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Department of Health and Human Services

Office of Inspector General -- AUDIT

"Review of Payments for Inhalation Drugs Made by Region C Durable Medical Equipment Regional Carrier," (A-06-00-00053)

October 4, 2001

Complete Text of Report is available in PDF format (826 kb). Copies can also be obtained by contacting the Office of Public Affairs at 202-619-1343.


This final report points out significant potential improper payments to suppliers for inhalation drugs by the Region C Durable Medical Equipment Regional Carrier (DMERC) for the 12-month period ending September 30, 1999. Based on a statistical sample, we estimate such payments totaled $134 million. Claims were unallowable ($46 million) because payments were for noncovered items of supplies (drugs billed without a prescription) or the items or supplies were not reasonable and necessary for the beneficiary’s condition. Claims for which there was insufficient documentation to determine allowability totaled $88 million. This problem occurred primarily because, with some exceptions, the DMERC had no procedures in place to "look behind" the claim at the beneficiary’s medical record or at the documentation maintained by the suppliers. Recommendations call for improvements to procedures and controls and financial adjustments.