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OIG Publishes Report Showing Overpayments to DME Suppliers

The OIG recently published a report showing that from 2006 to 2008, Medicare allowed $2.2 million for routine maintenance and servicing of capped rental durable medical equipment (DME) with rental periods.  These payments were erroneously made because the Deficit Reduction Act of 2005 (DRA) dramatically limited, if not eliminated, routine maintenance and servicing for beneficiary-owned DME with rental periods that began after January 1, 2006.  During the same time period, OIG found that Medicare allowed nearly $4.4 million for repairs for beneficiary-rented capped rental DME.  Medicare has never allowed payments for repairs of beneficiary-rented capped dental DME as the cost for repairs are already included in the monthly rental payments to suppliers.

As a result of its discoveries, the OIG is recommending that the Centers for Medicare and Medicaid Services (CMS) establish an edit to deny claims for routine maintenance and services of capped rental DME periods beginning after January 1, 2006 and for claims for repair of beneficiary-rented capped rental DME.  In addition, the OIG urges CMS to enhance the enforcement of existing payment requirements for beneficiary-owned capped rental DME, to begin to track repair costs for capped rental DME and to take appropriate action on erroneously allowed claims for maintenance and servicing, repair and payment errors.

DME suppliers should expect to see audit activity from CMS contractors on this issue and may want to consider conducting self-audits as part of their compliance programs.

For more information on proper Medicare billing practices for DME suppliers or for assistance defending a Medicare audit, please visit www.wachler.com or contact a Wachler & Associates attorney at 248-544-0888.