Updated documentation requirements in Medicare could add burden on healthcare providers

Citing concerns about improper payments, CMS issued a regulatory update that expands Medicare prior authorization and other documentation requirements starting April 13.

The regulations are most meaningful for vendors of durable medical equipment, prosthetics, orthotics and supplies (DMEPOS), but the operations of hospitals and other front-line providers stand to be affected as well.

Increased documentation requirements

The update expands the F2F/WOPD List, referring to Medicare items that require a face‑to‑face (F2F) encounter no more than six months before the patient receives the product, plus a written order prior to delivery (WOPD), transmitted to the supplier. Documentation must support the diagnosis, treatment decision and medical necessity.

The additions are eight new codes relating to oxygen equipment and delivery systems. CMS wrote that oxygen supplies have been identified as a leading source of improper payments in Medicare, including a 2024 improper payment rate of 11.3%, equating to $81 million.

“We continue to believe additional practitioner oversight of beneficiaries in need of items included on the F2F/WOPD List will help further our program integrity goals of reducing fraud, waste and abuse,” CMS wrote. “It helps ensure beneficiary receipt of items specific to their medical needs, as the written order/prescription must be communicated to the supplier prior to delivery.”

Telehealth is an option for prescribing and monitoring DMEPOS items that require a face-to-face encounter and written notice, CMS said. Eligibility is contingent on meeting Medicare coverage and documentation requirements for telehealth.

Of the 75 items already on the list, “We have not been notified of any issues related to beneficiary access, and billing trends have been consistent with anticipated volumes,” CMS wrote.

Expansion of prior authorization

Seven new items require prior authorization, including five codes for orthoses and two for pneumatic compression devices. Providers thus can expect requests for additional documentation or clarifications from suppliers.

CMS said pneumatic compression devices had an improper payment rate of between 61% and 79% from 2021 through 2024, with errors increasingly tied to medical necessity. The rate for orthoses was 35.2% to 57.5%, and in recent years, the Department of Justice has taken action related to alleged fraud involving medically unnecessary orthotic braces.

The increased oversight by Medicare is expected to reduce unnecessary payments by 20% and save $32 million per year for the program, according to CMS.

While the newly issued updates relate to suppliers, providers in six states are subject to expanded Medicare prior authorization requirements through the Wasteful and Inappropriate Service Reduction (WISeR) Model that launched in January. In recent years, Medicare has established that a handful of hospital outpatient department services include obligatory prior authorization.

Greater scrutiny for some HCPCS codes

CMS also added 18 codes to its Master List, effective in April. Inclusion on the list signifies that CMS has assessed the item to be at high risk for fraud and is monitoring it for possible inclusion on the list for prior authorization or the catalog of items requiring face-to-face encounters and written orders. To be considered for the Master List this year, an item needed to have an average purchase price of $602 or an average monthly rental price of $61.

Among the new items on the list are wound dressings, glucose monitor supplies, ventilatory devices, compression garments, and prosthetic and orthotic components.

Eight of the 18 codes were recent subjects of reports by the HHS Office of Inspector General or the Government Accountability Office or were flagged by CMS’s Comprehensive Error Rate Testing Program. The 10 others were added due to concern over aberrant billing patterns such as payment growth that exceeds 30% year over year, with no evident explanation for the rapid increase.

With no items qualifying for removal this year, the Master List stands at 512 items.

Congress hears about the DMEPOS issue

The broader concern over improper payments across government healthcare programs received its latest congressional hearing Feb. 3, as conducted by the House Energy and Commerce Committee’s Oversight and Investigations Subcommittee.

Suspected fraudulent claims from six DMEPOS companies amounted to more than $1,000 per beneficiary in 2025 in one state, said Stephen Nuckolls, CEO of Coastal Carolina Health Care. That’s roughly triple the 2022 DMEPOS spending level per beneficiary.

“Anomalous billing spikes,” suggesting fraud or abuse, were seen for wound dressings (1 code), orthotics (4 codes), continuous glucose monitoring (2 codes plus related), and urinary catheters (1 code) last year, Nuckolls said in his written testimony.

Jessica Gay, co-founder and vice president of Integrity Advantage, which helps payers combat fraud, waste and abuse (FWA), submitted testimony in which she described manifestations of FWA in several areas of healthcare, including DMEPOS.

Trends that show up in cases of possible DMEPOS fraud include products being billed but not supplied, an absence of medical necessity, a lack of physician orders (including in telemarketing scenarios), and upcoding.

The big picture for payment oversight

CMS in January issued its annual report on improper payments in Medicare and Medicaid, finding that Medicare fee-for-service had an improper payment rate of 6.55% ($28.83 billion) in FY25. That was down from 7.66% ($31.7 billion) in FY24.

“Most improper payments occurred in situations where a reviewer could not determine if a payment was proper because of insufficient documentation from a state [Medicaid agency], provider, or the [Medicare] Part D sponsor,” the agency wrote, noting that an improper payment does not in itself suggest fraud.

When actual fraud is perpetrated, modern documentation tools sometimes are the culprit, Gay said during the hearing.

“It’s also more difficult on our end to be able to see [whether it’s] a legitimate document because electronic medical records can print off an amazing medical record that looks like a full service was done,” she said. “Whereas in the past, if you’d had to write out that note, you might have seen what was really performed.”