GAO Report Calls for Better DME Prepayment Controls

WASHINGTON–According to the Government Accountability Office,
CMS’ DME payment contractors need better prepayment controls to
detect questionable claims.

In a report released Tuesday, the GAO said the DME Program
Safeguard Contractors and Medicare Administrative Contractors
responsible for medical review and processing of Medicare claims
“did not have sufficient automated prepayment controls to flag
claims that are part of unexplained increases in billing, or that
were medically improbable.” CMS estimates Medicare paid $700
million in improper claims for DMEPOS between April 2005 and March
2006.

For example, GAO said the CMS contractors could not “identify
questionable claims that were part of an atypically rapid increase
in billing” and, in some cases, couldn’t “identify claims for items
unlikely to be prescribed in the course of routine quality medical
care.”

Due to an absence of such “threshold edits,” the report said,
from the first quarter of 2003 through the first quarter of 2005,
225 suppliers increased their billing to Medicare by $500,000 and
50 percent from at least one three-month period to the next. And
from October 2002 through March 2005, Medicare paid over $2 million
for beneficiaries’ braces after the program had paid for
prosthetics for the same beneficiaries’ legs, feet or ankles.

The GAO recommended that CMS require its contractors to share
information with each other to adopt the most cost-effective
prepayment controls.

For example, the report noted, Medicare could have saved nearly
$71 million from January 2003 through June 2005 if all the
contractors had adopted one contractor’s control restricting
payment for home-use hospital beds to one per month per
beneficiary.

“This report underscores the need for Medicare program officials
to make sure the contractors are doing their jobs,” said ranking
Senate Finance Committee member Chuck Grassley, R-Iowa, who
requested the GAO inquiry. “By proactively identifying suspicious
billing, dishonest suppliers can be caught and the fraud stopped
before even more money is scammed.

“Most suppliers of medical equipment like leg braces and glucose
test strips are honest, but the bad actors cost the program $700
million every year.”