Improper Medical Billing for DMEPOS Costs Medicare Billions

May 18, 2016 - Medicare continues to lose billions as a result of improper medical billing for durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS), according to the Council for Medicare Integrity.

Specifically, the Medicare program had an improper payment rate of nearly 40 percent in 2015 for DMEPOS. As a result, $3.2 billion was lost out of the Medicare Trust Fund. This billing error rate happens to be about three times higher than the amount of the national Medicare fee-for-service improper payment rate, which is currently 12 percent. In 2011, this rate was 8.6 percent.

“The consistently high rates of improper payments within the DMEPOS industry are very concerning and a significant drain on the Medicare Trust Fund,” The Council for Medicare Integrity said.

According to the non-profit organization that obtained data from a CMS 2015 Comprehensive Error Rate Testing (CERT) report, the most common error in DMEPOS billing was insufficient documentation. This particular error accounted for $2.6 billion of the total $3.2 billion in DMEPOS-related waste.

Medicare Part B covers medically necessary DMEPOS, which doctors prescribe for use in a patient’s home. Some of the services that DMEPOS include are blood sugar test strips, hospital beds, crutches and nebulizers.

DMEPOS services with the highest improper rate were hospital bed/accessories at improper billing rate of 85.3 percent. Claims for manual wheelchairs were overbilled 81.3 percent of the time while surgical dressing claims were overbilled 72.5 percent of the time.

Also, claims for oxygen equipment and accessories had an improper payment rate of 48.5 percent while respiratory assist devices had an improper rate of about 68 percent.

Of the providers that bill for DMEPOS services, podiatrists were found to be most responsible for improper billing, overbilling about 67 percent of the time. Medical supply companies with pedorthic personnel had an improper payment rate of about 59 percent while multispecialty clinics had a rate of 57.9 percent.

Pharmacy providers that billed for DMEPOS had a projected improper payment amount of more than $700 million. It’s projected that medical supply companies with respiratory therapists wasted more than $300 million as a result of improper billing.

Insufficient DMEPOS claims happen when a submitted medical document is not able to support payment for the services billed. This specifically happens when a CMS CERT contractor is unable to conclude that billing services were ever actually needed. Claims are also considered insufficient when a specific documentation element, which is needed as a condition of payment, is missing. For example, if a claim does not have a physician signature than it would be deemed insufficient, The Council for Medicare Integrity explained. Additionally, if medical documentation shows a different code than the one that was billed or if services were performed by someone other than the billing provider than the payment is considered improper.

Medicare loses more money to wasteful spending than any other government program. It loses more than $60 billion each year because of erroneous billing.

“With both Congressional Budget Office and Medicare Trustees warning that at current spending rates the Medicare program will be insolvent within the next ten to fifteen years, it is more important than ever to rein in sources of egregious misbilling and return improperly billed taxpayer dollars back to the Medicare Trust Fund,” The Council for Medicare Integrity said.

Congress enacted the Recovery Audit Contractor (RAC) Program as a way to identify and return improperly billed Medicare funds back to the Trust Fund. Since this program began, more than $10 billion has been returned to Medicare, “lengthening the life of the program by two full years,” The Council for Medicare Integrity explained.

As a result of the high level of DMEPOS improper payments, CMS decided to “pull this category out of its regional auditing structure and create a fifth auditing area devoted solely to looking at DMEPOS claims.” The Council for Medicare Integrity said. When new RAC contracts are executed, this change will be implemented.

The RAC program efforts are not as prevalent as they were previously because Medicare provider groups have opposed claims auditing. Auditors formerly examined two percent of a provider’s Medicare claims. “Today, Recovery auditors can only look at 0.5 percent of a provider’s claims,” The Council for Medicare Integrity said. This means that 99.5 percent of Medicare claims are not reviewed for billing accuracy.

“With Medicare bankruptcy looming, now is the time to get the RAC program back up and running at previous levels to breathe life back into the fiscal future of the program for the millions of Americans who rely on it for their health care needs,” The Council for Medicare Integrity said.

Dig Deeper:

• Using Big Data in the Hunt for Healthcare Fraud, Waste, and Abuse
• GAO: Millions Spent Yearly on Ineligible Medicaid Reimbursements