U.S. Department of Health & Human Services 
Office of Inspector General 
 
 
CMS Did Not Detect 
Some Inappropriate 
Claims for Durable 
Medical Equipment 
in Nursing Facilities 
 
OEI-06-16-00380 
June 2018 
 
OoiEgI.-h0h0s-.g0o0v- 00000 
Suzanne Murrin 
Month 201Y 
Deputy Inspector General for 
 
Evaluations and Inspections 
oig.hhs.gov  Report in Brief  U.S. Department of Health & Human Services 
June 2018 
Office  of Inspector General 
OEI-06-16-00380 
 
 
CMS Did Not Detect Some Inappropriate Claims for  Why OIG Did This Review 
The Medicare, Medicaid, and SCHIP 
Durable Medical Equipment in Nursing Facilities  
Benefits Improvement and Protection 
What OIG Found  Act of 2000 directs the Office of 
Key Takeaway 
Payment edits (automated payment processes)  Inspector General (OIG) to monitor the 
By not submitting full and accurate 
did not detect $18.4 million in Medicare  appropriateness of Medicare payments 
information on claims for DME, SNFs 
payments in 2015 for inappropriate claims for  for items and services (including DME) 
and DME suppliers bypassed the CMS 
durable medical equipment (DME) provided  provided during noncovered stays in 
edits that were designed to detect 
during stays in skilled nursing facilities (SNFs) not  SNFs.  CMS requires facilities to 
inappropriate DME claims.  As a 
covered by Medicare, called noncovered stays.   provide DME as a standard part of 
result, CMS allowed $18.4 million in 
This represented 6 percent of all payments for  nursing care, and does not permit 
payments for inappropriate claims for 
DME during noncovered stays in SNFs.   separate Medicare payment for DME 
DME provided during SNF stays not 
except when Medicaid-only nursing 
The Centers for Medicare & Medicaid Services  covered by Medicare, and may have 
(CMS) uses two payment edits designed to  allowed additional inappropriate  facilities serve as beneficiary homes.  
identify and reject such claims, but neither edit  claims in Medicaid-only nursing  Previously, OIG found that CMS 
facilities.  To improve its detection of  allowed $41.2 million in Medicare 
rejected the claims because SNFs and DME 
inappropriate DME claims, CMS  payments for inappropriate claims for 
suppliers did not submit full and accurate 
should strengthen oversight of place- DME provided during noncovered 
information required for processing. 
of-service codes, and assess the costs  stays in SNFs ($30 million) and in 
For 72 percent of the inappropriate DME claims, 
and benefits of strengthening  Medicaid-only nursing facilities 
DME suppliers failed to correctly code the SNF  oversight of no-payment bills and  ($11.2 million) in 2006.  In response to 
as a facility.  Instead, they coded the place of  collecting information regarding  OIGs work, CMS implemented a new 
service as the beneficiarys home, thus enabling  Medicaid-only nursing facilities level 
payment edit to reject claims for DME 
the claims to bypass the CMS edit that rejects  of care. 
provided during noncovered SNF 
separate payment for most DME provided at 
stays.  However, CMS did not address 
facilities.  By definition, SNFs provide primarily skilled care and thus cannot be considered 
stays in Medicaid-only nursing 
beneficiary homes.  For 98 percent of the inappropriate DME claims, SNFs did not submit 
facilities.  This study provides an 
no-payment bills, which are administrative claims that document the dates of noncovered 
update to OIGs prior study, assessing 
stays and do not result in payment.  No-payment bills enable another CMS edit to identify 
Medicare claims for DME provided 
noncovered stays and reject claims for DME provided during those timeframes.   
during noncovered stays in SNFs and 
CMS may have also allowed up to $3.7 million in Medicare payments for inappropriate  Medicaid-only nursing facilities. 
claims for DME provided during stays in Medicaid-only nursing facilities.  Unlike SNFs, 
How OIG Did This Review 
these facilities can be considered beneficiary homes if they provide primarily nonskilled 
For 2015, we identified inappropriate 
care, permitting separate Medicare payments for DME.  However, we found that CMS is 
claims for DME provided during 
unable to verify whether the facilities qualify as homes because CMS does not collect and 
noncovered stays in SNFs, and 
maintain information regarding the level of carei.e., skilled or nonskilledthat facilities 
potentially inappropriate claims for 
provide. 
DME provided during stays in 
What OIG Recommends and How the Agency Responded  Medicaid-only nursing facilities.  We 
To improve detection of inappropriate DME claims, we recommend that CMS  used admission and discharge dates 
(1) strengthen oversight of place-of-service codes by developing a process to determine  from the Minimum Data Set and SNF 
whether DME claims with home as the place of service fit the circumstances permitting  claims to document facility stay dates 
separate payment; (2) assess the costs and benefits of strengthening oversight of  and identify noncovered stays.  We 
no-payment bills by developing a process to identify noncovered stays when SNFs do not  then determined whether SNFs and 
submit no-payment bills; and (3) assess the costs and benefits of collecting and  DME suppliers submitted information 
maintaining information regarding the level of care provided by Medicaid-only nursing  required to facilitate proper billing for 
facilities.  CMS concurred with our recommendations. DME.  We also collected information 
about CMSs methods to prevent 
processing inappropriate claims for 
Full report can be found at http://oig.hhs.gov/oei/reports/oei-06-16-00380.asp   DME in these facilities.   
TABLE OF CONTENTS 
BACKGROUND  1 
Methodology  6 
   
FINDINGS   
CMSs edits did not detect $18.4 million in Medicare payments for inappropriate claims  8 
for DME provided during noncovered SNF stays  
CMS may have allowed additional Medicare payments for inappropriate claims for DME   9 
provided during stays in Medicaid-only nursing facilities 
   
CONCLUSION AND RECOMMENDATIONS   
Improve oversight of place-of-service codes submitted by DME suppliers for DME provided  10 
during noncovered SNF stays 
Assess the costs and benefits of improving oversight of no-payment bills submitted by SNFs  10 
Assess the costs and benefits of collecting and maintaining information regarding the level of  10 
care provided by Medicaid-only nursing facilities 
   
AGENCY COMMENTS AND OIG RESPONSE  11 
   
APPENDICES   
A.  Inappropriate Claims and Payments for Durable Medical Equipment Provided During  12 
Noncovered Stays in Skilled Nursing Facilities 
B.  Agency Comments  13 
   
ACKNOWLEDGMENTS  15 
 
   
BACKGROUND 
Objective 
To determine the extent to which the Centers for Medicare & Medicaid 
Services (CMS) permitted Medicare payments for inappropriate claims 
for durable medical equipment (DME) provided during noncovered stays 
in skilled nursing facilities (SNFs) and potentially inappropriate claims for 
DME provided during stays in Medicaid-only nursing facilities. 
The Medicare, Medicaid, and SCHIP Benefits Improvement and Protection 
Act of 2000 directs the Office of Inspector General (OIG) to monitor the 
appropriateness of Medicare payments for items and services (including 
DME) furnished to residents during SNF stays not covered by Medicare, 
called noncovered stays.1  In response to the mandate, OIG reported in 
2009 that CMS had allowed $41.2 million in Medicare payments for 
inappropriate claims for DME provided during noncovered stays in 2006
$30 million for DME provided during noncovered stays in SNFs, and 
$11.2 million for DME provided during stays in Medicaid-only nursing 
facilities.2   
In 2010, CMS implemented a new payment edit, or automated system 
process, to identify and reject Medicare claims for DME provided to 
residents during noncovered SNF stays.3  CMS did not take action to 
address inappropriate claims for DME provided during stays in 
Medicaid-only nursing facilities.  This study provides an update to OIGs 
2009 report, assessing Medicare claims for DME provided during 
noncovered stays in SNFs and Medicaid-only nursing facilities in 2015.   
Medicare Coverage for Skilled Nursing Facility Care 
Nursing facilities may provide skilled or nonskilled nursing care to residents, 
typically elderly and disabled individuals who are either physically or 
mentally unable to live independently.4  CMS certifies most nursing facilities 
that provide primarily skilled care as SNFs, meaning that they are permitted 
to bill Medicare for beneficiary stays.  Skilled nursing care is care that is 
 
1 Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000,  313(d). 
2 OIG, Part B Services During Non-Part A Nursing Home Stays:  Durable Medical Equipment, 
OEI-06-07-00100, July 2009.  The total Medicare payment amount associated with 
inappropriate claims ($41.2 million) included both payments made by CMS and payments 
made by beneficiaries.   
3 CMS, One-Time Notification, Pub. 100-20, Transmittal 637, Change Request 6695, 
February 5, 2010.  See also CMS, One-Time Notification, Pub. 100-20, Transmittal 789, Change 
Request 7164, October 28, 2010, and CMS, CMS Manual System, Pub. 100-20, Transmittal 973, 
Change Request 7625, October 27, 2011. 
4 Social Security Act (SSA),  1819(a), 1919(a). 
CMS Did Not Detect Some Inappropriate Claims for Durable Medical Equipment in Nursing Facilities  1 
OEI-06-16-00380   
provided by licensed clinicians such as nurses and rehabilitation therapists 
and includes services such as intravenous injections.5   
In 2015, CMS certified 83 percent of nursing facilities as SNFs and classified 
the remaining 17 percent as Medicaid-only nursing facilities.6  Medicaid-only 
nursing facilities can provide either skilled care or nonskilled care, and they 
receive reimbursement through State Medicaid programs.7  Nonskilled 
nursing care does not require the skills of a registered nurse or therapist 
and includes services such as assistance with daily activities and oral 
medications.8  In the 2009 report, OIG found that CMS did not collect and 
maintain information about whether Medicaid-only nursing facilities 
provided primarily skilled or nonskilled care.  CMS only categorized the 
nursing facilities as SNFs or Medicaid-only nursing facilities.9, 10   
Medicare covers SNF stays for up to 100 days for each benefit period.  To 
reimburse SNFs for these stays, Medicare requires that (1) the beneficiary 
must have had a qualifying 3-day inpatient hospital stay prior to the SNF 
admission, and (2) the beneficiary must require and receive skilled care 
during the SNF stay.11   
Noncovered stays.  When a SNF stay does not meet these Medicare 
coverage requirements, Medicare does not cover the stay and refers to it as 
a noncovered stay.  CMS must track the dates of noncovered stays to 
accurately determine the beneficiarys benefit period for Medicare-covered 
stays.  To this end, CMS requires SNFs to submit administrative claims for 
 
5 CMS, Skilled nursing facility (SNF) care.  Accessed at 
https://www.medicare.gov/coverage/skilled-nursing-facility-care.html on June 8, 2017.  CMS, 
Medicare Coverage of Skilled Nursing Facility Care, January 2015.  Accessed at 
https://www.medicare.gov/Pubs/pdf/10153.pdf on September 15, 2017. 
6 OIG analysis of 2015 nursing facilities in the Certification and Survey Provider Enhanced 
Reports/Quality Improvement and Evaluation System.  This figure includes facilities that are 
dually certified as SNFs and Medicaid providers. 
7 SSA  1919(a).  CMS, Special Skilled Nursing Facility (SNF) Definition Used in Determining 
Durable Medical Equipment (DME) Coverage, and in Ending a Benefit Period or Spell of 
Illness, MLN [Medicare Learning Network] Matters, Article #SE0745, August 28, 2012.  
Accessed at https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-
MLN/MLNMattersArticles/downloads/SE0745.pdf on June 7, 2017.  CMS, Medicare Coverage 
of Skilled Nursing Facility Care, January 2015.  Accessed at 
https://www.medicare.gov/Pubs/pdf/10153.pdf on September 15, 2017. 
8 CMS, Medicare Claims Processing Manual, Pub. 100-04, ch. 30,  70.4.5; CMS, Medicare 
Benefit Policy Manual, Pub. 100-02, ch. 8  30.5. 
9 CMS also acknowledges facilities that are dually certified as SNFs and Medicaid providers 
and acknowledges that some nursing facilities have distinct parts, a term referring to 
portions of nursing facilities that are certified differently than the rest of those facilities.  
42 CFR  483.5. 
10 OIG, Part B Services During Non-Part A Nursing Home Stays:  Durable Medical Equipment, 
OEI-06-07-00100, July 2009. 
11 SSA,  1812(a)(2)(A), 1861(a); 42 CFR  409.30; CMS, Medicare Benefit Policy Manual, ch. 8 
 20, 30.  CMS, Skilled nursing facility (SNF) care.  Accessed at 
https://www.medicare.gov/coverage/skilled-nursing-facility-care.html on June 8, 2017. 
CMS Did Not Detect Some Inappropriate Claims for Durable Medical Equipment in Nursing Facilities  2 
OEI-06-16-00380   
noncovered stays.  These administrative claims document the dates when 
residents received care in SNFs outside of Medicare coverage.12 
Depending on the circumstances, SNFs are required to submit one of two 
types of administrative claims for noncovered stays:  (1) no-payment bills, 
which a SNF submits when a beneficiary who resides in a SNF no longer 
requires a skilled level of care, and (2) benefits exhaust bills, which a SNF 
submits when a beneficiary exhausts the 100 days of SNF benefits.13, 14  
Because both types of claims identify noncovered stays, we combined 
no-payment bills and benefits exhaust bills for our analysis and refer to 
them collectively as no-payment bills.  CMS does not require 
Medicaid-only nursing facilities to submit no-payment bills because stays in 
these facilities are never covered by Medicare. 
Medicare Coverage for Durable Medical Equipment 
DME is reusable medical equipment that serves a primarily medical purpose 
and is appropriate for use in a beneficiarys home, such as a wheelchair, 
walker, or hospital bed.15  Medicare-enrolled DME suppliers provide DME to 
beneficiaries for use in their homes, and these suppliers submit claims to 
Medicare payment contractors for reimbursement.  If the payment 
contractor determines that the DME claim is allowable, Medicare pays the 
approved amount, minus copayments and deductibles that are either paid 
by the beneficiary or reimbursed from other insurance providers.16, 17 
CMS considers most DME to be a standard part of care provided by SNFs 
and Medicaid-only nursing facilities, and generally does not permit separate 
Medicare payment for DME provided during covered or noncovered  
 
12 CMS, Medicare Claims Processing Manual, ch. 6,  40.8. 
13 Neither no-payment bills nor benefits exhaust bills are required for beneficiaries who are 
initially admitted to SNFs for nonskilled care because these services are not covered by 
Medicare. 
14 CMS, Medicare Claims Processing Manual, ch. 6,  40.8. 
15 CMS, Medicare Benefit Policy Manual, ch. 15,  110.1.   
16 CMS, Medicare Claims Processing Manual, ch. 20,  190A. 
17 DME claims dated on or after April 1, 2013, incur a 2-percent reduction in payment in 
accordance with the Budget Control Act of 2011 and the American Taxpayer Relief Act of 
2012 (i.e., sequestration).  For further explanation, see https://www.cms.gov/Outreach-and-
Education/Outreach/FFSProvPartProg/Downloads/2013-03-08-standalone.pdf.  
CMS Did Not Detect Some Inappropriate Claims for Durable Medical Equipment in Nursing Facilities  3 
OEI-06-16-00380   
stays.18, 19  However, CMS permits separate Medicare payment for DME when 
Medicaid-only nursing facilities serve as beneficiary homes.  To qualify as 
a home, the facility must provide primarily nonskilled care.20  (SNFs never 
qualify as beneficiary homes because, by definition, they provide primarily 
skilled care.)  To receive the separate Medicare payment for facilities that 
qualify as homes, DME suppliers identify home as the place of service on 
the Medicare claim. 
There are two circumstances under which CMS permits separate Medicare 
payment for DME when the facilitya SNF or a Medicaid-only nursing 
facilitydoes not serve as the beneficiarys home:  (1) when the beneficiary 
rented DME for the month during which he/she was admitted to the facility 
and (2) when the beneficiary received DME in anticipation of discharge for 
use in his or her home.21, 22  To receive the separate Medicare payment 
under these circumstances, CMS instructs DME suppliers to identify home 
as the place of service on the Medicare claim. 
Ensuring Accurate Medicare Claims 
To ensure that Medicare reimburses only appropriate claims, CMS instructs 
payment contractors to identify and reject certain claims that should not be 
paid.  These instructions are programmed within the payment processing 
system as edits that trigger the system to automatically reject the claim 
during processing.23  
 
18 SSA,  1861(h)(5).  CMS, Special Skilled Nursing Facility (SNF) Definition Used in 
Determining Durable Medical Equipment (DME) Coverage, and in Ending a Benefit Period or 
Spell of Illness, MLN [Medicare Learning Network] Matters, Article #SE0745, August 28, 2012.  
Accessed at https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-
MLN/MLNMattersArticles/downloads/SE0745.pdf on June 7, 2017.  See also The Henry J. 
Kaiser Family Foundation, Medicaid Benefits: Medical Equipment and Supplies, 2012.  Accessed 
at http://www.kff.org/medicaid/state-indicator/medical-equipment-and-
supplies/?currentTimeframe=0&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:
%22asc%22%7D on July 6, 2017. 
19 There are a few exceptions for specific categories of DME; for example, CMS permits 
separate Medicare payment for surgical dressings and prosthetic devices.  CMS, Medicare 
Claims Processing Manual, ch. 7,  10.1. 
20 CMS, Medicare Benefit Policy Manual, ch. 15,  110.1(D).  See also CMS, Special Skilled 
Nursing Facility (SNF) Definition Used in Determining Durable Medical Equipment (DME) 
Coverage, and in Ending a Benefit Period or Spell of Illness, MLN [Medicare Learning 
Network] Matters, Article #SE0745, August 28, 2012.  (For URL, see footnote 18 above.). 
21 CMS permits payment for the entire rental month that overlaps the nursing facility 
admission.  Ibid. 
22 CMS permits payment for DME claims if the DME is delivered to a beneficiary in the SNF 
up to 2 days prior to discharge to home.  In these situations, CMS instructs DME suppliers to 
use the date of discharge as the date of service on the claim.  CMS, Medicare Benefit Policy 
Manual, ch. 15,  110.5. 
23 CMS/Medicare Learning Network, Medicare Claim Review Programs, September 2016.  
Accessed at https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-
MLN/MLNProducts/downloads/MCRP_Booklet.pdf on June 19, 2017.  CMS, Annual Report to 
Congress on the Medicare and Medicaid Integrity Programs, Fiscal Year 2015,  2.2.  Accessed 
at https://www.cms.gov/About-CMS/Components/CPI/Downloads/2015-final-rtc-
06232017.pdf on January 30, 2018. 
CMS Did Not Detect Some Inappropriate Claims for Durable Medical Equipment in Nursing Facilities  4 
OEI-06-16-00380   
For DME, CMS has two payment edits that are designed to identify and 
reject these claims: 
Edit that uses place-of-service codes.  One CMS edit rejects claims for DME 
that is provided in institutional settings, including SNFs and Medicaid-only 
nursing facilities.  This edit identifies and rejects Medicare claims for DME 
that do not have the place of service coded as home or another 
appropriate setting that would permit separate payment for DME.24  
As previously mentioned, DME suppliers can appropriately code 
Medicaid-only nursing facilities as beneficiary homes if the facility provides 
primarily nonskilled care or if one of several other exceptions apply. 
Prior OIG studies found that place-of-service codes can be inaccurate.  
In the 2009 report that identified Medicare payments for inappropriate 
claims for DME provided during noncovered SNF stays, OIG found that 
98 percent of inappropriate DME claims were incorrectly coded with home 
as the place of service.25  In 2015, OIG found that Medicare potentially 
overpaid physicians approximately $33.4 million for incorrectly coding 
nonfacility places of service on claims.26 
Edit that uses no-payment bills.  In response to OIGs prior finding of 
inappropriate claims, CMS implemented another edit that identifies and 
rejects inappropriate claims for DME provided during noncovered SNF 
stays.  The new edit uses no-payment bills submitted by SNFs to document 
the dates of noncovered stays and rejects DME claims during those 
timeframes for a list of DME codes specified by CMS.27, 28  If SNFs do not 
submit no-payment bills, either because they fail to submit them or because 
they are not required to submit them, this edit does not have the 
information it needs to identify the noncovered stays and reject 
inappropriate claims. 
 
 
24 Noridian Healthcare Solutions, Place of Service, June 30, 2017.  Accessed at 
https://med.noridianmedicare.com/web/jadme/claims-appeals/claim-submission/pos on 
July 12, 2017.  Noridian Healthcare Solutions, Place of Service, June 15, 2017.  Accessed at 
https://med.noridianmedicare.com/web/jddme/search-result/-/view/2230703/place-of-
service on November 21, 2017.  CGS, DME MAC Jurisdiction B Supplier Manual, Summer 2017.  
Accessed at https://cgsmedicare.com/jb/pubs/pdf/jb_supplier_manual_summer2017.pdf on 
November 21, 2017.  CGS, DME MAC Jurisdiction C Supplier Manual, October 2, 2017.  
Accessed at https://www.cgsmedicare.com/jc/pubs/pdf/chpt6.pdf on November 21, 2017. 
25 OIG, Part B Services During Non-Part A Nursing Home Stays:  Durable Medical Equipment, 
OEI-06-07-00100, July 2009. 
26 OIG, Incorrect Place-of-Service Claims Resulted in Potential Medicare Overpayments Costing 
Millions, May 2015, A-01-13-00506. 
27 Select categories of DME, such as surgical dressings and prosthetic devices, are permitted. 
28 CMS, One-Time Notification, Pub. 100-20, Transmittal 637, Change Request 6695, 
February 5, 2010.  See also CMS, One-Time Notification, Pub. 100-20, Transmittal 789, Change 
Request 7164, October 28, 2010.  See also CMS Manual System, Pub. 100-20, Transmittal 973, 
Change Request 7625, October 27, 2011. 
CMS Did Not Detect Some Inappropriate Claims for Durable Medical Equipment in Nursing Facilities  5 
OEI-06-16-00380   
Methodology  For this study, we identified inappropriately allowed claims for DME 
provided during noncovered stays in SNFs and potentially inappropriate 
claims for DME provided during stays in Medicaid-only nursing facilities for 
calendar year 2015.  We identified noncovered stays by combining data 
from several databases to document the timeframes for facility stays. 
Data Sources 
We used facility admission and discharge dates from the Minimum Data Set 
(MDS), a component of the Resident Assessment Instrument, to document 
the dates when residents stayed in the facilities.  To document the residents 
health and general well-being, CMS requires facilities to complete and 
electronically submit MDS assessments for all residents at the time facilities 
admit and discharge them.29 
We identified residents who received any type of MDS assessment during 
2015 and extracted their Social Security numbers; assessment dates; and 
facility admission and discharge dates.  We combined the MDS data with 
SNF claims from the National Claims History (NCH) to document the dates 
of the covered and noncovered periods of the SNF stays.  We then 
determined whether SNFs submitted no-payment bills for the noncovered 
stays.  We also extracted facility names and facility types (i.e., SNF or 
Medicaid-only nursing facility) from the Certification and Survey Provider 
Enhanced Reports/Quality Improvement and Evaluation System. 
Using the facility admission and discharge dates in MDS, we identified 
3,030,178 DME claims that occurred during noncovered stays; these claims 
totaled $350,774,111.30, 31  We also collected information from CMS 
regarding its methods to prevent the processing of inappropriate claims for 
DME provided during noncovered stays. 
Analysis 
Inappropriate Claims.  To identify inappropriate claims, we used the list of 
DME codes that CMS specified in its edit for noncovered stays.  We totaled 
the allowed amounts of inappropriate claims for DME provided during 
noncovered stays both in SNFs and in Medicaid-only nursing facilities.  The 
Medicare payment amounts associated with inappropriate claims include 
payments both by CMS and by beneficiaries.  We also grouped DME into 
broad categories and described the types of DME associated with such 
inappropriate claims. 
 
29 CMS, Long-Term Care Facility Resident Assessment Instrument 3.0 Users Manual, 
Version 1.14, ch. 5, 5, October 2016.  Accessed at https://downloads.cms.gov/files/MDS-30-
RAI-Manual-V114-October-2016.pdf on March 16, 2017. 
30 We used assessment dates when admission or discharge dates were missing. 
31 The total number of DME claims (3 million) and associated Medicare payments 
($351 million) included claims and payments from both SNFs (2,525,198 claims, $287,560,924) 
and Medicaid-only nursing facilities (504,980 claims, $63,213,188). 
CMS Did Not Detect Some Inappropriate Claims for Durable Medical Equipment in Nursing Facilities  6 
OEI-06-16-00380   
Place of Service.  For DME provided in SNFs and in Medicaid-only nursing 
facilities, we determined whether DME suppliers had coded the place of 
service as home.  For DME provided in SNFs, we considered all claims with 
place-of-service codes of home as inappropriate unless one of these two 
circumstances was applicable:  (1) the beneficiary rented DME for the month 
during which he/she was admitted to the facility or (2) the beneficiary 
received DME in anticipation of discharge to use in his or her home.  
To assess the exception for rented DME, we determined whether the service 
dates were within the same month as the admission.  To assess the 
exception for DME received in anticipation of a beneficiarys discharge, we 
determined whether the DME was provided within 3 days of discharge 
(expanding beyond CMSs permitted 2 days, to account for possible time 
discrepancies).32  For DME provided in Medicaid-only nursing facilities, we 
also determined whether the claims fit one of the two previously mentioned 
circumstances that permit separate Medicare payment for DME. 
No-Payment Bills.  We determined whether SNFs submitted no-payment 
bills for their residents on whose behalf DME suppliers inappropriately 
submitted claims.  We identified no-payment bills for beneficiaries who no 
longer required a skilled level of care and benefits exhaust bills for 
beneficiaries who had fully exhausted their 100 days of SNF benefits.  
As previously stated, both types of bills are required only for beneficiaries 
admitted to SNFs for skilled nursing care.  In our analysis, we included 
admissions both for skilled and nonskilled care and did not assess whether 
submission of no-payments bills or benefits exhaust bills was required.  We 
counted benefits exhaust bills that included both Medicare-covered and 
noncovered days as though they were Medicare-covered stays in their 
entirety, which had a negligible impact on our analysis.  We combined 
no-payment bills and benefits exhaust bills, and we refer to them collectively 
as no-payment bills in the findings and recommendations. 
Limitation 
We did not determine whether the DME provided to SNF and 
Medicaid-only nursing facility residents was medically necessary. 
Standards  This study was conducted in accordance with the Quality Standards for 
Inspection and Evaluation issued by the Council of the Inspectors General on 
Integrity and Efficiency. 
 
32 To determine whether the DME was provided within 3 days of discharge, we compared the 
DME claims dates of service to the beneficiaries dates of discharge.  (CMS instructs DME 
suppliers to use the date of discharge as the date of service on the claim.) 
CMS Did Not Detect Some Inappropriate Claims for Durable Medical Equipment in Nursing Facilities  7 
OEI-06-16-00380   
FINDINGS 
CMSs edits did not  In 2015, CMS allowed $18,350,191 in Medicare payments across 
292,848 inappropriate claims for DME provided during noncovered stays in 
detect $18.4 million 
SNFs.33  This total dollar amount includes both payments made by CMS 
in Medicare 
($14,000,204) and payments made by beneficiaries ($4,349,987).  These 
payments for  payments represented 6 percent of all payments for DME provided during 
inappropriate claims  noncovered stays in SNFs in 2015 ($287,560,924).34  Oxygen and wheelchair 
equipment were the largest categories of DME among these inappropriate 
for DME provided 
claims, accounting for 67 percent of the total payments for inappropriate 
during noncovered 
claims for DME provided during noncovered stays in SNFs.  (See Appendix A 
SNF stays  for a list of all inappropriately allowed DME by category.)  CMS permitted 
these inappropriate DME claims despite using two payment edits intended 
to identify and reject them. 
For many of these inappropriate claims, DME suppliers incorrectly 
coded the SNF as home, thus bypassing a CMS edit 
For 72 percent (212,132) of the inappropriately allowed DME claims, DME 
suppliers incorrectly coded the SNFs with home as the place of service.35  
As previously mentioned, SNFs cannot serve as beneficiary homes and 
should not be coded as home except under two circumstances, and none 
of the 292,848 DME claims met these circumstances.36  Therefore, DME 
suppliers coding the SNFs as home bypassed the CMS edit designed to 
reject claims for DME provided in institutional settings, such as SNFs and 
Medicaid-only nursing facilities not serving as homes. 
For nearly all of these inappropriate claims, SNFs did not submit 
no-payment bills, thus bypassing another CMS edit  
For 98 percent (288,011) of the inappropriately allowed DME claims, SNFs 
did not submit no-payment bills covering the time periods when the DME 
was provided.  Although CMS requires submission of no-payment bills for 
beneficiary admissions for skilled care, SNFs have little incentive to submit 
these administrative claims given that they do not receive compensation.  
CMS does not have a process to ensure that SNFs submit them.37  
 
33 This figure includes facilities that are dually certified as SNFs and Medicaid providers. 
34 The majority of the $288 million was for DME that CMS permits during noncovered stays, 
such as orthotics, prosthetics, and enteral nutrition. 
35 OIG review using dates of care provided by MDS determined that the remaining 
28 percent of DME claims were also inappropriate, but suppliers did not code home as the 
place of service.  
36 These claims did not include modifiers indicating the equipment was rented in the first 
month of care, and the beneficiary had not been discharged within 3 days of receiving DME. 
37 One incentive for SNFs to submit no-payment bills is to obtain a Medicare denial notice, 
which may be required for coverage by another insurer.  CMS, Medicare Claims Processing 
Manual, ch. 6,  40.8 2a. 
CMS Did Not Detect Some Inappropriate Claims for Durable Medical Equipment in Nursing Facilities  8 
OEI-06-16-00380   
In addition, CMS does not require submission of no-payment bills if the 
initial admission is for unskilled care and accordingly is not covered by 
Medicare.   
CMSs edit relies on no-payment bills to document the dates of noncovered 
stayswhen residents received care outside of Medicare coverage.  When 
CMS did not receive no-payment bills, the edit was unable to identify the 
noncovered stays and reject the inappropriate claims.  CMS does not use 
additional data sources beyond the no-payment bills, such as MDS, which 
documents dates for noncovered stays via resident assessments. 
For the remaining 2 percent (4,837) of inappropriately allowed DME claims, 
SNFs submitted no-payment bills that provided the dates of the noncovered 
stays, making it feasible to identify the inappropriate DME claims.  Yet CMS 
allowed these inappropriate claims and made payments of $156,996.38  It is 
unclear why the edit did not reject these claims. 
 
CMS may have  In 2015, CMS allowed up to $3,720,401 in Medicare payments during 
noncovered stays in Medicaid-only nursing facilities.39, 40  Of these 
allowed additional 
59,949 claims, DME suppliers coded 81 percent (48,615 claims) with home 
Medicare payments 
as the place of service, thus bypassing the CMS edit and enabling separate 
for inappropriate  payments for DME.41  These designations may have been correct, given that 
Medicaid-only nursing facilities can serve as beneficiary homes if the facility 
claims for DME 
provides primarily nonskilled care.  However, CMS is unable to verify 
provided during 
whether the Medicaid-only nursing facilities associated with these claims 
stays in  provide primarily nonskilled care and therefore can qualify as beneficiary 
Medicaid-only  homes.  CMS does not collect and maintain information regarding whether 
Medicaid-only nursing facilities provide primarily nonskilled care; as a result, 
nursing facilities  
it cannot confirm the accuracy of the place-of-service codes.  Given the high 
rate of inaccurate place-of-service codes found in claims for DME provided 
during noncovered SNF stays, and given similar findings in prior OIG 
reports, some of the 81 percent of DME claims for Medicaid-only nursing 
facilities coded as home may also be inaccurate.42   
 
38 The CMS payment was $120,608 and the beneficiary payment was $36,388. 
39 This figure includes distinct parts of nursing facilities.  None of the claims that we reviewed 
fit the circumstances under which CMS permits separate payment for DME in facilities that 
are not serving as beneficiary homes. 
40 The CMS payment was $2,837,650 and the beneficiary payment was $882,751. 
41 We did not assess the place-of-service codes for the remaining 19 percent of allowed 
claims for DME provided during Medicaid-only nursing facility stays.  The claims were coded 
with a range of places of service, such as assisted living facilities and custodial care facilities. 
42 OIG, Part B Services During Non-Part A Nursing Home Stays:  Durable Medical Equipment, 
OEI-06-07-00100, July 2009.  OIG, Incorrect Place-of-Service Claims Resulted in Potential 
Medicare Overpayments Costing Millions, May 2015, A-01-13-00506. 
CMS Did Not Detect Some Inappropriate Claims for Durable Medical Equipment in Nursing Facilities  9 
OEI-06-16-00380   
CONCLUSION AND RECOMMENDATIONS 
CMS requires SNFs and Medicaid-only nursing facilities to provide DME as 
a standard part of care and does not permit separate Medicare payment for 
DME unless the facility serves as the beneficiarys home.  Our findings 
demonstrate that CMS did not detect some inappropriate claims for DME 
provided during noncovered stays in SNFs, despite using two payment 
processing edits intended to identify and reject such claims.   
We also note that CMS is unable to assess the appropriateness of claims for 
DME provided in Medicaid-only nursing facilities when DME suppliers code 
these facilities as the beneficiarys home, because CMS does not collect and 
maintain information about the level of care provided in these facilities.  We 
recommend that CMS: 
Improve oversight of place-of-service codes submitted by DME 
suppliers for DME provided during noncovered SNF stays 
To strengthen oversight of place-of-service codes submitted by DME 
suppliers for DME provided during noncovered SNF stays, CMS should 
(1) develop a process to determine whether claims for DME provided during 
noncovered SNF stays with home as the place of service fit one of the two 
circumstances that permit separate Medicare payment for DME and recover 
any inappropriate reimbursements associated with these claims; and 
(2) provide targeted education to DME suppliers who frequently submit 
inaccurate place-of-service codes. 
Assess the costs and benefits of improving oversight of 
no-payment bills submitted by SNFs  
To strengthen oversight of no-payment bills submitted by SNFs, CMS 
should assess whether it would be cost-effective to (1) develop a process
such as the one that OIG used for this reviewto identify noncovered stays 
for which SNFs did not submit no-payment bills and recover any 
inappropriate reimbursements associated with these claims; and (2) provide 
targeted education regarding submission of no-payment bills to SNFs found 
to have high numbers of missing bills. 
Assess the costs and benefits of collecting and maintaining 
information regarding the level of care provided by 
Medicaid-only nursing facilities  
To strengthen oversight of place-of-service codes submitted by DME 
suppliers on claims for DME provided during Medicaid-only nursing facility 
stays, CMS should assess whether it would be cost-effective to collect and 
maintain information regarding whether facilities provide primarily 
nonskilled care and can serve as beneficiary homes.  This information may 
enable CMS to develop and implement a process to confirm the accuracy of 
place-of-service codes.   
CMS Did Not Detect Some Inappropriate Claims for Durable Medical Equipment in Nursing Facilities  10 
OEI-06-16-00380   
AGENCY COMMENTS AND OIG RESPONSE 
CMS concurred with our recommendations and described several ongoing 
efforts to prevent improper DME claims.  These efforts include claims 
processing edits (automated payment processes); prepayment and 
postpayment reviews; and provider education regarding proper DME billing 
through various channels such as the Medicare Learning Network, weekly 
electronic newsletters, and quarterly compliance newsletters. 
In response to our recommendations, CMS stated that it will do the 
following: 
  Instruct Medicare Contractors to review place-of-service codes on 
claims submitted by DME suppliers for DME provided during 
noncovered SNF stays.  CMS will also recover inappropriate 
reimbursements associated with these claims and provide targeted 
education to suppliers that frequently submit inaccurate codes. 
  Assess whether it would be cost-effective to implement a process
similar to the one that OIG used for this reviewto identify noncovered 
stays for which SNFs did not submit the required no-payment bills.  CMS 
will also consider providing targeted education to SNFs found to have 
high numbers of missing no-payment bills. 
  Evaluate ways to improve oversight of place-of-service codes on claims 
submitted by DME suppliers for DME provided during stays in 
Medicaid-only nursing facilities. 
Appendix B contains the full text of CMSs comments. 
   
CMS Did Not Detect Some Inappropriate Claims for Durable Medical Equipment in Nursing Facilities  11 
OEI-06-16-00380   
APPENDIX A:  Inappropriate Claims and 
Payments for Durable Medical Equipment 
(DME) Provided During Noncovered Stays in 
Skilled Nursing Facilities 
 
Number of 
Category  Payments  
Claims  
Oxygen and respiratory supplies and related equipment  $6,157,499   63,545  
Wheelchairs and accessories  $6,047,178   85,025  
Seat/patient lifts  $1,264,175   3,787  
Hospital beds and accessories  $1,088,213   14,708  
Transcutaneous and/or neuromuscular electrical nerve stimulators  $793,977   485  
IV poles  $791,997   73,147  
Blood glucose monitoring equipment  $709,053   43,053  
Wound care  $311,392   407  
Decubitus care equipment  $234,971   2,173  
Pneumatic compressor and appliances  $194,513   286  
Infusion pump supplies and equipment  $168,032   1,194  
Hearing and communication DME  $157,298   148  
Pacemakers and related equipment  $150,939   61  
Walkers, canes, crutches, and attachments  $90,417   1,673  
Sitz baths and commodes  $73,392   1,513  
Temporary replacement for patient-owned equipment being repaired  $68,254   166  
Traction equipment  $25,910   1,244  
Range-of-motion devices  $20,833   171  
Other  $2,148   62  
Total  $18,350,191  292,848  
Source:  OIG analysis of 2015 DME claims. 
 
 
   
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APPENDIX B:  Agency Comments 
 
CMS Did Not Detect Some Inappropriate Claims for Durable Medical Equipment in Nursing Facilities  13 
OEI-06-16-00380   
   
CMS Did Not Detect Some Inappropriate Claims for Durable Medical Equipment in Nursing Facilities  14 
OEI-06-16-00380   
ACKNOWLEDGMENTS 
Jennifer Hagen served as the project leader for this study.  Others in the 
Office of Evaluation and Inspections who conducted the study include 
Nathan Dong.  Office of Evaluation and Inspections staff who provided 
support include Joe Chiarenzelli, Kevin Farber, and Christine Moritz.  
This report was prepared under the direction of Ruth Ann Dorrill, Regional 
Inspector General for Evaluation and Inspections in the Dallas regional 
office, and Amy Ashcraft and Petra Nealy, Deputy Regional Inspectors 
General.  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
To obtain additional information concerning this report or to obtain copies, 
contact the Office of Public Affairs at Public.Affairs@oig.hhs.gov.  
CMS Did Not Detect Some Inappropriate Claims for Durable Medical Equipment in Nursing Facilities  15 
OEI-06-16-00380   
ABOUT THE OFFICE OF INSPECTOR GENERAL 
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