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OIG: Medicare Contractor Overpaid $39.2 Million for Diabetic's Supplies

Cheryl Clark, for HealthLeaders Media, September 9, 2010

Medicare inappropriately paid $39.2 million for test strips and lancets for diabetic beneficiaries in 2007 because its administrative contractor serving 12 northeastern states failed to require proper authorization, the Office of Inspector General said last week.

The OIG audit looked only at claims paid by NHIC Corp, one of four regional Medicare contractors that review and pay durable medical equipment (DME) claims under Part B.  The scope was limited to a sample of claims that are considered "high utilization" in that they exceeded normal utilization of 100 test strips and 100 lancets each month for insulin-dependent beneficiaries and every three months for non-insulin dependent beneficiaries.

For those "high utilization" claims, the physician must meet additional requirements for the DME supplier to be paid: he or she must have seen the patient and evaluated the patient's diabetic control within six months of ordering the excess supply, and must have documented in the patient's medical record the specific reason the additional supplies were necessary.

But in 70 of the 100 claims reviewed, that did not take place.

Of $95 million Medicare paid for so-called "high utilization" claims for these DME supplies, the OIG found that 30 claims contained necessary supporting documentation while "the remaining 70 were not supported because each claim had one or more deficiencies."

For example, in those deficient claims, the patient's medical record did not include the specific reason why the additional supplies were necessary, the frequency of testing, nor the treating physician's evaluation of the patient's diabetic control within six months before the additional supplies were ordered.

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