Department  of Health  and Human  Services 
OFFICE  OF 
INSPECTOR  GENERAL 
Medicare  Allowances  for 
Lymphedema  Pumps 
JUNE  GIBBS  BROWN 
Inspector  General 
JULY1998 
OEI-04-97-00130  OFFICE  OF INSPECTOR  GENERAL 
The mission  of the Office  of Inspector  General (OIG),  as mandated by Public  Law  95-452,  is to 
protect the integrity  of the Department  of Health  and Human  Services programs  as well  as the 
health and welfare  of beneficiaries  served by them.  This statutory  mission  is carried out through 
a nationwide  program  of audits, investigations,  inspections,  sanctions, and fraud alerts.  The 
Inspector  General informs  the Secretary of program  and management problems  and recommends 
legislative,  regulatory,  and operational  approaches to correct them. 
Office  of Evaluation  and Inspections 
The Office  of Evaluation  and Inspections  (OEI)  is one of several components  of the Office  of 
Inspector  General.  It conducts  short-term  management  and program  evaluations  (called 
inspections)  that focus on issues of concern to the Department,  the Congress, and the public.  The 
inspection  reports provide  findings  and recommendations  on the efficiency,  vulnerability,  and 
effectiveness  of departmental  programs. 
OEIs Atlanta  Regional  Office  prepared this report under the direction  of Jesse J. Flowers, 
Regional  Inspector  General, and Christopher  Koehler,  Deputy  Regional  Inspector  General. 
Principal  OEI staff included: 
GION  QUARTERS 
Betty  Apt,  Project  Leader  Stuart Wright,  Program  Specialist 
Jacqueline  Watkins,  Program  Analyst  Brian  Ritchie,  Technical  Support 
Greg Jones, Program  Analyst 
To obtain copies of this report, please call the Atlanta Regional Office at 404-562-7743. 
Reports  are also available  on the World  Wide Web at our home page address: 
http://www.dhhs.gov/progorg/oei  EXECUTIVE  SUMMARY 
PURPOSE 
To summarize  trends in Medicare  allowed  charges for lymphedema  pumps, and to ascertain the 
impact of Office  of Inspector  General investigations  and Health  Care Financing  Administration 
controls  on Medicare  payments  for lymphedema  pumps.. 
BACKGROUND 
Lymphedema  pumps are pneumatic  compression  devices used to treat patients afflicted  with 
lymphedema.  Lymphedema  is a condition  characterized  by swelling  of tissues in an affected 
body part due to accumulation  of excessive fluid. 
FINDINGS 
Medicare  allowed  charges for  lymphedema  pumps  skyrocketed from  1991 to 1995 
Medicare  allowed  charges for the most expensive type lymphedema  pump (E0652)  increased 
from $18.5 million  in 1991 to $106.7 million  in 1995--almost  a 500 percent increase in 4 years. 
The Office  of Inspector  General focused  a national  initiative  on fraudulent  lymphedema  pump 
suppliers 
In September of 1994, the Office  of Investigations,  Office  of Inspector  General (OIG)  began a 
national  initiative  to curtail  lymphedema  pump fraud and abuse.  Resulting  from that initiative, 
some DME  suppliers  were convicted  for fraudulently  misrepresenting  the type of pump issued to 
Medicare  beneficiaries  in order to obtain higher  reimbursement. 
Durable  Medical  Equipment  Regional  Carriers  and  The Health  Care Financing 
Administration  enhanced  policies  and controls for  lymphedema  pumps 
Concurrent  with  the OIG investigations  and convictions,  Durable  Medical  Equipment  Regional 
Carriers  (DMERCs)  began to intensify  their review  of lymphedema  pump claims.  Additionally, 
the Health  Care Financing  Administration  (HCFA)  began to develop new coverage and payment 
policies.  The policies  limited  coverage of the most expensive model  lymphedema  pump to very 
specific  instances, and then only  after other treatments and less expensive model pumps had been 
tried.  Further,  HCFA  required  that a Certificate  of Medical  Necessity  (CMN)  accompany  claims 
for all models of lymphedema  pumps.  Providers  also had to submit documentation  that more 
conservative  methods  of treatment had been ineffective  in treating  a lymphedema  condition. 
i  Medicare  allowances  for  lymphedema  pumps  have declined  dramatically  since 1995 
Medicare  allowed  charges for the most expensive type of lymphedema  pump (E0652)  dropped 
from $106.7 million  in 1995 to $8.8 million  in 1996--a 92 percent decrease in 1 year. 
Efforts  of the OIG, HCFA,  and DMERC  will  save the Medicare  program  $381 million 
The efforts of the OIG, HCFA,  and DMERCs  saved the Medicare  program  $76.2 in 1 year.  If 
HCFAs  new documentation  requirements  and continued  OIG surveillance  succeed in 
discouraging  unnecessary payments  for the expensive model lymphedema  pump, the 5-year 
savings will  total $381 million. 
CONCLUSION 
In view  of the apparent success in dealing with  this problem,  the OIG is canceling  further 
inspection  of this equipment.  We will  continue  to monitor  expenditures  and re-instate  a study if 
necessary. 
ii  TABLE  OF  CONTENTS 

PAGE 

EXECUTIVE  SUMMARY 

INTRODUCTION  ............................................................. 
 . 
FINDINGS 

@Medicare Allowances  Skyrocketed  ............................................. 
 .2 
l OIG Initiative  Focuses on Fraudulent  Suppliers  ................................... 
 .2 
l DMERCs  and HCFA  Enhance Policies  and Controls  ............................... 
 .4 
@Medicare Allowances  Decline  Dramatically  ...................................... 
 .5 
@Medicare Saves $381 Million  ................................................. 
 .5 
CONCLUSION  ............................................................... 
 .  INTRODUCTION 

PURPOSE 

To summarize  trends in Medicare  allowed  charges for lymphedema  pumps, and to ascertain the 

impact of Office  of Inspector  General investigations  and Health  Care Financing  Administration 

controls  on Medicare  payments  for lymphedema  pumps. 

BACKGROUND 

Medicare  Coverage  of Lymphedema  Pumps 

Medicare  covers pneumatic  compression  devices, commonly  called lymphedema  pumps, for 

Medicare  beneficiaries  afflicted  with  lymphedema.  Lymphedema  is a relatively  uncommon 

medical  condition  characterized  by swelling  of tissues in an affected body part due to 

accumulation  of excessive fluid.  The condition  results from an impairment  to the normal 

clearing  function  of the lymphatic  system or from excessive production  of fluid  from lymphatic 

vessels.  Factors precipitating  the onset of lymphedema  include  surgical  procedures  involving 

removal  of groups of lymph  nodes, obstruction  of the lymphatic  system by malignant  tumors, 

and congenital  anomalies.  Lymphedema  pumps are medical  devices designed to control  and 

reduce swelling  in affected body parts, usually  a limb. 

Medicare  reimburses  for lymphedema  pumps under three different  HCPCS  codes:  E0650, 

E065 1, and E0652.  Generally,  lymphedema  pumps are classified  as either segmented or non-

segmented, depending  on whether  distinct  segments of the devices can be inflated  sequentially. 

The less sophisticated,  and least expensive pumps, are coded E0650  and E065 1, and cost 

Medicare  about $600 and $800, respectively.  The most sophisticated  and expensive pumps are 

coded E0652,  and cost Medicare  about $4,000 to $6000.  This device is characterized  by 

calibrated  gradient  pressure, capable of delivering  individually  determined  pressure to each 

segmental unit. 

METHODOLOGY 

To summarize  trends in Medicare  allowed  charges for lymphedema  pumps, we obtained  and 

arrayed expenditure  data for lymphedema  pump codes.  We obtained  data from the Medicare  Part 

B Extract  and Summary  System (BESS).  To ascertain the impact  of Office  of Inspector  General 

investigations  and HCFA  payment  controls,  we reviewed  recent reports, congressional 

testimony,  and national  investigation  results related to lymphedema  pumps. 

We conducted  this inspection  in accordance with  the Quality  Standards for  Inspections  issued by 

the Presidents Council  on Integrity  and Efficiency. 

1  FINDINGS 

MEDICARE  ALLOWED  CHARGES  FOR  LYMPHEDEMA  PUMPS  SKYROCKETED 
FROM  1991 TO  1995 
As illustrated  in Figure  1, Medicare  allowed  charges for the most expensive type lymphedema 
pump (E0652)  increased from  $18.5 million  in 1991 to $106.7 million  in 1995--almost  a 500 
percent increase in 4 years.  Lymphedema  pumps coded E0650 and E065 1 did not experience 
large increases as did those coded E0652. 
Figure  1 

Medicare  Allowed  Charges  for 

Lymphedema  Pumps 

1992  1993  1994 
Year 
--v-- E065Chs- E065l-t~  E0652 
THE  OFFICE  OF INSPECTOR  GENERAL  FOCUSED  A NATIONAL  INITIATIVE  ON 
FRAUDULENT  LYMPHEDEMA  PUMP  SUPPLIERS 
The Office  of Investigations,  Office  of Inspector  General (OIG)  has been investigating 
lymphedema  pump  suppliers  since the early  1990s.  However,  in September  1994, the Office 
began a national  initiative  to curtail  lymphedema  pump  fraud and abuse.  The OIG served 30 
durable medical  equipment  suppliers  with  subpoenas asking for all records from  1989 through 
1993 related to their lymphedema  pump billing.  . 
Resulting  from the 1994 OIG initiative,  HCFA  suspended payments  for some medical  suppliers 
until  the investigations  were completed.  Also,  some DME  suppliers were convicted  for 
fraudulent  practices.  For example, several investigations  showed that manufacturers  and 
providers  misrepresent  the type of pump issued to Medicare  beneficiaries  in order to obtain 
2 
 higher reimbursement.  In some cases, the more expensive lymphedema  pump was provided  to 
patients who  had only  regular  edema which  could have been treated with  the lower  cost pump. 
Suppliers  used various  scams to get reimbursed  for lymphedema  pumps.  The following  is a 
sample of OIG cases concluded  during  the last 3 years: 
1995 
A New  Jersey DME  company  submitted  claims for lymphedema  pumps that did 
not meet specifications,  resulting  in overpayments  of approximately  $192,960. 
The supplier  agreed to repay $100,000,  and entered into a compliance  plan 
designed to prevent  future improper  billings. 
A Maryland  DME  company  agreed to pay $1.5 million  to resolve liabilities  under 
the Civil  Monetary  Penalties Law.  The company  submitted  claims for 
lymphedema  pumps that did not meet specifications  for the code used.  The 
company  was overpaid  $690,000. 
Two  New  Jersey DME  suppliers  who had billed  Medicare  $5000 for pumps that should 
have been reimbursed  at $600 agreed to pay Medicare  close to $1 million.  The company 
that sold the pumps to the suppliers  also agreed to pay $4.9 million  to settle allegations 
that they had misrepresented  the product. 
A New  Jersey supplier  was sentenced for Medicare  fraud and obstruction  of 
justice.  The supplier  billed  Medicare  for pumps that were medically  unnecessary. 
The false claims that the supplier  submitted  indicated  that a less expensive pump 
had been tried before using the more expensive one.  The supplier  was ordered to 
pay $220,100  in restitution. 
A Washington  State DME  owner was sentenced to 12 months.  This supplier 
billed  Medicare  for the most expensive lymphedema  pumps, but delivered  less 
expensive pumps.  The supplier  was required  to pay $148,500  in restitutions, 
fines, and penalties. 
3 
 DURABLE  MEDICAL  EQUIPMENT  REGIONAL  CARRIERS  AND  THE  HEALTH 
CARE  FINANCING  ADMINISTRATION  ENHANCED  POLICIES  AND  CONTROLS 
FOR  LYMPHEDEMA  PUMPS 
Concurrent  with  the OIG investigations  and convictions,  in 1994 Durable  Medical  Equipment 
Regional  Carriers  (DMERCs)  began to intensify  their review  of lymphedema  pump claims.  For 
example, DMERCs  began to automatically  review  claims for all three models of lymphedema 
pumps. 
Also,  the Health  Care Financing  Administration  (HCFA)  began to develop expanded coverage 
and payment  policies.  HCFA  required  that a Certificate  of Medical  Necessity  (CMN) 
accompany  claims.  A CMN  is a form that a physician  completes and signs to certify  that a 
patient has a documented,  medical  need for a lymphedema  pump.  The CMN  elicits  specific 
information  about a patients medical  condition  and need for a lymphedema  pump. 
HCFA  further  required  that documentation  of a patients condition  accompany  a claim  for 
reimbursement.  A simple diagnosis  code on a claim or CMN  is rarely  adequate to explain  a 
patients condition.  There should also be documentation  that conservative  measures were tried 
before ordering  a pump to treat lymphedema  condition.  Such measures may include  limb 
elevation  and custom fitted  gradient-pressure  compression  dressings. 
In 1995, HCFA  further  revised its lymphedema  coverage and payment policy  to require  that the 
most expensive lymphedema  pump  (E0652)  be used as a treatment  of last resort.  A physician  is 
required  to provide  additional  information  to document  the need for the more expensive pump. 
The information  must include 
0  more details about a patients medical  condition  than claims for the less expensive pumps, 
0 	 nature, time, and results of other treatment methods attempted, including  the less 
expensive pumps, 
0  treatment  plan, including  details about the pressure needed for each chamber of the pump, 
0  features of the provided  system that a patient requires, and 
0  pump model number  and manufacturers  name.  MEDICARE  ALLOWED  CHARGES  FOR  LYMPHEDEMA  PUMPS  HAVE  DECLINED 
DRAMATICALLY  SINCE  1995 
As illustrated  in Figure  2, Medicare  allowed  charges for the most expensive type lymphedema 
pump (E0652)  dropped  from  $106.7 million  in 1995 to $8.8 million  in 1996--a 92 percent 
decrease in 1 year. 
Figure  2 

Medicare  Allowed  Charges  for 

Lymphedema  Pumps 

$120  ~------ x- x~_---_
l-~-lll.-l--- ._..l..-.-- -.-....   _.-.......-. . _...-.._._-.. 
Year 
--v- E0650-0  E06!3+3- E0652 
Medicare  allowed  charges for code E0652 continued  to decline in 1997.  Claims  for January 
through  September  1997 totaled  approximately  $460,000.  HCFA  estimated that those claims 
represent about 63 percent of claims that were be filed  for 1997.  Therefore,  projected  claims for 
code E0652 are around  $730,000,  as compared to $8.8 million  in 1996. 
Allowed  charges for pumps submitted  under code E065 1 increased about $2.7 million.  Allowed 
charges for Code E0650 pumps remained relatively  unchanged. 
EFFORTS  OF THE  OIG,  HCFA,  AND  DMERC  WILL  SAVE  THE  MEDICARE 
PROGRAM  $381 MILLION 
Compared  to the peak level of 1995, the efforts of the OIG, HCFA,  and DMERCs  have been 
successful.  Combined,  those efforts reduced Medicare  allowed  charges for the code E0652 pump 
$97.9 million  in one year.  Taking  into consideration  the $2.7 million  increase in the code E0651 
lesser-priced  pump,  Medicare  allowed  charges for all pumps decreased $95.2 million. 
The reduction  in allowed  charges resulted in a savings of $76.2 million  for  1996 in Medicares  80 
percent portion  of allowed  charges.  This brings  the projected  5-year savings to $381 million. 
5 
 CONCLUSION 
Concerted  efforts by the OIG, HCFA,  and DMERCs  seem to have curtailed  growth  and 
contributed  to declines in Medicare  allowed  charges for the most expensive model  lymphedema 
pumps.  Prosecutions  of and payment  of restitutions  by lymphedema  pump  suppliers  has sent a 
message that fraudulent  billing  for lymphedema  pumps will  not be tolerated.  New  policies  and 
more stringent  documentation  requirements  by DMERCs  made billing  for the high priced 
lymphedema  pumps more difficult. 
In view  of the apparent success in dealing  with  this problem,  the OIG is canceling  further 
inspection  of lymphedema  pumps.  We will  continue,  however,  to monitor  expenditures  and re-
instate an inspection  if necessary. 
6