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Millions of Dollars Are Lost Because of Miscoded Durable Medical Equipment Supply Claims

Cheryl Clark, for HealthLeaders Media, July 30, 2009

Durable medical equipment suppliers miscoded claims in 2006 resulting in the federal government, private insurance, and individuals overpaying them $42 million for items like wheelchairs and oxygen, an investigation by the Office of Inspector General said yesterday.

Of the $42 million, $23.4 million was paid by Medicare. Medicare, private insurance companies, and private payers wrongly paid an additional $7.1 million, much of it in co-payments. And another $11.9 million was "inappropriately allowed" by Medicare Part B during stays in Medicaid certified nursing facilities.

The 309,626 claims were spread across 11,702 nursing homes.

Except in very special circumstances in which the nursing home does not provide rehabilitation or skilled care, such nursing facilities did not meet the definition of a home for the purpose of durable equipment reimbursement.

The OIG report is titled "Part B Services During Non-Part A Nursing Home Stays: Durable Medical Equipment," and deals with a category of care services provided after Medicare Part A expires, which is after the first 100 days a beneficiary receives care in a skilled nursing home.

The overpayments are a result of ignorance of or non-adherence to a federal rule that disallows payment for rental or purchase of such equipment unless beneficiaries are living in their homes. The report also pointed to a nationally flawed system in which states and CMS have no way of knowing which facilities qualify for reimbursement and which don't.

In response to the OIG's investigation, acting administrator for the Center for Medicare and Medicaid Services, Charlene Frizzera, said the agency "plans to recover the overpayments identified consistent with the Agency's policies and procedures." A spokeswoman for CMS said it is unclear how the agency will seek to recover the misspent funds, and whether private consumers and insurance companies will be separately notified.

Equipment that was incorrectly paid for included hospital beds, decubitus or wound healing equipment, walkers, seats or patient lifts, neuromuscular electrical nerve stimulators, commodes and baths, and air mattresses. Payment for wheelchairs and walkers accounted for 72% ($22 million) of $30 million worth of incorrect Medicare billings. Another $11.9 million was inappropriately allowed for Medicare beneficiaries who stayed in Medicaid nursing facilities. Most of it was for renting equipment rather than purchase.

If the beneficiary requires a longer stay, Part B may kick in for certain services, but not for durable medical equipment unless the facility is the patient's home.

Durable medical equipment is defined as equipment that can withstand repeated use, serves a medical purpose primarily, is not useful to someone who is not ill, and is appropriate for use in the home.

Michael Reinemer, vice president of communications and policy for the American Association for Home Care, which represents companies that manufacture and supply such equipment, says if some people are cut out of eligibility for care they need, and no other entities will provide it, "maybe the policy needs to be adjusted."

However, he emphasizes, if suppliers are miscoding in an effort to commit fraud, "we're adamantly opposed to that."

The American Healthcare Association, which represents skilled nursing facilities, did not return a call requesting comment.

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