OIG: Error rate for DME claims should be higher

Sunday, May 24, 2009

WASHINGTON - The error rate for durable medical equipment claims for FY 2008 was inaccurate, according to a May report from the Office of Inspector General (OIG).

Each year, CMS's Comprehensive Error Rate Testing (CERT) contractor conducts medical reviews of a sample of DME claims to determine an error rate. For FY 2008, CMS contracted with Palmetto GBA to conduct an independent review of the CERT contractor's findings.

The OIG report, requested by the Senate Finance Committee, details Palmetto's review. The review consisted of a sub-sample of 250 paid claims from the sample of 14,221 claims that the CERT contractor had reviewed in determining the FY 2008 error rate. The result: Palmetto found that 175 of the 250 sampled claims were in error, significantly exceeding the 23 errors found by the CERT contractor. Most of Palmetto's error determinations were based on insufficient documentation to establish medical necessity.

After further review, the CERT contractor agreed with 17 of Palmetto's additional error determinations, for a total of 40 error determinations, but disagreed with the remaining 135 error determinations.

The reason for the discrepancy, according to the OIG: incorrect medical necessity determinations by the CERT contractor and differences in review standards and methodology used by the CERT contractor and Palmetto GBA. The CERT contractor used clinical inference to make medical necessity determinations based on its review of supplier documents, beneficiary claim histories and limited medical records; Palmetto GBA required beneficiary medical records to perform medical reviews and to make medical necessity determinations.

In a report on the FY 2006 error rate for DME claims, the OIG harped on the CERT contractor for not reviewing additional records from physicians and other healthcare providers and information obtained from beneficiary interviews.

In this, its most recent report on the matter, the OIG recommends that CMS require the CERT contractor to develop a corrective action plan to reduce its number of incorrect determinations; and perform a complex medical review by obtaining and reviewing all medical records from all relevant providers to support the medical necessity of DME items.

CMS concurred with the OIG's findings.