Department of Health and Human Services (HHS) Inspector General Daniel Levinson on Aug. 25 released a federal audit that found that Medicare officials underestimated the amount of incorrect payments for durable medical equipment (DME) in 2006 and that the miscalculation was caused by the agency’s failure to have auditors follow CMS’s policy for checking claims. The HHS audit reviewed a sample of 363 Medicare DME claims to determine whether auditing contractor AdvanceMed had found all improper payments. CMS had estimated a payment error rate of 7.5 percent, or about $700 million in improper payments. However, the HHS audit found an “error rate” of nearly 29 percent for the sample of DME claims. The report cited 20 payment errors identified by the Medicare audit and 73 errors the contractor had not identified. However, the HHS Office of Inspector General cautioned against applying these findings to the entire Medicare DME program because the sample was not entirely random.
The report faults Medicare officials for allowing AdvanceMed to conduct the review without fully documenting claims from suppliers. According to the audit, more incorrect payments would have been identified if Medicare had told the contractor to follow the agency’s written policy.
In a cover letter for the report, Levinson wrote that Medicare auditors should check a wider range of records related to claims, including physician records and other medical documents verifying the necessity of equipment. Download the report.
