Audit of Medicaid Payments for Oxygen Related Durable Medical Equipment and Supplies at the Michigan Department of Community Health - January 1, 1998 through December 31, 1999

This final report points out that Medicaid providers received reimbursements for oxygen related items of durable medical equipment (DME) and supplies at rates that were higher than the Medicare allowable amount.  The higher reimbursements occurred because the State agency did not reflect Medicare reductions in the Medicaid reimbursement limits set for these items.  Based on our review of payments for Medicaid DME and supply claims with dates of service during our audit period of January 1, 1998 through December 31, 1999, we found that savings of approximately $2 million (Federal share $1 million) could have been realized if the Medicaid rates had been limited to amounts allowable under the Medicare program.  We have recommended that the State limit the maximum allowable price for DME and supplies to an amount equal to or less than the Medicare allowable amount for the same items.