Medicare Part B Payments for Durable Medical Equipment Provided to Beneficiaries in Skilled Nursing Facilities

EXECUTIVE SUMMARY:

This final report points out a major flaw in the claims processing systems of the four durable medical equipment regional carriers (DMERC). Federal regulations prohibit Medicare Part B payments for durable medical equipment (DME) on behalf of a beneficiary who is in a Medicare Part A skilled nursing facility (SNF) for an entire month. In such cases the Medicare Part A reimbursement to the SNF would cover the DME services and the SNF would be responsible for paying the DME provider or supplier. Our final report points out, however, that the four DMERCs made improper Medicare Part B payments for such services during calendar years 1996 through 1998. We estimate the overpayments totaled approximately $35 million, and were due, in part, to lack of adequate edits in the DMERCs' claims processing systems. In addition, coinsurance payments of approximately $9 million related to these DME items may have also been overpaid by the Medicaid program, supplemental insurance programs, or by the beneficiaries themselves. In addition to recovery of the overpayments, we recommended that the Centers for Medicare and Medicaid Services (CMS) work with the DMERCs to implement edits to identify and prevent such payments in the future. The CMS generally concurred with our recommendations and has agreed to take corrective action.

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