. If a hospital receives a
credit for a replacement medical device,
the charges to Medicare should also be
appropriately reduced.” (Emphasis added). 2
For implantable medical device credits issued for certain replacement devices
(as well as initially placed-free devices), a
basic equation reigns: For credits of 50% or
greater, the credit amount must be passed
along to the Medicare program and the
by Michael G. Calahan, PA, MBA
Top 10 federal audit findings
for implantable medical device
credits, Part 1
» The OIG has found certain areas of device credit reporting to be lucrative for provider repayments and fines.
» Review the underlying principles of the device credit-reporting mandate.
» Key employees should be taught to recognize the reportable device credit thresholds and how to correctly
apply the device credit calculations.
» The typical workflow process will involve cross-departmental staff, but it generally works if communication
is good between departments.
» The top error found during federal audits is not pursuing all of the available vendor credits for the associated implantable device.
Michael G. Calahan ( email@example.com) is Vice President of Hospital &
Physician Compliance for HealthCare Consulting Solutions (HCS). Michael lives
and works in the Washington DC Metro area.