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Medicare requirements for HBO - compliance, review, pre-authorization

Medicare requirements for HBO - compliance, review, pre-authorization

Medicare requirements for HBO - compliance, review, pre-authorization


The U.S. Office of Inspector General (OIG) is responsible for fighting waste, fraud, and abuse in Medicare, Medicaid and other Department of Health & Human Services (HHS) programs. A prior OIG review identified issues with Medicare payments for HBO therapy, and Medicare Administrative Contractors (MACs) have expressed frequent concerns about the overuse of hyperbaric oxygen therapy (HBOT).[1] Among the MACs, Wisconsin Physicians Service Government Health Administrators (WPS) demonstrated a high volume of paid outpatient claims that contained HBO therapy services. As a result, a new review was conducted by the OIG to determine whether WPS paid providers in 2013 and 2014 for HBO therapy services that complied with Medicare requirements. The review found that WPS overpaid providers in Jurisdiction 5 an estimated $42.6 million in 2013-2014 for HBO therapy that did not comply with Medicare requirements. This topic discusses reasons why requirements were not met and the consequences. [1] 


  • WPS was reviewed by the OIG.[1] A sample of 120 claims totaling $438,210 was analyzed. WPS paid 73 providers for HBO therapy services that did not comply with Medicare requirements. WPS made payments for HBO therapy that did not comply with Medicare requirements for 102 claims, resulting in overpayments totaling $300,789. Based on this sample, OIG estimated that WPS overpaid providers in Jurisdiction 5 $42.6 million in 2013 and 2014. 
  • Errors detected by the review include inadequate documentation of medical necessity and incorrect billing, which are detailed below:
  • Regarding HBOT without medical necessity (see Table 1):
    • Documentation on medical records did not support that the HBOT provided met requirements for a covered condition as listed on National Coverage Determination (NCD) 20.29 [2] For all MACs, Local Coverage Determinations and NCDs see "Medicare Coverage Determinations for Hyperbaric Oxygen Therapy"
    • Also, there was insufficient documentation on the fact that HBO therapy was provided only after standard or conventional treatment failed. 
  • Regarding HBOT with incorrect billing (see Table 2): 
    • Provider billed the incorrect number of units or the
    • Documentation did not support that HBO therapy was provided on the dates of service billed 
  • Causes for improper payments for HBOT:
    • WPS made payments for HBO therapy that did not always comply with Medicare requirements because it had limited policies and procedures in place to ensure that it made correct payments.

Table 1. A Representative Example of a Medicare Payment for Hyperbaric Oxygen Therapy That Was Not Medically Necessary [1] 

           Jane Doe is a Medicare beneficiary who started receiving HBO therapy on June 16, 2014, for a diabetic foot ulcer. Ms. Doe received 19 sessions of HBO therapy during July 2014. The hospital provider billed for these sessions and was paid $7,236 by WPS. However, the medical reviewers found that the HBO therapy was not reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member. Specifically, the records did not clearly support that the patient’s foot ulcer was due to diabetes. In addition, the records documented that the patient had lower extremity vascular insufficiency. There was no evidence that this vascular insufficiency was treated. Wounds that are due to chronic vascular insufficiency are not eligible for HBO therapy. Furthermore, the wound consistently was noted in the medical record as being Wagner grade I.  To be eligible for HBO therapy, diabetic wounds must be Wagner grade III or higher. Therefore, the HBO therapy did not meet Medicare requirements. As a result, WPS overpaid the provider $7,236

Table 2. A Representative Example of a Medicare Payment for Hyperbaric Oxygen Therapy That Was Billed Incorrectly [1] 

        John Doe is a Medicare beneficiary who underwent 27 HBO therapy sessions as of August 19, 2014, for treatment of Wagner grade III diabetic foot ulcers, which is a covered condition. The hospital provider billed four units (120 minutes) of HBO therapy (HCPCS code C1300) for one of the sessions and was paid $325 by WPS. However, the HBO treatment record indicated that the total treatment time was 89 minutes. (The patient experienced cramping, and decompression was started early.) Therefore, only three units (90 minutes) of HBO therapy should have been billed rather than four units. As a result, WPS overpaid the provider approximately $81 ($325/four units) for one unit of HBO therapy.


  • OIG made several recommendations to WPS including [1] :
    • Recover the appropriate portion of the $300,789 in identified Medicare overpayments; 
    • Notify the providers responsible for the 44,820 non sampled claims, with potential overpayments estimated at $42.3 million, so that those providers can investigate and return any identified overpayments;
    • Identify and recover any improper payments for HBO therapy made after the audit period;
    • Strengthen its policies and procedures for making payments for HBO therapy, which would result in millions in future cost savings.
      •  As a result, HBO therapy was referred to the Fraud Prevention System contractor to develop automated edits for all MACs to utilize. A new edit was installed in the Fiscal Intermediary Standard System. 
  • In 2015, WPS initiated CMS’s Non Emergent Hyperbaric OxygenTherapy Prior Authorization demonstration program in Michigan.[1] 


  • Established in 2015 and completed in 2018, this 3 year program aimed to reduce improper payments by requiring claims for services to be reviewed by a health care payer for compliance with coding, billing, and coverage rules (including medical necessity) before services are rendered to beneficiaries and claims are submitted for payment. [3]
  • Implementation of the model began in April 2015 in Michigan, followed by Illinois and New Jersey in August 2015. 
  • Findings are listed below [3]:
    • Prior authorization reduced HBO service use and Medicare expenditures.
      • The estimated probability of HBO utilization, number of HBO treatments, and average HBO expenditures all decreased for the population of beneficiaries with any condition subject to prior authorization as well as for the focal analysis group: beneficiaries with diabetic lower-extremity wounds.
      • HBO expenditures decreased by nearly 40 percent for both of these groups.
      • The decrease in HBO service use does not appear to be offset by increased spending on other wound care services.
    • Quality of care:
      • Prior authorization did not appear to reduce the quality of care received by beneficiaries or increase adverse events. Stakeholders report some delays in beneficiaries receiving timely access to care in the early phases of the model
    • MACs report few challenges
    • Providers report increased burden, concerns about the application of medical necessity guidelines, and challenges understanding pre-existing documentation requirements enforced under the model. 
    • At the outset of model implementation, denied claims initially rose but reverted to their pre-model level, suggesting that HBO providers were learning and becoming accustomed to the model’s more strict enforcement of pre-existing documentation requirements


  • In light of the reviews and reports above, the U.S. Government Accountability Office (GAO) recommended that based on results from evaluations, to continue prior authorization. The Department of Health and Human Services neither agreed nor disagreed with GAO’s recommendations but said it would continue to evaluate prior authorization programs and take GAO’s findings and recommendations into consideration in developing plans or determining appropriate next steps. [4]
  • 06/19/2019 - Final Evaluation Report

    The Centers for Medicare & Medicaid Services (CMS) released the Evaluation of the Medicare Prior Authorization Model for Non-emergent Hyperbaric Oxygen (HBO): Final Report. An evaluation of the model was conducted as required by Section 1115A of the Social Security Act. The findings indicate that prior authorization decreased HBO therapy use and expenditures; however, there was no significant effect on total Medicare expenditures. Additionally, the effects of the model on quality of care and adverse outcomes were neutral.

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NOTE: This is a controlled document. This document is not a substitute for proper training, experience, and exercising of professional judgment. While every effort has been made to ensure the accuracy of the contents, neither the authors nor the Wound Reference, Inc. give any guarantee as to the accuracy of the information contained in them nor accept any liability, with respect to loss, damage, injury or expense arising from any such errors or omissions in the contents of the work.


  1. Department of Health and Human Services, Office of Inspector General et al. Wisconsin Physicians Service Paid Providers for Hyperbaric Oxygen Therapy Services That Did Not Comply with Medicare Requirements . 2018;.
  2. CMS. National Coverage Determination (NCD) for Hyperbaric Oxygen Therapy (20.29) . 2017;.
  3. Mathematica Policy Research. Interim Report for the Evaluation of Medicare Prior Authorization Model for Non-emergent Hyperbaric Oxygen (HBO) . 2018;.
  4. U.S. Government Accountability Office. CMS Should Take Actions to Continue Prior Authorization Efforts to Reduce Spending . 2018;.
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