Medicare inappropriately paid $39.2 million for test strips and lancets for diabetic beneficiaries in 2007 because its administrative contractor serving 12 northeastern states failed to require proper authorization, the Office of Inspector General said last week.
The OIG audit looked only at claims paid by NHIC Corp, one of four regional Medicare contractors that review and pay durable medical equipment (DME) claims under Part B. The scope was limited to a sample of claims that are considered "high utilization" in that they exceeded normal utilization of 100 test strips and 100 lancets each month for insulin-dependent beneficiaries and every three months for non-insulin dependent beneficiaries.
For those "high utilization" claims, the physician must meet additional requirements for the DME supplier to be paid: he or she must have seen the patient and evaluated the patient's diabetic control within six months of ordering the excess supply, and must have documented in the patient's medical record the specific reason the additional supplies were necessary.
But in 70 of the 100 claims reviewed, that did not take place.
Of $95 million Medicare paid for so-called "high utilization" claims for these DME supplies, the OIG found that 30 claims contained necessary supporting documentation while "the remaining 70 were not supported because each claim had one or more deficiencies."
For example, in those deficient claims, the patient's medical record did not include the specific reason why the additional supplies were necessary, the frequency of testing, nor the treating physician's evaluation of the patient's diabetic control within six months before the additional supplies were ordered.
Additionally, although Medicare rules require that the patient can refill an order for test strips and lancets "only when the beneficiary has nearly exhausted the previous supply and specifically requests the supplies to be dispensed," for 18 of claims reviewed, "the beneficiary had not nearly exhausted the previously dispensed supplies.
"Of the 18 claims, 13 claims had multiple DME suppliers that had dispensed test strips and/or lancets for the same beneficiary with overlapping service dates," the OIG report said.
"In one instance, five DME suppliers had billed Medicare for claims with overlapping service dates for the same beneficiary," whose physician had ordered testing frequency of once a day," which required 100 test strips for a three-month period."
"For calendar year 2007, based on our sample results, we estimated that NHIC inappropriately allowed for payment approximately $49.2 million in claims for test strips and/or lancets that we identified as high utilization claims," the OIG audit said.
"Of this amount, we estimated that NHIC inappropriately paid approximately $39.2 million to DME suppliers."
The OIG said that NHIC "could have saved Medicare an estimated $39.2 million for CY 2007 if it had controls to ensure that claims for test strips and/or lancets complied with certain Medicare documentation requirements.
The OIG audit recommends that NHIC implement systems to identify such claims that don't meet Medicare requirements.
The audit added that NHIC says that it has already addressed the recommendations, and is conducting supplier prepayment reviews for test strips and lancet claims.
NHIC Inc. is contracted by Medicare to serve 7.7 million Medicare beneficiaries in Connecticut, Delaware, District of Columbia, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island and Vermont, and pays 24,000 suppliers of Durable Medical Equipment, Prosthetics, Orthotics, and Supplies.