OIG Review Finds Erroneous Capped Rental DME Claims

From 2006 to 2008, Medicare erroneously allowed millions of dollars for routine maintenance and servicing and repairs of capped rental durable medical equipment (DME), and supplier practices adversely affected some beneficiaries with high-cost repairs, according to an Office of Inspector General (OIG) report released this month.

OIG Findings

From 2006 to 2008, Medicare erroneously allowed nearly $4.4 million for repairs of beneficiary-rented capped rental DME. The costs of repairs of beneficiary-rented capped rental DME are included in the monthly rental payments to suppliers and, therefore, not separately payable by Medicare.

Of the $90 million allowed for capped rental DME repair claims in 2007, nearly $27 million was for claims associated with payment errors. OIG review of supplier records indicate that 27 percent of allowed repair claims for beneficiary-owned capped rental DME in 2007 lacked medical necessity, service, or delivery documentation or represented repairs to DME still under manufacturer or supplier warranties.

Also in 2007, Medicare allowed nearly $29 million for questionable claims due to missing information and high dollar allowed amounts for repairs relative to replacement costs. These claims represent 49 percent of all allowed claims for repair of capped rental DME in 2007.

Beneficiaries with high-cost allowed repairs reported some suppliers failed to properly customize power mobility devices (PMD), rendering the PMDs useless to them, and other suppliers did not offer loaner equipment when repairing PMDs, leaving some beneficiaries immobile. Some beneficiaries reported difficulties in contacting suppliers, and record reviews indicated suppliers charged some beneficiaries service fees for repairs of capped rental DME. Finally, other beneficiaries reported suppliers failed to provide instructions about the proper use of their equipment and information about repair charges.

The OIG recommends in the report that the Centers for Medicare & Medicaid Services (CMS):

  • Implement an edit to deny claims for routine maintenance and servicing of capped rental DME with rental periods beginning after Jan. 1, 2006.
  • Implement an edit to deny claims for repair of beneficiary-rented capped rental DME.
  • Improve enforcement of existing payment requirements for beneficiary-owned capped rental DME.
  • Consider whether to require Medicare administrative contractors (MACs) to track accumulated repair costs of capped rental DME.
  • Develop and implement safeguards to ensure beneficiaries have access to the services they require.
  • Take appropriate action on erroneously allowed claims for maintenance and servicing, repair, and payment errors.

Read the OIG report for complete details.

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