New preauthorization rule targets DME fraud, improper payments

Responding to "longstanding concerns" about improper payments tied to durable medical equipment (DME), the federal government issued a final rule Tuesday aimed at reducing fraud, waste and abuse within an industry known for questionable billing practices.

The final rule requires preauthorization for equipment such as prosthetics, wheelchairs, knee braces and other qualified equipment. Although clinical documentation requirements will remain the same--meaning the rule will not place an additional burden on clinicians--all relevant documentation must be submitted to the Centers for Medicare & Medicaid Services (CMS) for prior review before certain medical equipment is provided to a beneficiary. CMS has established a "Master List" containing 135 DME items with an average fee of $1,000 or greater or an average rental fee schedule of $100 or greater.

CMS spokesman Aaron Albright told USA Today the new rule is expected to save Medicare $10 million in the first year, $200 million in the first five years, and $580 million over the next decade. CMS also highlighted the success of a three-year prior authorization demonstration program that cut monthly expenditures for power wheelchairs by 75-80 percent. A recent report from the Council for Medicare Integrity found that the error rates within DME billing was 53.1 percent in 2014, amounting to $5 billion in improper payments.

DME fraud has been a thorn in the side of CMS for a number of years, and CMS has pushed for a prior authorization rule for DME orders since 2014. In 2007, federal officials arrested 38 individuals tied to DME companies in South Florida for a $142 million fraud scheme. In November, the Office of Inspector General highlighted DME fraud as a new focus area within its 2016 Work Plan, particularly orthotic braces that have been used in schemes targeting seniors.

To learn more:
- here's the CMS announcement
- read the USA Today article

Related Articles:
CMS wants prior authorization for many DME orders
FL DME companies named in $142M fraud
Medical equipment fraud schemes worth watching
OIG's 2016 Work Plan targets Part D, med equipment fraud concerns
Medical equipment manufacturers target seniors

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