OPERATION RESTORE TRUST: Review of Durable Medical Equipment Regional Carrier Overpayments

EXECUTIVE SUMMARY:

This report provides you with the results of our review of durable medical equipment regional carrier (DMERC) overpayments. The objectives of our review were to determine whether Palmetto Government Benefits Administrators (GBA) were identifying and collecting overpayments from Medicare providers in a timely manner and to determine whether the DMERC was writing off overpayments.

Our review at Palmetto GBA has identified problems with the overpayment collection process. As of June 30, 1996, the DMERC has identified and recorded $112.6 million in overpayments and interest which have not been collected from the Medicare durable medical equipment (DME) providers. Our review of 90 overpayments showed that established collection procedures were not followed in a timely manner resulting in an excessive dollar amount of outstanding overpayments.

In a memorandum dated November 8, 1996, we advised the Health Care Financing Administration (HCFA) of our findings. In a memorandum dated December 16, 1996, HCFA responded that subsequent to our review, they had been actively involved in overseeing the recoupment of the DMERC overpayments. The HCFA reported that individual overpayments in excess of $5,000 (that had totaled $97,470,926) had been reduced to $45.7 million through collection or referral to HCFA for appropriate action. In addition, HCFA stated that the Atlanta Regional Office will follow-up on a monthly basis with the DMERC to assure that appropriate action has been taken on all overpayments.

The HCFA requires uncollected overpayments outstanding over 180 days to be transferred to HCFA for collection. Therefore, none of the Medicare DME overpayments should be written off by the DMERC. During our audit, we did not find any instances where the DMERC had written off overpayments to providers.

We recommend that the DMERC take immediate corrective actions to comply with collection procedures in order to reduce or eliminate the $112.6 million in overpayments and interest in a timely manner.