Review of Medicare Home Health Consolidated Billing for Calendar Years 2007 and 2008

Based on our sample results, we estimated that durable medical equipment Medicare administrative contractors (DME MAC) failed to recover $3.4 million overpaid to DME suppliers for calendar years 2007 and 2008. For the 107 sampled line items of service, the DME MACs recovered overpayments for 49 line items, and 4 line items were not associated with a home health episode and therefore were not subject to consolidated billing. For the 54 remaining line items of service, the DME MACs had not recovered overpayments totaling $24,000 as of June 10, 2010. The Centers for Medicare & Medicaid Services (CMS) contracts with DME MACs to process and pay Medicare claims from DME suppliers.

The Common Working File postpayment edit consistently identified nonroutine supplies subject to home health consolidated billing. However, two of the DME MACs did not implement procedures to process and recover overpayments in a timely manner.

We recommended that CMS direct the DME MACs to (1) process and recover the $24,000 in unrecovered overpayments that we identified in our sample; (2) use our data to identify, process, and recover potential unrecovered overpayments estimated at $3.4 million for the nonsampled line items of service; and (3) implement procedures to ensure prompt and aggressive action to process and recover overpayments for nonroutine supplies subject to home health consolidated billing. CMS agreed with our recommendations.