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Department of Health and Human Services

Office of Inspector General -- AUDIT

"Medicare Part B - Reimbursement to Providers for Drugs Used in Conjunction with Durable Medical Equipment," (A-06-92-00079)

August 14, 1995

Complete Text of Report is available in PDF format (1.7 MB). Copies can also be obtained by contacting the Office of Public Affairs at 202-619-1343.


This final report presents the results of our review of the Health Care Financing Administration's (HCFA) policies regarding reimbursement for drugs used with durable medical equipment (DME). We believe that HCFA's policy for paying for self-administered outpatient prescription drugs used in conjunction with DME lacks clear legislative authority. Also, HCFA does not have specific pricing policies for the payment of drugs used with DME. Consequently, there was no assurance that in calendar year 1992 about $43.9 million of the total payments of $57.4 million for self-administered outpatient drugs used with DME were properly priced and paid. We recommended that HCFA: (1) seek legislation to expressly authorize the coverage of drugs used with DME, and (2) fully implement policies and procedures at the carriers to ensure that such drugs are properly priced and paid.