CMS Did Not Detect Some Inappropriate Claims for Durable Medical Equipment in Nursing Facilities

WHY WE DID THIS STUDY

The Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 directs OIG to monitor the appropriateness of Medicare payments for items and services-including durable medical equipment (DME)-provided during stays not covered by Medicare, called "noncovered stays," in skilled nursing facilities (SNFs). CMS requires facilities to provide DME as a standard part of nursing care, and does not permit separate Medicare payment for DME except when Medicaid only nursing facilities serve as beneficiary homes. Previously, OIG found that CMS allowed $41.2 million in Medicare payments for inappropriate claims for DME provided during noncovered stays in SNFs ($30 million) and in Medicaid only nursing facilities ($11.2 million) in 2006. In response to OIG's work, CMS implemented a new payment edit (automated payment process) to reject claims for DME provided during noncovered SNF stays. However, CMS did not address stays in Medicaid-only nursing facilities. This study provides an update to OIG's prior study, assessing Medicare claims for DME provided during noncovered stays in SNFs and Medicaid only nursing facilities.

HOW WE DID THIS STUDY

For 2015, we identified inappropriate claims for DME provided during noncovered stays in SNFs, and potentially inappropriate claims for DME provided during stays in Medicaid only nursing facilities. We used admission and discharge dates from the Minimum Data Set and SNF claims to document facility stay dates and identify noncovered stays. We then determined whether SNFs and DME suppliers submitted information required to facilitate proper billing for DME. We also collected information about CMS's methods to prevent processing inappropriate claims for DME in these facilities.

WHAT WE FOUND

CMS's payment edits did not detect $18.4 million in Medicare payments in 2015 for inappropriate claims for DME provided during noncovered stays in SNFs. This represented 6 percent of all payments for DME during noncovered stays in SNFs.

CMS uses two payment edits designed to identify and reject such claims, but neither edit rejected the claims because SNFs and DME suppliers did not submit full and accurate information required for processing.

For 72 percent of the inappropriate DME claims, DME suppliers failed to correctly code the SNF as a facility. Instead, they coded the place of service as the beneficiary's home, thus enabling the claims to bypass the CMS edit that rejects separate payment for most DME provided at facilities. By definition, SNFs provide primarily skilled care and thus cannot be considered beneficiary homes. For 98 percent of the inappropriate DME claims, SNFs did not submit "no payment bills," which are administrative claims that document the dates of noncovered stays and do not result in payment. No-payment bills enable another CMS edit to identify noncovered stays and reject claims for DME provided during those timeframes.

CMS may have also allowed up to $3.7 million in Medicare payments for inappropriate claims for DME provided during stays in Medicaid only nursing facilities. Unlike SNFs, these facilities can be considered beneficiary homes if they provide primarily nonskilled care, permitting separate Medicare payments for DME. However, we found that CMS is unable to verify whether the facilities qualify as homes because CMS does not collect and maintain information regarding the level of care-i.e., skilled or nonskilled-that facilities provide.

WHAT WE RECOMMEND

To improve detection of inappropriate DME claims, we recommend that CMS (1) strengthen oversight of place-of-service codes by developing a process to determine whether DME claims with "home" as the place of service fit the circumstances permitting separate payment; (2) assess the costs and benefits of strengthening oversight of no payment bills by developing a process to identify noncovered stays when SNFs do not submit no payment bills; and (3) assess the costs and benefits of collecting and maintaining information regarding the level of care provided by Medicaid only nursing facilities. CMS concurred with our recommendations.