Department  of  Health  and  Human  Services 
OFFICE  OF 
INSPECTOR  GENERAL 
MEDICARE  BENEFICIARY 

SATISFACTION  WITH  DMERC  SERVICES 

JUNE  GIBBS  BROWN 
Inspector  General 
JUNE 1997 
OEI-02-96-00200  EXECUTIVE  SUMMARY 
PURPOSE 
To determine  the knowledge,  experiences  and satisfaction  of Medicare  beneficiaries  who use 
durable  medical  equipment,  prosthetics,  orthotics  and supplies with  services  provided  by the 
Durable  Medical  Equipment  Regional  Carriers  (DMERCs). 
This inspection  will complement  a larger  study,  currently  planned,  which  will  ascertain 
whether  the establishment  of the DMERCs  has met its intended  objectives.  The Health  Care 
Financing  Administration  (HCFA)  established  these in  1993 to improve  processing  of 
medical  equipment  and supply claims.  Determining  beneficiary  satisfaction  with DMERC 
services  will help to evaluate  how well these carriers  are meeting  their  goals. 
BACKGROUND 
In October  1993, HCFA  began processing  medical  equipment  and supply claims  through  four 
regional  carriers  called  the DMERCs.  The DMERCs  were given  specific  responsibilities  for 
educating  Medicare  beneficiaries  and responding  to their  questions  and concerns.  They must 
have  staff available  to respond  to written,  telephone,  and in-person  inquiries,  and are 
required  to meet certain  standards  of timeliness,  accuracy,  and clarity  when responding  to 
these beneficiary  contacts.  They  must also have a beneficiary  outreach  program  and are 
responsible  for the first two of five  stages of beneficiary  appeals. 
We surveyed  a stratified  random  sample of 2,000  Medicare  beneficiaries  who had at least 
one medical  equipment  or supply claim processed  by the DMERCs  during  the first 6 months 
of  1996.  We sent each of these a mail  questionnaire  asking  about their  knowledge, 
experiences  and satisfaction  with beneficiary  services  provided  by the DMERC.  We received 
responses  from  1,487 beneficiaries,  187 of whom had contacted  their  carrier  in the past  12 
months.  We also conducted  structured  telephone  interviews  with DMERC  staff from  all four 
regions  to gather  information  about their  outreach  activities  and beneficiary  services. 
FINDINGS 
Most Beneficiaries  Who Have Had Contact With Their DMERC Are Satisfied With The 
Service They Received 
Twelve percent  of beneficiaries  report  some contact  with their  DMERC  in the past  12 
months.  Of these,  most (81 percent)  called.  A majority  (86 percent)  of these beneficiaries 
who report  contacting  their  DMERC  are very  or somewhat  satisfied  with how their  carrier 
has served them overall.  However,  overall  satisfaction  rates vary  among the four regions. 
In three  regions,  over  80 percent  of beneficiaries  (83 percent,  91 percent,  and 98 percent, 
respectively)  who have contacted  their  DMERC  are satisfied.  Just 65 percent  report  being 
satisfied  in the fourth  region.  Beneficiaries  in all four regions  who report  discourteous  staff and long waiting  times are 
most likely  to be dissatisfied.  Additionally,  beneficiaries  with denied  claims  are less satisfied 
and those who wrote their  DMERC  are least likely  to rate their  contact  favorably.  Finally, 
most beneficiaries  who have  appealed  a claim  are satisfied  with the appeals process. 
However,  Beneficiaries  Who Use Medical  Equipment  And Supplies Have Limited 
Knowledge  Of Their DMERC,  And Few Know Where  To Go For More Information 
About Their Medicare  Benefits 
Thirty-nine  percent  of Medicare  users of equipment  and supplies know they have  a DMERC. 
Of this group,  only  9 percent  are able to correctly  identify  the name of their  carrier,  41 
percent  do not know the name,  and 50 percent  wrongly  identify  a different  company  as their 
DMERC. 
Not surprisingly,  most beneficiaries  do not use their  DMERC  as a source  of information. 
Only  17 percent  say they  would contact  the DMERC  with questions  about their  Medicare 
benefits  for equipment  and supplies,  and just  15 percent  would contact  the DMERC  if they 
wanted to appeal a Medicare  decision. 
Ten Percent  Of Beneficiaries  Who Use Medical  Equipment  And Supplies Report Having 
Some Experience  With Possible Fraud And Abuse 
Five percent  of beneficiaries  have  suspected fraud or abuse related  to their  medical 
equipment  and supplies.  Of these,  38 percent  did not contact  anyone  about their  suspicions, 
and nearly  one-quarter  contacted  their  supplier.  Another  5 percent  of beneficiaries,  while 
saying they have never  actually  suspected fraud or abuse,  report  some other  experience  that 
strongly  suggests that one or the other  occurred.  These beneficiaries  report  never  receiving 
equipment  or supplies,  receiving  equipment  or supplies they did not need,  or being  charged 
more than they were told they would have to pay. 
While All Four DMERCs  Conduct Beneficiary  Outreach,  They Do So Only To A 
Limited Extent And Report Difficulties  In Their Efforts 
Staff at the four  DMERCs  devoted  to outreach  varies  from  one to 20; however,  only  one 
person  in each DMERC  works  on outreach  on a full-time  basis.  All four publish  and 
distribute  literature  and also participate  in conferences,  health  fairs,  and other public  events. 
Nevertheless,  DMERC  staff cite obstacles  to conducting  outreach,  ranging  from  resolving 
scheduling  conflicts  with other  organizations  which  also conduct  outreach,  to locating  the 
most appropriate  and effective  individuals  and organizations  to disseminate  information  to. 
RECOMMENDATIONS 
Our findings  of high  satisfaction  among beneficiaries  who have had contact  with their 
DMERC  suggest that HCFAs  initiative  to use only  four regional  carriers  to process 
Medicare  claims  for medical  equipment  and supplies  is having  some success so far. 
However,  we believe  HCFA  can take additional  steps to improve  the education  and service 
ii  of Medicare  beneficiaries  who use medical  equipment  and supplies.  These  steps would 
support wider HCFA  initiatives  to involve  beneficiaries  in managing  their  own health  care 
and in detecting  and reporting  fraud and abuse. 
Specifically,  HCFA  should: 
1. 	 Evaluate  ways to increase  beneficiary  satisfaction  with the one DMERC  region  with 
the lowest overall  satisfaction  rating; 
2. 	 Instruct  the DMERCs  to emphasize  the importance  of courteous  staff and timeliness  in 
responding  to beneficiary  inquiries,  since these two variables  appear  to be strongly 
related  to overall  beneficiary  satisfaction; 
3. 	 Look  more carefully  at effective  ways to educate beneficiaries  on what constitutes 
fraud  and abuse and what to do if they  suspect that one or the other  occurs. 
COMMENTS 
We received  comments  on the draft report  from  HCFA  and the Assistant  Secretary  for 
Planning  and Evaluation  (ASPE).  They  concur  with our recommendations.  The ASPE also 
provided  suggestions  for clarifications  of the text which  have for the most part been 
incorporated  into the final  report. 
The ASPE expressed  some concern  with our findings  on the appeals process  which  suggest 
that almost  50 percent  of beneficiary  appeals  are successful  and that 50 percent  take more 
than 2 months  to be resolved,  indicating  that some beneficiaries  may be waiting  for necessary 
equipment  and supplies.  The ASPE therefore  recommends  that HCFA  routinely  examine 
DMERC  denials  and the outcomes  of beneficiary  appeals.  We believe  the number  of 
beneficiaries  in our survey  who appealed  a claim  (34) is too small on which  to base such a 
recommendation.  While  our data may be suggestive  of procedural  weaknesses,  it is too 
limited  to draw any general  conclusions.  However,  we do believe  that this is an important 
issue and we currently  plan to undertake  a broader  review  of the appeals process. 
The ASPE also recommends  that HCFA  encourage  the DMERCs  to look  for more  effective 
ways to conduct  general  outreach.  We agree with the need for additional  outreach,  which 
could be conducted  along  with the more  specific  fraud and abuse outreach  already  planned  by 
HCFA. 
... 
111  TABLE  OF  CONTENTS 
PAGE 
EXECUTIVE  SUMMARY 
INTRODUCTION  . . . . . . . . . . . . . . . . . 
FINDINGS  ...............................................  . 

 Beneficiaries  Who Have Contacted  Their  DMERC  Are Satisfied  ............  5 

 Beneficiaries  Have Limited  Knowledge  of DMERCs  ...................  7 

 Ten Percent  Have Experience  with Possible  Fraud  and Abuse  .............  9 

 DMERCs  Conduct  Outreach  to a Limited  Extent  .....................  9 

RECOMMENDATIONS  .....................................  12 

APPENDICES 

A:  Sample Selection  .......................................  A-l 

B:  Confidence  Intervals  for Key Questions  ..........................  B-l 

C:  Non-respondent  Analysis  ...................................  C-1 

D:  Comments  ...........................................  D-l 
 INTRODUCTION 
PURPOSE 
To determine  the knowledge,  experiences  and satisfaction  of Medicare  beneficiaries  who use 
durable  medical  equipment,  prosthetics,  orthotics  and supplies with  services  provided  by the 
Durable  Medical  Equipment  Regional  Carriers  (DMERCs) . 
This inspection  will complement  a larger  study,  currently  planned,  which  will  ascertain 
whether  the establishment  of the DMERCs  has met its intended  objectives.  The Health  Care 
Financing  Administration  (HCFA)  established  these in  1993 to improve  processing  of 
medical  equipment  and supply claims.  Determining  beneficiary  satisfaction  with DMERC 
services  will help to evaluate  how well these carriers  are meeting  their  goals. 
BACKGROUND 
Medicare  Program 
Medicare  provides  health  insurance  for approximately  37 million  elderly  and disabled 
beneficiaries  under  two parts.  Part A, hospital  insurance,  covers  services  furnished  by 
providers,  such as hospitals,  home health  agencies,  and skilled  nursing  facilities.  Part B, 
supplementary  medical  insurance,  covers  physician  services,  outpatient  hospital  services,  and 
other medical  services  and supplies.  The Health  Care Financing  Administration  (HCFA) 
administers  the Medicare  program  and contracts  with carriers  and fiscal  intermediaries  to 
process,  review,  and pay claims  for covered  services. 
One group of items covered  under  Medicare  Part B is durable  medical  equipment, 
prosthetics,  orthotics  and supplies.  Examples  of these include  wheelchairs,  blood  glucose 
monitors,  hospital  beds,  neck braces,  artificial  limbs,  and some anticancer  and 
immunosuppressive  drugs. 
In October  1993, HCFA  began processing  claims  for these items through  four regional 
carriers  called  the DMERCs.  Their  establishment  was intended  to help eliminate  the 
inconsistency  of coverage  and reimbursement  for DME that had been problematic  in the past. 
The DMERCs  are divided  into regions  A, B, C, and D, and cover  the entire  country.  They 
were given  specific  responsibilities  for educating  Medicare  beneficiaries  and responding  to 
their  questions  and concerns.  However,  the DMERCs  have primary  responsibility  for 
providing  such services  for users of medical  equipment  and supplies. 
HCFA  Beneficiary  Services 
The HCFA  publishes  various  literature  for public  distribution.  One of its most important 
publications,  the Medicare  Handbook,  includes  a description  of the DMERCs  and how to 
contact  them.  Beneficiaries  also learn  about the DMERCs  from  their  Explanation  of 
Medicare  Benefits  forms,  which  they  are sent after receiving  Part B services.  The form  lists  the name and telephone  number  of the carrier  they  should contact  with any questions  or 
problems  with their  claim.  Finally,  staff from  HCFA  also deal directly  with the public  by 
responding  to beneficiary  questions  and complaints. 
DMERC  Beneficiaq  Services 
The four  DMERCs  are required  to provide  the following  beneficiary  services. 
Beneficiarv  Inctuiries.  The DMERCs  must have  staff available  to respond  to written, 
telephone,  and in-person  inquiries,  problems  and complaints,  They  are required  to meet 
certain  standards  of timeliness,  accuracy,  and clarity  when responding  to these beneficiary 
contacts.  More  specifically,  the carriers  must provide  a toll-free  telephone  service  which 
operates  during  normal  business  hours  for telephone  inquires.  This number  must be separate 
from any numbers  established  for providers  and be widely  advertised,  including  being  listed 
on Explanation  of Medicare  Benefits  forms.  The carriers  must also have the capacity  to deal 
with written  correspondence  and beneficiary  visits.  Timeliness  standards  include  an interim 
or final response  within  30 calendar  days from  receipt  of a beneficiarys  letter,  a telephone 
response  within  2 minutes  after acknowledgement  of a beneficiary  call,  and a meeting  with a 
carrier  representative  within  10 minutes  of visiting  an office  in person. 
Beneficiarv  Outreach  and Education.  The DMERCs  are required  to have a beneficiary 
outreach  program.  To meet this mandate,  all four employ  staff to conduct  educational 
activities.  These  activities  include  participating  in conferences,  publishing  and disseminating 
literature  such as pamphlets  and newsletters,  and coordinating  outreach  efforts  with local  and 
State agencies  such as the State Departments  of Aging.  Two DMERC  ombudsmen  also 
conduct  beneficiary  outreach  activities. 
Fraud  and Abuse Units.  The DMERC  fraud  and abuse units  are also active  in enlisting  the 
help of the public  in combatting  fraud and abuse.  Beginning  June  1, 1996, one Medicare 
fraud and abuse information  specialist,  operating  out of region  D, began coordinating  all of 
the beneficiary  outreach  activities  related  to fraud and abuse in the four DMERCs. 
Beneficiary  Apneals  Process.  The DMERCs  are responsible  for the first two of five  stages 
of beneficiary  appeals.  When  appealing  a claim  decision,  a beneficiary  can request  a first 
stage of review  by the DMERC  reconsideration  department  within  6 months  of the initial 
decision.  Should the beneficiary  wish to continue  to a second stage of appeal,  he or she can 
request  a hearing  with a hearing  officer,  an independent  arbitrator  working  for the DMERC 
who adjudicates  the claim.  Appeals  taken beyond  these first two stages are no longer 
adjudicated  by the DMERC. 
Operation Restore  Trust 
This  inspection  is part of a Department  of Health  and Human  Services  anti-fraud  initiative 
called  Operation  Restore  Trust  (ORT) designed  to target  fraud,  waste and abuse related  to 
home health  agencies,  nursing  homes  and DME suppliers.  Recent reports  and investigations 
by the OIG showed that these areas are particularly  vulnerable  to fraud,  waste,  and abuse.  The ORT initiative  targets  California,  Florida,  New York,  Illinois,  and Texas.  These  five 
States account  for 40 percent  of the nations  Medicare  beneficiaries  and program 
expenditures. 
METHODOLOGY 
Multiple Data Collection Methods 
We used three  methods  of data collection  to conduct  this inspection.  First,  we sent a mail 
survey  to a stratified  random  sample of Medicare  beneficiaries  who had one or more  claims 
submitted  for durable  medical  equipment,  prosthetics,  orthotics  and supplies  in the first  6 
months  of  1996.  Second,  we conducted  structured  telephone  interviews  with DMERC  staff 
to gather  information  about their  outreach  activities  and experience  handling  beneficiary 
inquiries.  Third,  we requested  outreach  materials  from the DMERCs  which  we reviewed  for 
content  and clarity. 
See Appendix  A for further  discussion  of the beneficiary  sample selection,  Appendix  B for 
confidence  intervals  for key  survey  questions,  and Appendix  C for a non-respondent  analysis. 
Beneficiary  Survey 
We surveyed  a stratified  random  sample of 2,000  Medicare  beneficiaries,  500 from  each of 
the four DMERCs,  who had at least one claim processed  by the DMERCs  during  the first  6 
months  of  1996.  Beneficiaries  filed claims  for a wide variety  of medical  equipment  and 
supplies.  Some of the most common  included:  oxygen  equipment,  blood  glucose  test strips, 
lancets,  and wheelchairs.  Thirty-four  percent  of these beneficiaries  had at least one denied 
claim  during  this time. 
A questionnaire  was then mailed  to each of these beneficiaries  which  included  questions 
about their  awareness  of the DMERCs;  exposure  to their  literature  and other  outreach 
activities;  satisfaction  with DMERC  performance;  and experiences  with fraud  or abuse.  The 
survey  instructions  allowed  for a caregiver,  family  member,  or friend  to assist in filling  out 
the items. 
After  6 weeks of data collection,  during  which  time we conducted  a second mailing  to non-
respondents,  1,487 questionnaires  were returned  to us.  We therefore  achieved  an overall 
response  rate of 74.4 percent.  Response  rates between  the strata were very  similar:  72 
percent  for Region  A; 77 percent  for Region  B; 74 percent  for Region  C; and 74 percent  for 
Region  D. 
Upon reviewing  the returned  surveys,  it became  apparent  that some beneficiaries  were 
confused  about the difference  between  their  medical  equipment  supplier  and their  DMERC. 
Although  the DMERC  was clearly  defined  numerous  times  in the questionnaire,  some 
respondents  clearly  answered  questions  about contact  with the DMERC  by referring  to their 
medical  equipment  supplier.  For example,  some beneficiaries  listed the name of a supplier 
when asked for the name of their  DMERC,  and indicated  that the nature  of their  contact  with 
3  the  DMERC  was to pick up supplies.  To prevent  a potential  distortion  of study findings, 
we were careful  to exclude  answers that were obviously  referring  to medical  equipment 
suppliers  from  questions  about contact  with the DMERC. 
After  excluding  these questionable  cases,  we were left with  185 beneficiaries  who had 
contacted  their  DMERC  by telephone,  by mail  or in-person,  within  the past  12 months. 
Of these  185 beneficiaries,  48 were from  region  A,  37 from  region  B, 46 from  region  C, 
and 54 from  region  D.  Thirty-seven  percent  of beneficiaries  who have contacted  their 
DMERC  had at least one denied  claim  during  the sampling  time frame. 
For the purposes  of this inspection,  we will refer  to all durable  medical  equipment, 
prosthetics,  orthotics  and supplies  as medical equipment  and supplies.  All differences 
reported  between  subgroups  are statistically  significant  at the 95 percent  level unless 
otherwise  noted. 
DMERC  Interviews and  Outreach  Literature  Review 
We conducted  structured  telephone  interviews  with two staff members  from each of the four 
DMERCs,  for a total of eight  interviews.  Within  each DMERC,  one interview  focused  on 
outreach  activities,  while  the other  focused  on beneficiary  inquiries. 
Staff from the DMERCs  were also asked to send us copies  of materials  used by their 
company  for beneficiary  outreach.  We received  outreach  materials,  including  brochures, 
newsletters,  and business  cards,  from three  of the four DMERCs.  We reviewed  all of these 
materials  for content  and clarity. 
This inspection  was conducted  in accordance  with the Quality  Standards  for Inspections 
issued by the Presidents  Council  on Integrity  and Efficiency. 
4  FINDINGS 
MOST BENEFICIARIES  WHO HAVE HAD CONTACT WITH THEIR DMERC ARE 
SATISFIED WITH THE SERVICE THEY RECEIVED 
Twelve Percent  of Beneficiaries  Report  Contacting  Their DMERC  In the Past 12 Months 
Twelve  percent  of Medicare  beneficiaries  report  some contact  with their  DMERC  in the past 
12 months.  Of these beneficiaries,  81 percent  called,  12 percent  wrote,  and  18 percent 
visited  the DMERC  in person.  These percentages  vary  little  among  the four regions. 
The most common  reason  cited by beneficiaries  for calling  and writing  their  DMERC  was to 
discuss billing  problems  (19 and 20 percent,  respectively).  Other reasons  given  for calling 
include  wanting  more  information  about how Medicare  covers  medical  equipment  and 
supplies  (17 percent)  and wanting  general  information  (17 percent).  Nineteen  percent  of 
beneficiaries  who wrote their  DMERC  wrote to appeal a claim  decision. 
The most common  reason  given by beneficiaries  for visiting  the DMERC  was to obtain 
information  about different  suppliers  or types of medical  equipment  and supplies  (24 
percent).  Other common  reasons  for these visits were to obtain  general  information,  to 
discuss billing  problems,  and to find out about Medicare  coverage  of medical  equipment  and 
supplies. 
Eighty-six  Percent  of Beneficiaries  Who Say  They Have  Contacted  Their DMERC  Rate 
Overall Satisfaction  With DMERC  Service  Positively 
A majority  (86 percent)  of the  185 beneficiaries  who have contacted  their  DMERC  are very 
or somewhat  satisfied  with how their  carrier  has served them overall.  More  specifically,  68 
percent  are very  satisfied  and  18 percent  are somewhat  satisfied.  Another  2 percent  are 
neither  satisfied  nor dissatisfied,  while  12 percent  are somewhat  or very  dissatisfied.  Of 
those who are satisfied,  15 percent  of beneficiaries  are able to correctly  identify  their 
DMERC  by name. 
The main variables  contributing  to beneficiaries  dissatisfaction  in all four regions  include 
being  served by discourteous  carrier  staff,  long waiting  times to get through  to the carrier, 
and having  a claim  denied.  These variables  are discussed  in greater  detail  below. 
Overall  satisfaction  rates with services  vary  among the four DMERCs.  In three  regions, 
over  80 percent  of beneficiaries  (83 percent,  91 percent,  and 98 percent,  respectively)  who 
have contacted  their  DMERC  are satisfied.  Just 65 percent  are satisfied  in the fourth  region. 
However,  beneficiaries  rate DMERC  telephone  staff courtesy  lowest  in this region,  and many 
of those who are dissatisfied  report  a lack of response  or explanation  from  the DMERC  as to 
why their  claim  was denied. 
5  Beneficiaries  Who Report Discourteous  Staff  and Long  Waiting Times Are  Least Likely  TO 
Be  Satisfied 
Beneficiaries  satisfaction  with the DMERC  is associated  with how they perceive  staff 
courtesy.  Ninety-one  percent  of beneficiaries  who contacted  their  DMERC  by telephone 
found the staff to be courteous;  97 percent  of beneficiaries  who visited  found the staff to be 
so (the remaining  3 percent  were neutral).  Of those beneficiaries  who say staff were 
courteous  during  their  most recent  telephone  call,  89 percent  are satisfied  overall;  however, 
of beneficiaries  who say staff were not courteous,  only  50 percent  were satisfied  overall. 
These findings  linking  staff courtesy  to overall  satisfaction  are similar  to prior  beneficiary 
satisfaction  surveys  conducted  by the OIG. 
Staff courtesy  ratings  vary  among the four DMERC  regions.  More  than 91 percent  of 
beneficiaries  report  that staff were courteous  during  their  most recent  telephone  contact  in 
three  of the four  regions  (92 percent,  94 percent,  and 96 percent  respectively).  However, 
only  77 percent  of beneficiaries  in the fourth  region  say staff were courteous.  This  is also 
the region  with the lowest overall  satisfaction  rate amongst  its beneficiaries. 
Also consistent  with findings  from past studies,  beneficiaries  waiting  time for a response  to 
an inquiry  is related  to their  overall  satisfaction  with the DMERC.  Three-quarters  (75 
percent)  of beneficiaries  calling  their  DMERC  got through  right  away,  while  almost  half  (48 
percent)  who had written  to their  DMERC  and had received  a response  did so within  30 
days.  Finally,  three-quarters  (75 percent)  of beneficiaries  who visited  their  DMERC  office 
in person  were able to meet with a staff member  within  10 minutes. 
Eighty-nine  percent  of beneficiaries  who got through  right  away when they called  their 
DMERC  are satisfied  overall,  compared  to only  60 percent  of those for whom  it took more 
than half  an hour  to get through. 
Beneficiaries  With Denied  Claims are Less  Satisfied 
Having  at least one medical  equipment  or supply claim  denied  is negatively  related  to overall 
beneficiary  satisfaction  with DMERC  service.  Of those beneficiaries  who have had no 
denied claims,  90 percent  are satisfied  overall.  In comparison,  just  79 percent  of those who 
had at least one denied  claim  are satisfied  overall. 
Beneficiaries  Who Wrote Their DMERC  Are  Least Likely  To Rate Their  Contact Favorably 
Of those beneficiaries  who called  their  DMERC,  three-quarters  say the DMERC  did a very 
good or good job  handling  their  inquiry;  just  12 percent  say the carrier  did a poor job.  A 
majority  (89 percent)  also found the information  they got from their  call helpful.  Similarly, 
79 percent  of beneficiaries  who visited  their  DMERC  say staff there  did a very  good or good 
job  in handling  their  visit,  with almost  all (92 percent)  saying  the information  they  got as a 
result  of their  visit was helpful. 
Of the 25 beneficiaries  who wrote their  DMERC,  however,  only  nine  say the DMERC  did a 
6  very  good or good job.  Another  nine  say the DMERC  did a poor job,  five gave a neutral 
response,  and two offered  no opinion.  The reasons  given  most often by these beneficiaries 
for their  poor  rating  are either  a negative  decision  from  the DMERC  (such as stopping  a 
benefit)  or the lack of a response  from the DMERC.  Furthermore,  in comparison  to 
beneficiaries  who called  or visited  their  DMERC,  beneficiaries  who wrote the carrier  were 
less likely  to say the information  they received  from  the DMERC  was helpful. 
Most Beneficiaries  Who Have Appealed  A Claim Are  Satisfied  With The Appeals  Process 
Of the  185 respondents  who had contacted  their  DMERC,  68 had at least one denied  claim, 
34 of whom appealed  their  denial.  Of these,  13 won their  appeal,  12 lost,  and the remainder 
are still awaiting  a decision.  Of those beneficiaries  whose claims  have been decided,  almost 
half  report  that the entire  appeals  process  took 2 months  or less.  Fourteen  of the 25 
beneficiaries  who have had a decision  reached  on their  appeal report  being  satisfied  with the 
process,  nine are dissatisfied,  and two gave no opinion. 
All Four  DMERCs  Have  Similar Procedures  In Place  To Handle  Beneficiary  Inquiries 
All four of the DMERCs  have  similar  procedures  in place for responding  to telephone  calls 
from beneficiaries.  They  receive  from  25,000  to 60,000  beneficiary  calls  in an average 
month,  with volume  varying  across the regions.  All four have  staff devoted  exclusively  to 
responding  to beneficiary  calls,  as well as a toll-free  number  for beneficiary  use.  Once a call 
is made,  DMERC  staff determine  the nature  of the inquiry  and answer  any questions 
immediately.  If more research  is necessary,  they try to call back the beneficiary  within  24 
hours.  All calls are logged  into a computer  system,  with records  kept on the nature  of each 
call made. 
Beneficiary  inquiries  by mail  are made much less frequently  than phone  inquiries.  Three  of 
the DMERCs  report  having  500 or fewer inquiries  by mail per month.  Region  C, however, 
reports  receiving  7,800  inquiries  each month  by mail.  Staff members  available  to handle 
mail  inquiries  vary  among the four DMERCs  from  one to 42.  All regions  try to respond  to 
beneficiary  mail within  2 weeks. 
All four report  having  fewer than  10 beneficiary  visits per month.  Respondents  from  three 
regions  say that these visits  are handled  by the correspondence  or telephone  staff.  Two have 
a special area for staff to meet with beneficiaries. 
HOWEVER,  BENEFICIARIES  WHO USE MEDICAL  EQUIPMENT  AND SUPPLIES 
HAVE LIMITED  KNOWLEDGE  OF THEIR DMERC,  AND FEW KNOW WHERE 
TO GO FOR MORE INFORMATION  ABOUT THEIR MEDICARE  BENEFITS 
Less  Than  One-Half  of Medicare  Users of Equipment  and  Supplies  Know About  Their 
DMERC 
Thirty-nine  percent  of the  1,487 survey  respondents  say they know  they have a DMERC. 
However,  many  of these beneficiaries  appear confused  about who this is, perhaps  because  the 
7  DMERCs  were only  recently  established.  Of these beneficiaries  who claim  to know  about 
their  DMERC,  only  9 percent  are able to correctly  identify  the name of their  DMERC,  41 
percent  do not know  the name of their  DMERC,  and the remaining  50 percent  wrongly 
identify  a different  company  as their  DMERC.  Of this latter  group,  beneficiaries  often give 
the name of another  Medicare  carrier,  their medical  equipment  supplier,  or private  insurance 
company. 
These results  do not generally  differ  among  the four regions,  with beneficiaries  from  all four 
reporting  similar  levels  of awareness  about the existence  of the DMERC.  However,  12 
percent  of beneficiaries  in region  D and  14 percent  in region  A are able to correctly  identify 
the name of their  DMERC,  compared  to just  5 percent  in regions  B and C. 
Long term users  of medical  equipment  and supplies  (that is, those who have had them for 
more than  12 months)  are somewhat  more  likely  to know they have a DMERC  than more 
recent  users  (those who have had their  equipment  and supplies for  12 months  or less). 
Forty-five  percent  of the former  know they have a DMERC,  compared  to 38 percent  of the 
latter. 
Most Beneficiaries  Do Not Use Their DMERC  As a Source  of Information 
Medicare  beneficiaries  appear  to be using  a variety  of information  sources  for matters  related 
to their  equipment  and supplies.  For most,  this is not the DMERC.  Being able to obtain 
information  related  to their  Medicare  benefits  is especially  important,  considering  that two-
thirds  (66 percent)  do not know  what percentage  Medicare  pays for their  equipment  and 
supplies.  Furthermore,  35 percent  do not know  that their  medical  equipment  supplier  is 
required  to meet certain  customer  service  standards,  such as honoring  warranties  and taking 
back bad equipment. 
Of the beneficiaries  with questions  about their  Medicare  benefits  for equipment  and supplies, 
one quarter  state they would  contact  their physician  and another  quarter  state they  would 
contact  somebody  in the Federal  Governments  Medicare  program.  Only  17 percent  say 
they would contact  their  DMERC,  while  12 percent  would  contact  their  supplier.  Seventeen 
percent  would not know who to contact. 
Furthermore,  36 percent  of beneficiaries  would contact  the Medicare  program  if they  wanted 
to appeal a Medicare  decision  related  to their  equipment  and supplies.  One quarter  would 
not know who to contact  if they wanted to appeal a Medicare  decision,  while  only  15 percent 
state they  would contact  their  DMERC.  An additional  14 percent  say they  would contact 
their  physician.  Of those beneficiaries  in the sample who have had at least one denied  claim 
in 1996 (34 percent),  only  15 percent  would know to contact  the DMERC  to appeal their 
denial. 
Despite the fact that few Medicare  beneficiaries  are contacting  their  DMERC  with matters 
related  to their  benefits  for equipment  and supplies,  10 percent  say they would have 
contacted  their  DMERC  had they known  it existed. 
8  TEN PERCENT  OF BENEFICIARIES  WHO USE MEDICAL  EQUIPMENT  AND 
SUPPLIES  REPORT  HAVING  SOME EXPERIENCE  WITH POSSIBLE  FRAUD AND 
ABUSE 
Five Percent  of Beneficiaries  Have  Suspected  Fraud  or Abuse  Related  To Their  Equipment 
and Supplies 
Five percent  of  1,487 survey  respondents  answered  positively  when asked if they had ever 
suspected fraud  or abuse related  to their  equipment  and supplies.  Of these,  38 percent  say 
they did not contact  anyone  about their  suspicions.  Another  quarter  contacted  their  medical 
equipment  supplier,  and  16 percent  called  their  physician.  Fourteen  percent  say they 
contacted  the Medicare  program,  while  13 percent  said they called  their  DMERC.  Finally, 
just  1 percent  of those who suspected fraud and abuse contacted  the Inspector  Generals 
hotline. 
Despite Never  Suspecting  Fraud  and Abuse,  Another  5 Percent  of Beneficiaries  Report 
Some  Other Problem  Which Strongly  Suggests  That One or the Other Occurred 
In addition  to the 5 percent  of beneficiaries  who reported  having  suspected  fraud or abuse, 
another  5 percent  report  having  had one or more experiences  which  strongly  suggest that one 
or the other  occurred.  Surprisingly,  these beneficiaries  say they  have never  actually 
suspected fraud  and abuse.  Two percent  say they were billed  for equipment  or supplies that 
they  never  received,  2 percent  report  being  charged  more than they  were told they  would 
have to pay,  and another  2 percent  report  receiving  equipment  or supplies that they  did not 
need. 
Just  Over Half  of All Beneficiaries  Would Call The Medicare  Program  If  They Suspected 
Fraud  and Abuse,  But  One-fifth  Would Not Know  Whom to Call, and  Only 7 Percent 
Would Call the DMERC 
Fifty-four  percent  of all beneficiaries  say they would call the  Federal  Governments 
Medicare  program  to report  suspected  fraud or abuse.  Another  22 percent  report  they 
would not know  whom to contact  to report  suspected fraud or abuse.  Ten percent  say they 
would contact  their physician,  and only  7 percent  would call their  DMERC.  Interestingly,  3 
percent  would contact  their  medical  equipment  supplier  to report  abuse or fraud. 
WHILE ALL FOUR DMERCs  CONDUCT BENEFICIARY  OUTREACH,  THEY DO 
SO ONLY TO A LIMITED  EXTENT  AND REPORT  DIFFICULTIES  IN THEIR 
EFFORTS 
DMERC  Staff Devoted to Outreach  Varies Between  Regions 
The number  of staff members  handling  outreach  varies  from  one to 20 across the four 
DMERC  regions.  These  numbers  do not,  however,  represent  the number  of staff devoted  to 
outreach  activities  on a full-time  basis.  In the region  with 20 staff members  working  on 
outreach,  only  one does so full-time,  while  the rest are volunteers  from  within  other 
9  components  of the company.  In another  region,  three  of the four individuals  involved  in 
outreach  activities  also do public  relations.  Finally,  one regions  legislative  specialist  is also 
the sole staff person  conducting  outreach  activities. 
All Four  DMERCs  Conduct  Similar  Outreach  Activities 
All four of the DMERCs  publish  and distribute  literature,  such as pamphlets,  newsletters  and 

flyers,  as an integral  part of their  outreach  program.  This literature  cover  topics  such as 

Medicare  coverage  and non-coverage  of DME,  secondary  payers,  and  combatting  fraud. 

The DMERCs  also publish  newsletters  which  deal with  specific  issues,  such as particular 

groups of supplies  and capped rentals. 

These printed  materials  are distributed  through  mailing  lists,  consisting  mostly  of suppliers, 

advocacy  groups  for the elderly,  and local  and State Governments.  Two DMERCs  also 

routinely  send out their pamphlets  with all beneficiary  correspondence.  All four  also 

distribute  their  printed  materials  at conferences  and other public  events. 

Overall,  the outreach  materials  sent to us by the DMERCs  provided  useful  information  in 

simple terms.  Each DMERC  had a basic  informational  brochure  with their  name,  address, 

and phone  number  clearly  listed.  The brochures  discussed  the basics  of Medicare  coverage, 

definitions  and examples  of durable  medical  equipment,  prosthetics,  orthotics  and supplies, 

and the purpose  of DMERCs.  They  also had information  about how to appeal  a claim  and 

how to report  suspicions  of fraud or abuse.  In addition  to this basic brochure,  the DMERCs 

had other types  of materials,  such as newsletters  and flyers.  Some of these items were also 

available  in Spanish. 

All of the DMERCs  also participate  in conferences,  seminars,  or other public  events.  These 

events  include  trade  shows and health  fairs or expos,  and are sponsored  by local 

governments,  hospital  associations,  and advocacy  groups.  The DMERCs  participation  at 

these events consists  of giving  presentations,  setting up informational  booths,  and answering 

beneficiary  inquiries. 

Few Beneficiaries  Report Any Experience  With Outreach  Efforts 
One-quarter  of beneficiaries  (27 percent)  have  seen or read printed  information,  such as 
pamphlets  and brochures,  about Medicare  coverage  of equipment  and supplies.  Almost  all 
(97 percent)  say this information  was helpful.  Forty-four  percent  of these beneficiaries  say 
this literature  was published  by the Federal  Governments  Medicare  program;  just  15 percent 
report  the literature  was published  by their  DMERC.  Almost  half  (46 percent)  of the 
beneficiaries  who have  seen some literature  related  to medical  equipment  and supplies  say it 
was sent to them without  requesting  it, mostly  by the Federal  Governments  Medicare 
program.  Another  20 percent  picked  it up themselves. 
More  than one-third  (37 percent)  of Medicare  beneficiaries  say they  would  like to receive 
more  information  about their  Medicare  benefits.  Most of these beneficiaries  would  like 
general  information  on Medicare  coverage  and reimbursement. 
10  Only  3 percent  of Medicare  beneficiaries  report  ever having  attended  any meeting,  seminar 
or other public  event about Medicare  coverage  of their  medical  equipment  and supplies.  All 
of this small group believe  the meeting  was helpful. 
DMERC  Staff  Cite Obstacles To Conducting  Outreach,  But Also Report Some  Practices 
That Appear  To Be  Effective 
Staff at each of the four DMERCs  report  obstacles  which  hinder  their  outreach  efforts.  A 
staff person  at one region  believes  it is difficult  to locate  the most appropriate  and effective 
individuals  and organizations  within  each of his regions  States to disseminate  his information 
to; he is not sure that his information  is actually  reaching  the beneficiaries.  In another 
region,  the outreach  staff member  cites scheduling  conflicts  due to the many  different  groups 
he coordinates  his outreach  activities  with.  A staff member  at a third  region  identifies  the 
cost associated  with this type of work  as the main  obstacle  to conducting  outreach.  He also 
believes  that it is difficult  to assess the effectiveness  of outreach  efforts.  Finally,  one 
employee  cites a general  lack of knowledge  among beneficiaries  about who the DMERC  is, 
as well about Medicare  benefits  in general.  She also believes  that lack of attendance  at the 
advertised  events  is a major  obstacle  to conducting  effective  outreach. 
The DMERC  staff we interviewed  reported  what they viewed  as effective  practices  in 
conducting  outreach.  These different  practices  ranged  from using  alternative  methods  of 
educating  beneficiaries,  such as using business  cards to advertise  their  toll-free  number,  to 
promoting  beneficiary  involvement  in outreach  activities.  One innovative  approach  being 
used involves  having  Medicare  beneficiaries  themselves  present  educational  information  at 
outreach  events.  Another  DMERC  distributed  an informational  video  to libraries  and cable 
companies.  Several  staff members  stated that creative  and persistent  dissemination  of 
outreach  materials  helps to overcome  the obstacles  they  face in educating  the Medicare 
population. 
11  RECOMMENDATIONS 
Our findings  of high  satisfaction  among beneficiaries  who have had contact  with their 
DMERC  suggest that HCFAs  initiative  to use only  four regional  carriers  to process 
Medicare  claims  for medical  equipment  and supplies  is having  some success so far. 
However,  we believe  HCFA  can take additional  steps to improve  the education  and service 
of Medicare  beneficiaries  who use medical  equipment  and supplies.  These  steps would 
support wider HCFA  initiatives  to involve  beneficiaries  in managing  their  own health  care 
and in detecting  and reporting  fraud and abuse. 
Specifically,  HCFA  should: 
1. 	 Evaluate  ways to increase  beneficiary  satisfaction  with the one DMERC  region  with 
the lowest overall  satisfaction  rating; 
2. 	 Instruct  the DMERCs  to emphasize  the importance  of courteous  staff and timeliness  in 
responding  to beneficiary  inquiries,  since these two variables  appear  to be strongly 
related  to overall  beneficiary  satisfaction; 
3. 	 Look more carefully  at effective  ways to educate beneficiaries  on what constitutes 
fraud and abuse and what to do if they  suspect that one or the other  occurs. 
COMMENTS 
We received  comments  on the draft  report  from HCFA  and the Assistant  Secretary  for 
Planning  and Evaluation  (ASPE).  They concur  with our recommendations.  The ASPE also 
provided  suggestions  for clarifications  of the text which have  for the most part been 
incorporated  into the final  report. 
The ASPE expressed  some concern  with our findings  on the appeals process  which  suggest 
that almost  50 percent  of beneficiary  appeals  are successful  and that 50 percent  take more 
than 2 months  to be resolved,  indicating  that some beneficiaries  may be waiting  for necessary 
equipment  and supplies.  The ASPE therefore  recommends  that HCFA  routinely  examine 
DMERC  denials  and the outcomes  of beneficiary  appeals.  We believe  the number  of 
beneficiaries  in our survey  who appealed  a claim  (34) is too small to base on which  to base 
such a recommendation.  While  our data may be suggestive  of procedural  weaknesses,  it is 
too limited  to draw any general  conclusions.  However,  we do believe  that this is an 
important  issue and we currently  plan to undertake  a broader  review  of the appeals  process. 
The ASPE also recommends  that HCFA  encourage  the DMERCs  to look  for more effective 
ways to conduct  general  outreach.  We agree with the need for additional  outreach,  which 
could be conducted  along  with the more  specific  fraud and abuse outreach  already  planned  by 
HCFA. 
12  APPENDIX  A 
SAMPLE  SELECTION 
The universe  for this inspection  was selected by identifying  all line  items processed  by the 
DMERCs  and posted to HCFAs  1996 National  Claims  History  1 percent  sample file as of 
6130196.  These 224,098  records  were then  summarized  by DMERC  and Medicare 
identification  number  to eliminate  multiple  billings  for a beneficiary  to the same DMERC. 
After  limiting  the line  items to those for living  beneficiaries,  our universe  consisted  of 
31,283 records  for 31,159 beneficiaries  (several  beneficiaries  had claims  submitted  to 
multiple  DMERCs). 
Pre-inspection  research  indicated  that approximately  10 percent  of Medicare  beneficiaries 
who file claims  for medical  equipment  or supplies contact  their  DMERC.  To ensure  that we 
captured  a large  enough  number  of these beneficiaries,  we chose a sample  size of 2,000 
records.  This  sample size was also based on the assumption  of a 70 percent  response  rate, 
which  we believed  to be attainable  based on past beneficiary  survey  inspections. 
From  the identified  universe,  we selected  a stratified  random  sample of 500 beneficiaries 
(one was sampled twice)  from  each of the four DMERCs  as follows: 
STRATA  (DMERC)  UNIVERSE  SAMPLE 
1  (B)  7,277  500 
2  63  12,055  500 
3  03  6,165  500 
4  (4  5,786  500 
TOTAL  31.283  2,000 
A- 1  APPENDIX  B 
CONFIDENCE  INTERVALS  FOR KEY QUESTIONS 
We calculated  confidence  intervals  for  13 key questions  from  the beneficiary  mail 
questionnaire.  The response  estimate  and 95 percent  confidence  interval  are given  for each 
of the following: 
1. 	 Before  you  started to answer this questionnaire,  did you know that you have  a 
Medicare  medical  equipment  carrier  (the private  insurance  company  that contracts 
with the Federal  Government  to process  Medicare  claims  for your  medical  equipment 
and/or  supplies)? 
Yes response  estimate:  39 % 
Lower  interval:  36% 
Upper  interval:  42 % 
2. 	 What is the name of your Medicare  medical  equipment  carrier? 
I dont know  response  estimate:  41% 
Lower  interval:  37% 
Upper interval:  45% 
3. 	 Have you ever  seen or read any printed  information,  such as pamphlets  or brochures, 
about Medicare  coverage  of medical  equipment  and supplies? 
Yes response  estimate:  27 % 
Lower  interval:  25% 
Upper  interval:  29% 
4. 	 Do you know  what percentage  Medicare  pays for your  medical  equipment  and/or 
supplies? 
Yes response  estimate:  34 % 
Lower  interval:  31% 
Upper  interval:  37% 
5. 	 Who  would you call if you had a question  about your  Medicare  benefits  for medical 
equipment  and/or  supplies? 
My Medicare  medical  equipment  carrier  response  estimate:  17% 
Lower  interval:  15% 
Upper  interval:  19% 
6. 	 Who would you call  if you wanted to appeal a Medicare  decision  on your  medical 
equipment  and/or  supplies claim? 
My Medicare  medical  equipment  carrier  response  estimate:  15% 
Lower  interval:  13% 
Upper  interval:  17% 
B- 1  7. 	 Have you ever contacted  your  Medicare  medical  equipment  carrier  about any matter 
related  to your  medical  equipment  and/or  supplies? 
Yes response  estimate:  12% 
Lower  interval:  10% 
Upper  interval:  14% 
8. 	 Overall,  how satisfied  have you been with how your  Medicare  medical  equipment 
carrier  has served you? 
Satisfied  response  estimate:  86% 
Lower  interval:  81% 
Upper  interval:  91% 
9. 	 In general,  how courteous  or discourteous  were the Medicare  medical  equipment 
carrier  staff during  this call? 
Courteous  response  estimate:  91% 
Lower  interval:  85% 
Upper interval:  97% 
10. 	 What happened  when you called? 
I got through  right  away  response  estimate:  75% 
Lower  interval:  68% 
Upper interval:  82% 
11. 	 Does the beneficiary  report  having  some experience  with possible  fraud or abuse? 
Yes response  estimate:  10% 
Lower  interval:  8% 
Upper interval:  12 % 
12. 	 Have you ever  suspected Medicare  fraud or abuse related  to your  medical  equipment 
and/or  supplies? 
Yes response  estimate:  5 % 
Lower  interval:  4% 
Upper  interval:  6 % 
13. 	 Which  of the following  did you contact  about your  suspicions? 
Nobody  response  estimate:  38 % 
Lower  interval:  24% 
Upper  interval:  52% 
B-2  APPENDIX  C 
NON-RESPONDENT  ANALYSIS 
When  surveys  are used to collect  data,  the results  may be biased  if non-respondents  differ 
from  respondents.  For this inspection,  a beneficiary  for whom a survey  was not received  is 
a non-respondent.  To test for the presence  of any bias,  we first obtained  information  from 
HCFAs  1 percent  Common  Working  File for all 2,000  beneficiaries  who were  sent a mail 
questionnaire.  A total  of  1,487 surveys  were returned,  for a response  rate of 74.4 percent. 
The following  table  illustrates  the number  of responses  and the response  rate by strata: 
STRATA  (DMERC)  NUMBER  RESPONSE  RATE 
1 (B) 
384  77% 
m 
2  372  74% 
3  CD)  371  74% 
4  6%  360  72% 
Total Respondents  1,487  74% 
The survey  data are analyzed  as a whole  and not by strata.  However,  we did exceed  the 
desired  minimum  70 percent  response  rate for each strata. 
To test for the presence  of any non-response  bias,  we analyzed  the variables  that might 
influence  whether  an individual  would  respond  to the survey  or that might  affect his or her 
responses.  For the 2,000 beneficiaries  in our sample,  we looked  at sex, claim  status (i.e., 
whether  or not the beneficiary  had one or more claims  denied  during  our study period),  and 
DMERC  region.  These categorical  variables  were tested using  Chi-square  with the 
appropriate  degrees  of freedom. 
The results  of this analysis  are presented  in tables A, B and C.  The Chi-square  values given 
in the tables provide  a test of the difference  between  the distribution  of the respondents  and 
that of the non-respondents  for the variable  of interest.  Also provided  in the tables are the 
response  rates by the different  values of the variables. 
These tables  show no statistically  significant  differences  between  respondents  and non-
respondents  for any of the variables  tested.  Given the results  of this analysis,  we believe  that 
the inspection  findings  fairly  represent  the experience  and opinions  of beneficiaries  to whom 
the questionnaires  were  sent.  We therefore  believe  that our survey  results  can be generalized 
to the universe  of Medicare  beneficiaries  who had a medical  equipment  or supplies claim 
processed  during  the first 6 months  of 1996. 
c- 1  TABLE A 

SEX 

Respondents  Non-respondents  Total  Response 
Rate 
Male  608  41%  187  36%  795  76% 
Female  879  59%  326  64%  1,205  73% 
Total  1,487  513  2,000  74% 
CHI-SQ  =  3.133 

Degrees  of Freedom  =  1 

TABLE B 
CLAIM STATUS 
Respondents  Non-respondents  Total  Response 
Rate 
At least one  511  34%  191  37%  702  73% 
claim denied 
No claims  976  66%  322  63%  1,298  75% 
denied 
Total  1,487  513  2,000  74% 
CHI-SQ  =  1.377 
Degrees  of Freedom  =  1 
c-2  TABLE C 
DMERC REGION 
Non-respondents 
Total  1,487  513  2,000  74% 
IICH I-SQ  =  3.028 

Decrees  of Freedom  =  3  I( 

c-3  APPENDIX  D 
COMMENTS  ON  THE  DRAFT  REPORT 
In this appendix,  we present  in full the comments  from the Health  Care  Financing 
Administration  and the Assistant  Secretary  for Planning  and Evaluation. 
D-l