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

CMS has pledged to initiate Recovery Audit Contractor investigations to check on whether beneficiaries who received the services were in fact residents of homes that did not qualify as beneficiaries' homes.

Additionally, the OIG learned, neither the CMS nor the states have a good way of detecting which nursing homes meet those special circumstances that allow their beneficiaries to qualify for durable equipment reimbursement.

"If a beneficiary resides in a nursing facility or a distinct part nursing home that does not provide primarily skilled level of care or rehabilitation, the supplier should identify ‘home' as the place of service," the OIG reported. "However, suppliers that code place of service and Medicare Administrative Contractors that adjudicate claims do not have ready access to the primary level of care status of nursing facilities and distinct part nursing homes unless this information is provided directly by these facilities.

"They lack access to this information because CMS or states did not make these determinations and maintain results in an accessible database."

The OIG report recommends that CMS:

• Routinely identify non-Part A beneficiary nursing home stays
• Recapture inappropriate payments
• Identify patients entering skilled nursing homes with rented DME, which may allow them to qualify for partial reimbursement
• Implement a process to make information about which nursing homes primarily provide skilled nursing care to claims processors.

Part of the problem is that many caregivers for the beneficiaries are renting the equipment, and suppliers are billing Medicare for it, while they are still in their homes, but then they take that equipment with them to the nursing home.

"Following the monthly rental period during which the beneficiary moved to a nursing home that may not be considered his or her home, the DME claim should show the actual place of service as a (skilled nursing facility) or a (nursing facility), which would result in a denial of payment by the DME Medicare Administrative Contractors," the report said. "CMS policies require that suppliers submit accurate clams, but do not provide guidance on how or how frequently they must ensure the accuracy of the beneficiary's place of service."

Ultimately, suppliers depend on the beneficiary—or his or her responsible parties—to tell them when a beneficiary moves into a nursing home. But there is know way for suppliers to ensure that the beneficiaries do so, the report said.

The OIG report mentions that the agency is preparing several other documents on similar topics regarding reimbursement of care provided in skilled nursing facilities, such as psychotherapy and enteral nutrition therapy.

The report said 3.2 million people in 2006 received nursing home care in 16,121 nursing homes certified for Medicare or Medicaid.