Indiana Medicaid Durable Medical Equipment, Indiana Family and Social Services Administration, Indianapolis, Indiana

The objective of this audit was to determine whether the Indiana Medicaid program is adhering to its State Plan policy of paying durable medical equipment (DME) suppliers based on the current Medicare payment ceilings for DME items.  We identified payments made to 31 providers with the highest amounts of Medicaid reimbursement above Medicare payment levels, for the period October 1, 1997 through September 30, 2000, and found that they were overpaid $2,667,790.  The overpayments occurred because the Indiana Office of Medicaid Policy and Planning (OMPP) did not annually review and update its DME payment rates to conform with current Medicare prices.  If OMPP had followed its State Plan provision to adjust Medicaid payments to Medicare payment levels, annual savings would have amounted to $889,000, or $4.4 million over a five-year budget cycle.  We recommended that the OMPP:  (i) reimburse the Centers for Medicare and Medicaid Services $1,637,756 (Federal share) for DME costs claimed that exceeded the Medicare payment ceiling, (ii) consider recovering the DME overpayment from unduly enriched providers, and (iii) adjust its DME payment rates to insure that Medicare payment ceiling levels are not exceeded in the future.