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Medicare pays billions in questionable DME claims

Device Regulation Alert: Safety, Compliance and Reimbursement News, September 29, 2008

Medicare reimbursed more than $1 billion for 18 different durable medical equipment (DME) items from January 2001 to December 2006 because of incorrect or missing diagnosis codes, according to a new report from the Senate Permanent Subcommittee on Investigations.

CMS has required diagnosis codes on most DME claims since 2003, but claims review contractors did not effectively use the codes to determine whether the claim should be paid, according to the report. The subcommittee reviewed millions of claims to identify questionable or improper payments, and found numerous instances where the diagnosis code was incorrect, omitted, or not relevant for the DME supplied.

For instance, the subcommittee uncovered thousands of claims where blood glucose test strips were ordered for diagnoses unrelated to diabetes, including bubonic plague, leprosy, and typhoid.

The subcommittee also reviewed $4.8 billion in Medicare claims from 1995–2006 for 60 million DME items that contained invalid, blank, or unprocessable diagnosis codes. Although not all of those claims necessarily resulted in improper payment, the report said Medicare needed to implement additional procedures to ensure accurate, compliant payments.

• Strengthen the claims review process
• Consider developing procedures to link diagnosis codes with medical procedures
• Consider developing procedures to link claims for DME items with corresponding claims for medical treatment
• Strengthen contractor oversight

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