Using Thresholds to Identify Questionable Claims for Medical Equipment and Supplies

According to the most recent estimate from the Centers for Medicare & Medicaid Services (CMS), Medicare made about $1 billion in improper payments for medical equipment and supplies from April 1, 2006, through March 31, 2007. A 2008 report from the Department of Health and Human Services Office of Inspector General suggests that the amount could have been three times as high. CMS's contractors try to prevent and minimize making improper Medicare payments for medical equipment and supplies by incorporating automated prepayment controls to identify claims that should be reviewed or deny ones that should not be paid. However, in a 2007 report, GAO found that contractors were paying questionable claims that are part of an atypically rapid increase in billing because the contractors lacked prepayment controls to identify such claims. GAO found that from the first quarter of 2003 through the first quarter of 2005, 225 suppliers increased their billing by $500,000 and 50 percent from one quarter to the next. In November 2004, the U.S. government won a default judgment against 16 of these suppliers, for billing for services not rendered and other offenses, after they had been paid almost $40 million by the Medicare program. Little of the money was recovered. Therefore, GAO recommended that CMS require its contractors to develop thresholds for unexplained increases in billing and use them to develop automated prepayment controls to identify potentially improper claims.

For more information on the improper payments across government, please see Reducing Federal Improper Payments.

^ Back to topKey Reports

Medicare: Improvements Needed to Address Improper Payments for Medical Equipment and Supplies

GAO-07-59, January 31, 2007

Summary (HTML)   Highlights Page (PDF)   Full Report (PDF, 34 pages)   Accessible Text   Recommendations (HTML)

Medicare: CMS's Program Safeguards Did Not Deter Growth in Spending for Power Wheelchairs

GAO-05-43, November 17, 2004

Summary (HTML)   Highlights Page (PDF)   Full Report (PDF, 33 pages)   Accessible Text   Recommendations (HTML)

Department of Health and Human Services, Office of Inspector General, Medical Review of Claims for the Fiscal Year 2006 Comprehensive Error Rate Testing Program, A-01-07-00508

(Washington, D.C.: August 22, 2008).

HHS IG Report A-01-07-00508 (Note: This link goes to a document on the HHS IG Web site.)