CMS could do more to safeguard Medicare, GAO says

Sunday, March 11, 2007

WASHINGTON - CMS and its contractors could do more to address improper payments for durable medical equipment and supplies, according to a report from the General Accountability Office released last week.

The agency's three Program Safety Contractors (PSCs) use automated prepayment controls or "edits" to deny claims or flag them for medical review, but their efforts fall short in three ways, according to the GAO:

* Contractors don't have automated prepayment controls in place to identify questionable claims that are part of an atypically rapid increase in billing. For example, due to the absence of these so-called "threshold edits," from the first quarter of 2003 through the first quarter of 2005, 225 suppliers increased their billing to Medicare by $500,000 and 50% from at least one three-month period to the next.
* In some instances, contractors don't have controls in place to identify claims for items unlikely to be prescribed in the course of routine quality medical care. For example, from October 2002 through March 2005, Medicare paid more than $2 million for braces after it had paid for prosthetics for amputated legs, feet or ankles.
* CMS doesn't require the contractors to share information on the most effective controls of the other contractors or encourage them to adopt other controls. For example, one contractor restricted payment for home-use hospital beds to one per beneficiary per month. If that edit had been used in other regions, it could have saved Medicare almost $71 million from January 2003 through June 2005.

CMS estimates that it made about $700 million in improper payments for DME and supplies from April 1, 2005 to March 31, 2006. That represents 7.5% of its total payments. Improper payments include mistakes on the part of those who bill Medicare, fraudulent activities and abuse.

U.S. Sen. Charles Grassley, R-Iowa, the ranking minority member of the Senate's Finance Committee, asked the GAO to conduct the review and produce the report.

CMS concurred with the GAO's report. It pointed out that it has already developed plans to evaluate the PSC's program integrity activities on an annual basis. Officials will use the evaluations to determine whether to renew a PSC's contract and whether to award them monetary rewards for good performance.