NCPA - National Center for Policy Analysis


August 28, 2008

Medicare officials underestimated the amount of incorrect payments in 2006 for medical equipment, including wheelchairs and home hospital beds, because Medicare failed to follow its own policy of making sure the purchases matched orders from doctors, a new federal audit shows.

The report by the Health and Human Services inspector general's office, based on a sampling of claims for durable medical equipment, showed that some 29 percent of claims were made improperly but were paid by Medicare.  Moreover:

  • Medicare officials had estimated that improper payments cost the government health-care program for the elderly and disabled about $700 million in 2006, based on its estimate that 7.5 percent of claims were incorrect.
  • But that number would have been higher if Medicare told its outside auditor to follow the department's written policy.
  • Medicare said it spends about $9 billion a year for wheelchairs, oxygen and other types of durable medical equipment, compared with actual total Medicare spending of $429.7 billion.
  • In 2007, Medicare ordered physicians to keep records of their prescriptions for equipment and began denying claims if suppliers did not provide copies of those records. The error rate for equipment claims rose to 10 percent.

The inspector general's report faults Medicare officials for allowing the auditor contracted to study the error rate for medical-equipment claims in 2006 to conduct its review without fully documenting the claims from suppliers, including obtaining records from physicians.

However, for Medicare, the problem of paying improper claims is not new.  Congressional reports show that Medicare paid nearly $100 million in recent years for claims submitted under the names of dead doctors, adds the Wall Street Journal.

Source: Jane Zhang, "Medicare Ignored Its Claims Policy, Audit Says," Wall Street Journal, August 26, 2008; based upon: "Recovery Audit Contractor," Report conducted by the Centers for Medicare and Medicaid Services for the Health and Human Services, August 2008.

For Wall Street Journal text:

For audit overview:


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