Payment Errors Continue To Plague Medicare Program

The majority of last year's errors occurred because Medicare contractors reimbursed suppliers despite incomplete documentation that the the equipment was necessary, according to the inspector general. Instead of relying on patient medical records and physician prescriptions, Medicare's contractors often used documents from supply companies and prior Medicare claims.

Medicare's own rules state that information from a patient's medical records must show the need for the reimbursed device.

However, Medicare officials acknowledged those rules are "vague," when it comes to how contractors may interpret medical information.

"Contractors have interpreted the manuals differently, especially regarding the use of clinical judgment," Charlene Frizzera, acting head of the Centers for Medicare and Medicaid Services, said in a letter responding to the report.

Frizzera said the agency plans to clarify how much interpretation contractors are permitted when processing payments. She also said the agency plans to bolster its review of claims that are most vulnerable to fraud — including those for scooters and oxygen machines — by conducting interviews with the requesting patients. She added, however, that "it would be very resource-intensive for us to do this type of review" for all types of equipment.