Department  of Health  and Human  Services 
OFFICE  OF 
INSPECTOR  GENERAL 
ENTERAL  NUTRITION  THERAPY: 

MEDICAL  NECESSITY 

SE~VICEs 
&+*  6s
B
9
P  JUNE GIBBS BROWN 
///  Inspector  General 
JUNE  1997 
OEI-03-94-00022  OFFICE OF INSPECTOR GENERAL 
The  mission  of the  Office  of Inspector  General  (OIG),  as mandated  by Public  Law  95 
452, is to protect  the  integrity  of the  Department  of Health  and  Human  Services 
programs  as well  as the  health  and  welfare  of beneficiaries  served  by them.  This 
statutory  mission  is carried  out  through  a nationwide  program  of audits,  investigations, 
inspections,  sanctions,  and  fraud  alerts.  The  Inspector  General  informs  the  Secretary 
of program  and  management  problems  and  recommends  legislative,  regulatory,  and 
operational  approaches  to  correct  them. 
Office of Evaluationand Inspections 
The  Office  of Evaluation  and  Inspections  (OEI)  is one  of several  components  of the 

Office  of Inspector  General.  It conducts  short-term  management  and  program 

evaluations  (called  inspections)  that  focus  on  issues  of concern  to  the  Department,  the 

Congress,  and  the  public.  The  inspection  reports  provide  findings  and 

recommendations  on  the  efficiency,  vulnerability,  and  effectiveness  of departmental 

programs. 

OEIs  Philadelphia  Regional  Office  prepared  this  report  under  the  direction  of Robert 

A. Vito,  Regional  Inspector  General.  Principal  staff  included: 

Isabelle  Buonocore,  Project  Leader 
 Medical  Reviewers 

Amy  J. Semyak,  Lead  Analyst 
 Dr.  Mark  Delowery 

Donald  Flythe,  Program  Analyst 
 Dr.  Thomas  E. Martin 

Cynthia  Hansford,  Program  Assistant 

Robert  A. Katz,  Program  Analyst 

Brian  Levine,  Intern 

Richard  Lyons,  Auditor,  OIG/OAS 

Nancy  J. Molyneaux,  Program  Analyst 

Linda  Moscoe,  Program  Analyst 

Linda  M. Ragone,  Program  Analyst 

Sarah  Richards,  Management  Trainee 

Brian  Ritchie,  Program  Analyst 

Ethan  Shaw,  Intern 

Barbara  Tedesco,  Mathematical  Statistician 

To obtain a copy of this report, call the PhiladelphiaRegional Office at (800) 531-9562  EXECUTIVE  SUMMARY 
PURPOSE 
The  purpose  of this  study  was to  determine  whether  Medicare  Part  B enteral  nutrition 
therapy  claims  in  1995 met  Medicare  guidelines  for  medical  necessity. 
BACKGROUNJD 
Enteral  nutrition  therapy,  commonly  called  tube  feeding,  is a means  of providing 
nourishment  to patients  who  cannot  swallow  because  of severe  or permanent  medical 
problems.  Patients  are  fed  nutritional  formulas  through  a tube  which  is threaded 
through  the  nose,  or  a surgical  opening,  and  leads  directly  to  the  stomach  or intestine. 
The  three  methods  of delivering  enteral  nutrition  are  syringe,  gravity,  and  pump. 
In  1995, the  Medicare  program  and  its beneficiaries  paid  $660 million  for  enteral 
nutrition  products.  This  cost  covered  formulas  as well  as equipment  and  supplies,  with 
the  equipment  and  supplies  representing  more  than  half  the  total.  The  pump  delivery 
method  cost  approximately  $281 million  compared  to  $29 million  and  $18 millon  for 
the  gravity  and  syringe  methods  respectively. 
In this  study,  we obtained  medical  data  from  physicians,  nursing  homes,  home  health 
agencies,  and  suppliers  for  a national  sample  of beneficiaries  whose  1995 enteral 
nutrition  claims  were  paid  by Medicares  durable  medical  equipment  regional  carriers 
(DMERCs).  We  had  physicians  review  the  medical  data  and  determine  whether 
beneficiaries  met  medical  necessity  guidelines. 
FINDINGS 
Most benejidak  met medicalnecessitygzdeline~for enter-anlutdim  in 1495. 
Eighty  percent  of beneficiaries  met  Medicare  criteria  for  enteral  nutrition;  3 percent 
did not;  and  17 percent  had  insufficient  or  conflicting  documentation.  We  estimate 
that  Medicare  allowed  about  $12.2 million  (in formula,  equipment,  and  supplies)  for 
the  3 percent  of beneficiaries  who  did not  meet  guidelines  for  enteral  nutrition. 
l%ere are vulnerabilitiesh,oweva, withregardto the use of specialenteralform&s  and 
thepump  deliwry  method 
b  Special  Enteral  Formulas 
Twenty-four  percent  of beneficiaries  used  special  formulas.  Of that  subgroup, 
10 percent  did not  meet  medical  necessity  guidelines  for  special  formulas;  77 
percent  did;  and  13 percent  had  conflicting  information.  We  estimate 
i  questionable  Medicare  allowances  for  beneficiaries  who  did not  meet  special 
formula  criteria  to be  about  $2.9 million. 
b  Pump  Delivery  Method 
Seventy-six  percent  of beneficiaries  use  the  pump  delivery  method  of enteral 

nutrition.  Of that  subgroup,  9 percent  did not  meet  Medicare  criteria  for  the 

pump  delivery  method;  85 percent  did;  and  6 percent  had  conflicting 

information.  The  questionable  allowance  estimate  for  beneficiaries  who  did not 

meet  Medicare  guidelines  for  pump  delivery  method  is about  $7.5 million. 

Of the  beneficiaries  who  met  pump  criteria,  37 percent  did so based  solely  on 

Medicares  slow administration  rate  criterion  which  our  medical  reviewers 

believe  is vulnerable  to  abuse.  The  beneficiaries  who  met  that  criterion  did not 

have  medical  conditions  warranting  a slow administration  rate.  Had  these 

beneficiaries  not  met  pump  criteria,  Medicare  would  have  reimbursed  for  the 

less expensive  gravity  delivery  method,  and  saved  about  $28 million.  Our 

medical  reviewers  also  believe  Medicares  aspiration  criterion  for  the  pump 

delivery  method  is vulnerable  to  abuse.  Beneficiary  medical  charts  generally 

did not  demonstrate  that  aspiration  occurred  during  tube  feeding,  which  is a 

condition  that  makes  the  pump  delivery  method  necessary. 

IXFCOMMENDATIONS 
We  recognize  that  it would  not  be  manageable  or cost  effective  for  DMERCs  to 

conduct  a medical  review  for  every  claim.  However,  we believe  the  vulnerabilities  we 

found  with  special  enteral  formulas  and  the  pump  delivery  method  require  attention. 

We  have  two recommendations.  The  first  has  to  do with  Part  B claims  review,  and 

the  second  has  to  do with  changing  the  structure  of payment  for beneficiaries  in 

nursing  homes. 

We  recommend  that  DI$ERCs  consider  selecting  claims  for  special  formulas,  pump 

equipment,  and/or  pump  supply  kits when  they  determine  target  areas  for  focused 

medical  reviews.  This  recommendation  has  the  added  advantage  of addressing  claims 

for  all beneficiaries  regardless  of place  of service. 

We  recommend  that  when  enteral  nutrition  is provided  in nursing  homes,  the 

Medicare  program  should  cover  enteral  formulas,  equipment,  and  supplies  under  the 

nursing  home  daily  rate  rather  than  under  Part  B.  Of beneficiaries  with  Part  B enteral 

nutrition  claims,  more  than  two-thirds  reside  in homes.  We  believe  if enteral  nutrition 

therapy  products  are  bundled  into  the  nursing  home  daily  rate,  nursing  homes  will be 

motivated  to  select  the  most  economical  and  appropriate  formulas  and  delivery 

methods  for  beneficiaries. 

ii  A draft  of this  report  was reviewed  by the  Health  Care  Financing  Administration 
(HCFA)  and  the  Assistant  Secretary  for  Planning  and  Evaluation.  Both  concurred 
with  our  recommendations.  In  addition,  HCFA  provided  information  about  several 
initiatives  they  are  pursuing  to  address  problems  raised  in this  report.  The  full text  of 
HCFAs  comments  are  in Appendix  C. 
.. . 
111  TABLE  OF  CONTENTS 
PAGE 
EXECUTIVESUMMARY  .......................................... 
 i 
INTRODUCTION..  ............................................... 
 1 
FINDINGS 

 Medical  necessity  of enteral  nutrition  ................................ 
 6 
 Medical  necessity  of special  formulas  ................................ 
 6 
 Medical  necessity  of pump  delivery  method  ...........................  7 

 Vulnerability  of Medicare  guidelines  .................................  7 

RECOMMENDATIONS  . . . . . . . . . . . . . . .  . .  . .  . .  ...................  9 

APPENDICES 

A:  Recent  OIG  Studies  on  Enteral  Nutrition  . .  . .  . .  .................  A-l 

B:  Estimates  and  Confidence  Intervals  ................................  B-l 

C:  Comments  on  draft  report  ......................................  C-l  INTRODUCTION 
PURPOSE 
The  purpose  of this  study  was to  determine  whether  Medicare  Part  B enteral  nutrition 
therapy  claims  in  1995 met  Medicare  guidelines  for  medical  necessity. 
BACKGROUND 
Enteralrzutdiontherapy 
Enteral  nutrition  therapy,  commonly  called  tube  feeding,  is a means  of providing 
nourishment  to patients  who  cannot  swallow  because  of a severe  or permanent 
medical  problem.  The  patient  receives  a nutritional  formula  through  a tube  which  is 
threaded  through  the  nose,  or  a surgical  opening,  and  leads  directly  to the  stomach  or 
intestine. 
Nutritional  formulas  vary  in terms  of ingredients.  Each  has  a Health  Care  Financing 
Administration  (HCFA)  procedure  code  for  reimbursement  purposes.  The  most 
commonly  used  formulas  are  those  coded  B4150.  They  are  composed  of semi-
synthetic  intact  proteins  and  are  appropriate  for  the  majority  of patients.  When 
special  formulas  (other  than  B4150  and  B4152)  are  claimed,  such  as those  for  persons 
with  allergies  or blood  glucose  fluctuations,  billers  must  have  documentation  of 
medical  need  for  those  formulas.  For  example,  there  is a special  formula  for  patients 
with  diabetes,  and  its procedure  code  is xX033.  If documentation  of medical  necessity 
for  special  formula  is not  supplied  and  the  code  billed  is for  a more  expensive  formula 
than  the  commonly  used  B4150  formulas,  Medicare  will reimburse  the  special  formula 
claim  at the  less expensive  B4150  formula  rate. 
There  are  three  methods  of delivering  formula  to the  digestive  tract  and  each  requires 
different  supplies.  The  methods  are  syringe,  gravity,  and  pump.  The  pump  method  is 
the  most  expensive  and  Medicare  requires  documentation  that  this  method  is 
medically  necessary.  If documentation  is not  supplied,  Medicare  will not  pay  for  the 
pump  equipment  and  will reduce  the  pump  supplies  reimbursement  to  the  less 
expensive  gravity  supplies  level. 
In clinical  practice,  the  three  delivery  methods  fall  into  two categories  of feeding 
schedules:  intermittent  and  continuous.  The  implementation  of a continuous  feeding 
schedule  requires  the  use  of a pump  to  deliver  formula  at  a constant  rate  over  24 
hours.  The  pump  method  of delivery  may  be  necessary  when  beneficiaries  experience 
complications  with  the  syringe  or gravity  method.  For  the  person  administering  the 
enteral  nutrition,  the  pump  method  is easier  and  more  convenient.  Enteral  nutrition  is administered  by trained  persons,  e.g., nursing  staff  if the  patient  is 
in a nursing  home.  When  the  patient  lives  at  home,  enteral  nutrition  is likely  to be 
administered  by a family  member  or  staff  from  a home  health  services  agency. 
Regional M&are  cati 
Since  Medicare  covers  enteral  nutrition  therapy  under  the  prosthetic  device  benefit, 
claims  are  processed  by a durable  medical  equipment  regional  carrier  (DMERC). 
There  are  four  DMERCs.  Prior  to  the  start-up  of DMERCs  in Fiscal  Year  1994, 
parenteral  and  enteral  nutrition  claims  were  processed  by two  specialty  carriers,  and 
durable  medical  equipment  claims  were  processed  by more  than  30 other  carriers. 
The  DMERCs  were  created  by Federal  regulation  in  1993 to  process  claims  for 
durable  medical  equipment,  prosthetics,  orthotics,  and  supplies,  including  parenteral 
and  enteral  nutrition.  The  purpose  of regionalization  was to  (1) streamline  claims 
processing  for  these  types  of claims,  (2) reduce  costs,  (3) strengthen  control  over 
abusive  supplier  practices,  and  (4) bring  more  uniform  coverage  to beneficiaries  across 
the  country.  Suppliers  of enteral  products  are  reimbursed  by the  DMERC  which 
services  the  region  where  the  patient  lives. 
With  approval  from  HCFA,  DMERCs  establish  medical  policy  and  guidelines  for  the 
review  of claims.  Claims  for  enteral  nutrition  therapy  must  meet  certain  criteria  in 
order  to be  considered  medically  necessary.  Criteria  include  (1) severity  or 
permanence  of a condition  which  inhibits  normal  swallowing  function,  and  (2) inability 
to  take  in,  other  than  by tube  feeding,  the  number  of calories  needed  to maintain 
weight  and  strength  commensurate  with  overall  health  status.  Claims  for  special 
formulas  (codes  other  than  B4150  and  B4152)  must  have  documentation  of medical 
need. 
Claims  for  the  pump  delivery  method  must  also  have  documentation  of medical  need. 
Medicares  medical  necessity  criteria  for  the  pump  include  the  following:  (1) reflux  or 
aspiration;  (2) dumping  syndrome  (nauseabomiting);  (3) severe  diarrhea;  (4) 
circulatory  overload;  (5) blood  glucose  fluctuations  (diabetes);  and  (6) formula 
administration  rate  of less than  100 cc per  hour. 
With  initial  enteral  nutrition  claims,  the  biller  must  send  the  DMERC  a completed 
form  known  as a Certificate  of Medical  Necessity  (CMN).  A physician  must  complete 
the  clinical  portion  of the  CMN  and  sign it to  attest  that  there  is medical  need  for  the 
enteral  nutrition  therapy. 
If the  DMERC  receives  enteral  nutrition  claims  for  a beneficiary  (1) whose  claims 
were  deemed  medically  necessary  by the  pre-DMERC  carrier  and  (2) whose  enteral 
nutrition  is still  prescribed  by a physician,  Medicare  considers  those  claims 
grandfathered  and  the  DMERC  will reimburse  them.  Grandfather  provisions  vary 
slightly  at  each  DMERC,  but  all accept  the  previous  carriers  determination  that  the 
beneficiary  had  medical  need  for  enteral  nutrition. 
2 
 Cost of enteml nubition produck 
In  1995, the  Medicare  program  and  its beneficiaries  paid  approximately  $660 million 
for  enteral  nutrition  therapy  products  (according  to HCFAs  Part  B Extract  and 
Summary  System).  This  cost  covered  formulas  as well  as equipment  and  supplies,  with 
the  equipment  and  supplies  representing  more  than  half  of the  total  cost.  Below  is a 
breakdown  of the  $660 million  by formula,  equipment,  and  supplies. 
I 
Products  1995Medicare Part B Allowances 
Formulas  $316,381,467 
IIIv	   Poles  6,238,856 
Pump equipment  44,887,197
II 
Pump supply kits  236641,625 
Gravity supply kits  29,436,137
II 
Syringe supply kits  17,769,943 
IIOther suuulies  II  6,101,893 
Recent  Ojjke  of Inspector  General studies on enteral nut&on 
Five  recent  Office  of Inspector  General  studies  addressed  enteral  nutrition  therapy 
from  other  perspectives.  They  (1) compared  enteral  nutrition  coverage  policies  of 
Medicare  Part  B and  other  payers,  (2) compared  reimbursement  methodologies  of 
Medicare  Part  B and  other  payers,  (3) examined  Part  B payment  levels  for  enteral 
nutrition  therapy  for  beneficiaries  in nursing  homes,  (4) examined  Part  B payments  for 
enteral  equipment  and  supplies  for  beneficiaries  in nursing  homes,  and  (5) assessed 
Part  B payments  for  non-professional  services  which  are  covered  under  the  Part  A 
skilled  nursing  facility  benefit.  A list of study  titles  is in Appendix  A. 
. 
Several  studies  showed  that  Medicare  Part  Bs enteral  nutrition  therapy  payments  are 
higher  than  they  should  be.  Recommendations  focused  on ways Medicare  can  save 
money,  such  as: (1) reducing  reimbursement  rates  for  specific  products,  (2) changing 
the  reimbursement  methodology  in order  to take  advantage  of market  forces,  (3) 
eliminating  the  enteral  nutrition  benefit  from  Part  B when  the  beneficiary  is in a 
nursing  facility  and  folding  enteral  nutrition  services  into  the  nursing  home  daily  rate 
rate.  Together,  the  Inspector  Generals  studies  on  enteral  nutrition  therapy  provide 
comprehensive  information  for  decision  makers. 
SCOPE  AND  METHODOLDGY 
We  conducted  this  study  from  April  1996 through  January  1997, beginning  with  a 
review  of Medicare  policies  and  guidelines  for  determining  whether  enteral  nutrition 
3  therapy  claims  are  medically  necessary.  This  study  was part  of Operation  Restore 
Trust  (ORT),  the  2-year  demonstration  project  of Federal  and  State  Governments  to 
identify,  reduce,  and  prevent  fraud,  waste,  and  abuse  in targeted  areas.  Targeted 
areas  include  nursing  homes,  hospices,  home  health  agencies,  and  durable  medical 
equipment  companies. 
Sampling 
We  selected  a stratified  random  sample  of 510 Medicare  beneficiaries  whose  Part  B 
claims  were  paid  for  enteral  formula  delivered  in May  1995.  The  month  was selected 
at random.  Beneficiaries  were  selected  from  a HCFA  5 percent  file  of  1995 Medicare 
Part  B enteral  claims.  Stratification  was based  on  (1) whether  beneficiaries  lived  in 
ORT  or non-ORT  States,  and  (2) whether  beneficiaries  had  low, mid-range,  or high 
monthly  expenses  for  formula.  (The  ORT  States  are  California,  Florida,  Illinois,  New 
York,  and  Texas.)  We  did not  select  beneficiaries  with  formula  expenses  under  $50 
for  the  month.  Allowances  of less than  $50 accounted  for  only  0.2 percent  of total 
May  1995 allowances.  Of beneficiaries  selected  for  the  sample,  the  highest  formula 
allowance  for  May  1995 was $1,567.72.  Below  is a table  describing  each  stratum. 
Strata 	 Criteria 
1  ORT,  Low  monthly  expenses  ($50 to  $224) 
2  ORT,  Mid-range  monthly  expenses  ($225 to  $399) 
3  ORT,  High  monthly  expenses  (greater  than  $400) 
4  Non-ORT,  Low  monthly  expenses  ($50 to  $224) 
5  Non-ORT,  Mid-range  monthly  expenses  ($225 to  $399) 
6  Non-ORT,  High  monthly  expenses  (greater  than  $400) 
Data  Colkction 
Using  the  HCFA  5 percent  file  of  1995 Medicare  Part  B enteral  claims,  we identified 

all May  1995 enteral  claims  including  formula,  equipment,  and  supplies  for  the 

beneficiaries  in our  sample. 

From  the  National  Supplier  Clearinghouse,  we acquired  the  names  and  addresses  of 

billers  who  were  reimbursed  for  sample  beneficiaries  claims.  We wrote  to the  billers, 

and  they  provided  us with  physician-signed  CMNs  associated  with  the  sample 

beneficiaries  formula  claims.  While  we also  asked  billers  for  hard  copies  of the  May 

1995 claims  for  sample  beneficiaries,  most  could  not  provide  them  since  they  bill 

electronically.  Billers  also  gave  us names  and  addresses  of physicians  and  nursing 

facilities  that  provided  care  for  sample  beneficiaries  during  May  1995.  The  billers  did 

not  have  names  and  addresses  of home  health  agencies  that  provided  care  for 

beneficiaries,  so we requested  this  information  from  beneficiaries  physicians. 

We wrote  to beneficiaries  physicians,  nursing  homes,  and  home  health  agencies  to  ask 

(1) if they  provided  care  to  the  beneficiary;  (2) clinical  questions  about  the 

beneficiarys  condition;  and  (3) questions  about  the  formula  given  and  methods  of 

4  administration  and  delivery.  We  also  requested  that  these  providers  send  us 
documentation  of medical  need  for  enteral  formula  and  equipment.  Documentation 
included  but  was not  limited  to reports  of x-rays,  lab  results,  discharge  summaries, 
progress  notes,  and  operative  reports. 
Medical  Review  and Data Analysis 
With  the  documents  we received  from  each  type  of respondent,  we compiled  a 
medical  chart  for  each  sample  beneficiary.  A team  of physicians  from  Federal 
Occupational  Health,  a division  of the  Public  Health  Service,  reviewed  charts  for  387 
of the  510 sample  beneficiaries  to  determine  whether  the  claims  for  enteral  nutrition 
therapy  met  Medicares  medical  necessity  guidelines.  Medical  reviews  could  not  be 
done  for  123 of the  510 sampled  beneficiaries  for  the  following  reasons:  either  billers 
could  not  be  located,  billers  could  not  be  contacted  because  they  were  under 
investigation  by another  agency,  beneficiaries  medical  providers  could  not  be 
identified,  or beneficiaries  were  in the  pretest  sample. 
The  medical  reviewers  examined  four  areas  for which  Medicare  has  medical  necessity 
guidelines:  (1) enteral  nutrition,  (2) caloric  intake,  (3) special  formulas,  and  (4) pump 
delivery  method.  For  each  area,  the  reviewers  determined  whether  the  beneficiary 
met  Medicare  guidelines,  did not  meet  Medicare  guidelines,  or  a determination  could 
not  be  made  due  to insufficient  or  conflicting  information.  For  each  area,  we 
quantified  the  medical  review  results.  We  then  estimated  Medicare  allowances  for 
beneficiaries  who  did  not  meet  medical  necessity  guidelines  for  enteral  nutrition, 
special  formula,  and  pump  delivery  method.  We  also  quantified  the  place  of service 
for  all 510 sample  beneficiaries  and  the  subgroups  who  did not  meet  medical  necessity 
guidelines  for  special  formula,  and  pump  delivery  method. 
We  sent  the  DMERCs  lists of beneficiaries  whose  claims  did not  meet  medical 
necessity  guidelines  and  asked  them  to identify  the  grandfathered  ones.  We  recognize 
that  DMERCs  are  not  responsible  for  medical  necessity  determinations  on 
grandfathered  claims.  Those  claims  were  deemed  medically  necessary  by previous 
carriers.  Since  our  medical  review  was based  on the  medical  necessity  guidelines  used 
by the  DMERCs,  the  findings  in this  report  are  presented  for  the  total  number  of 
beneficiaries  and  a subtotal  which  excludes  grandfathered  beneficiaries. 
We  used  the  Survey  Data  Analysis  (SUDAAN)  software  package  to  compute 
percentage,  allowance,  and  confidence  interval  estimates  presented  in the  Findings 
section  and  Appendix  B.  Appendix  B also  contains  explanations  of how we arrived  at 
allowance  estimates.  Estimates  are  weighted  based  on  sample  selection  probabilities 
in each  stratum. 
This  study  was conducted  in accordance  with  the  Quality Standards for Inspections 
issued  by the  Presidents  Council  on  Integrity  and  Efficiency. 
5 
 FINDINGS 
MOST  BENEFICIARIES  MET  MEDICAL  NECESSITY  GUIDELINES  FOR 
ENTERAL  NUTRITION  IN 1995 
Seventy-seven  percent  of beneficiaries  with  1995 enteral  claims  met  Medicares 
medical  necessity  criteria.  When  we factored  grandfathering  provisions  into  our 
analysis,  the  percentage  of beneficiaries  who  met  the  criteria  rose  from  77 to  80 
percent.  As we mentioned  in the  Background  section,  Medicare  does  not  hold 
DMERCs  accountable  for  medical  necessity  determinations  for  grandfathered  claims. 
Four  percent  of beneficiaries  did  not  meet  medical  necessity  criteria  for  enteral 
nutrition.  Excluding  grandfathered  beneficiaries,  only  3 percent  did  not  meet  the 
criteria.  We estimate  that  Medicare  allowed  $17.6 million  for  medically  unnecessary 
enteral  nutrition  therapy  in  1995, or  $12.2 million  when  grandfathered  beneficiaries 
are  excluded. 
The  remaining  19 percent  of beneficiaries--and  17 percent  of non-grandfathered 
beneficiaries--were  ones  for whom  the  medical  review  determination  was insufficient 
or  conflicting  documentation.  Our  medical  reviewers  explained  that  most  of these 
medical  charts  had  insufficient  rather  than  conflicting  data.  Beneficiaries  physicians, 
nursing  homes,  or home  health  agencies  did not  send  the  supporting  documents  we 
requested,  or  the  documents  they  sent  were  incomplete. 
Conjlicting  data  aboutpremibed  calories 
Our  medical  reviewers  frequently  saw that  beneficiaries  caloric  needs  written  on 
CMNs  differed  from  caloric  information  provided  by nursing  homes  and/or  physicians. 
However,  in most  cases  the  discrepancy  in calories  still fell within  the  Medicare 
guidelines.  The  medical  reviewers  took  a conservative  approach  to  these  medical 
charts.  Instead  of determining  that  due  to  conflicting  documentation  a determination 
could  not  be  made,  they  determined  that  Medicares  caloric  guidelines  were  met.  The 
results  for  nongrandfathered  beneficiaries  were  that  91 percent  of beneficiaries  met 
the  caloric  guideline;  3 percent  did not;  and  6 percent  could  not  be  determined.  We 
would  add  that  a possible  explanation  for  caloric  discrepancies  is that  billers  did not 
submit  new  CMNs,  as required,  when  beneficiaries  caloric  prescriptions  changed. 
MEDICAL  NEED  FOR  SPECIAL  FORMULAS  WAS NOT  ALWAYS 
DOCUMENTED 
Of the  beneficiaries  who  used  special  formulas,  23 percent  did  not  have  documented 
medical  need  for  them.  Estimated  questionable  Medicare  allowances  for  these 
undocumented  special  formulas  totalled  about  $8 million.  When  we excluded 
grandfathered  beneficiaries,  10 percent  did not  have  the  required  documentation,  and 
the  questionable  allowance  estimate  dropped  to  $2.9 million. 
6  Medicare  requires  documentation  of medical  necessity  for  special  formulas.  For 

example,  if the  formula  claimed  is for  diabetics  the  medical  record  should  indicate  that 

the  beneficiary  is being  treated  for  diabetes.  If medical  necessity  for  a special  formula 

is not  documented  Medicare  will reimburse  the  special  formula  claim  at  a less 

expensive  formula  rate. 

Of the  40 sample  beneficiaries  who  did not  have  documented  need  for  special 

formula,  28 were  in skilled  nursing  facilities,  4 were  in regular  nursing  facilities,  and  8 

were  at home.  Excluding  grandfathered  beneficiaries,  16 sample  beneficiaries  did not 

have  documented  need  for  special  formula,  10 were  in skilled  nursing  facilities,  3 were 

in regular  nursing  facilities,  and  3 were  at home.  Of the  total  510 sample 

beneficiaries,  311 were  in skilled  nursing  facilities,  41 in regular  nursing  facilities,  2 in 

custodial  care  facilities,  and  156 at home. 

SOME  BENEFICIARIES  DID  NOT  HAVE  MEDICAL  JUSTIFICATION  FOR 
THEPUMP  DELIVERY  METHOD 
Seventy-eight  percent  of sample  beneficiaries  used  the  pump  method  of delivering 
formula  to the  digestive  tract.  Of those  using  the  pump  method,  80 percent  met 
medical  necessity  guidelines,  14 percent  did not,  and  6 percent  could  not  be 
determined.  When  we excluded  grandfathered  beneficiaries  from  our  analysis,  85 
percent  of beneficiaries  using  the  pump  method  met  the  medical  necessity  guidelines, 
9 percent  did not,  and  6 percent  could  not  be  determined. 
We  estimate  that  the  Medicare  program  and  its beneficiaries  paid  $11.5 million  for 
medically  unnecessary  pump  equipment  and  related  supplies  in  1995.  If grandfathered 
beneficiaries  are  excluded,  the  estimated  questionable  amount  is $7.5 million. 
Of the  41 sample  beneficiaries  who  did not  meet  the  pump  criteria,  23 were  in skilled 
nursing  facilities,  4 were  in regular  nursing  facilities,  1 was in a custodial  care  facility, 
and  13 were  at home.  Excluding  grandfathered  beneficiaries,  23 sample  beneficiaries 
did not  meet  the  pump  *criteria,  11 were  in skilled  nursing  facilities,  3 were  in regular 
nursing  facilities,  1 was in  a custodial  care  facility,  and  8 were  at home. 
CERTAIN  MEDICAL  NECESSITY  GUIDELINES  FOR  THE  PUMP  DELIVERY 
METHOD  MAY  BE VULNERABLE  TO ABUSE 
Our  medical  reviewers  believe  two medical  necessity  criteria  for  the  pump  delivery 
method  may  be vulnerable  to  abuse.  One  is the  formula  administration  rate  of less 
than  100 cc per  hour,  and  the  other  is the  aspiration  or reflux  criterion. 
Thirty-seven  percent  of non-grandfathered  beneficiaries  who  met  medical  necessity 
guidelines  for  the  pump  method  of delivery  did so based  only  on  the  administration 
rate  criterion.  But  the  medical  reviewers  found  that  these  beneficiaries  did not  have 
documentation  for  conditions  warranting  a slow delivery  rate.  If these  beneficiaries  pump  claims  had  been  deemed  medically  unnecessary,  Medicare  and  its beneficiaries 

would  have  saved  an  estimated  $28 million  in  1995. 

If a rate  of administration  less than  100 cc per  hour  is written  on  the  CMN,  Medicare 

considers  the  pump  medically  necessary.  The  reason  why the  beneficiary  needs  such  a 

slow administration  rate  need  not  be  documented.  Our  medical  reviewers  question 

why Medicare  considers  a slow rate,  alone,  presumptive  evidence  of meeting 

guidelines  for  the  pump  delivery  method.  They  expressed  concern  that  the  slow rate, 

and  therefore  the  pump,  may  have  been  prescribed  for  the  convenience  of nursing 

home  staff.  Among  our  sample  beneficiaries,  61 percent  were  in skilled  nursing 

facilities  and  7 percent  were  in regular  nursing  facilities.  The  remaining  31 percent 

lived  at home. 

The  other  criterion  which  may  be vulnerable  to  abuse  is the  documentation  of 

aspiration/reflux  as the  medical  reason  for  requiring  the  pump  delivery  method.  Our 

medical  reviewers  believe  that  billers  may  be  misinterpreting  this  criterion.  Aspiration 

during  swallowing  is a common  reason  for  initiating  tube  feedings.  Once  a tube  is 

inserted,  it by-passes  the  dysfunctional  area.  Aspiration  during  tube  feeding,  on  the 

other  hand,  is due  to reflux.  The  presence  of aspiration  from  swallowing  does  not 

mean  there  is a risk  of aspiration  from  reflux.  The  reviewed  medical  charts  generally 

did  not  demonstrate  that  aspiration  was from  refhrx. 

Since  Medicare  reimburses  claims  where  aspiration  alone  is indicated,  and  where  a 

slow administration  rate  alone  is documented,  our  medical  reviewers  determined  those 

claims  medically  necessary.  But  they  believe  Medicare  should  clarify  the  one  criterion, 

specifying  that  aspiration  must  be  due  to  reflex,  and  should  strengthen  the  second 

criterion  by requiring  documentation  of a condition  that  warrants  a slow administration 

rate. 

8 
 RECOMMENDATIONS 
We  recognize  that  it would  not  be  manageable  or  cost  effective  for  DMERCs  to 

conduct  a medical  review  for  every  claim.  However,  we believe  the  vulnerabilities  we 

found  with  special  enteral  formulas  and  the  pump  delivery  method  require  attention. 

We  have  two recommendations.  The  first  has  to  do with  Part  B claims  review,  and 

the  second  has  to  do with  changing  the  structure  of payment  for beneficiaries  in 

nursing  homes. 

We  recommend  that  DMERCs  consider  selecting  claims  for  special  formulas,  pump 

equipment,  and/or  pump  supply  kits when  they  determine  target  areas  for  focused 

medical  reviews.  This  recommendation  has  the  added  advantage  of addressing  claims 

for  all beneficiaries  regardless  of place  of service. 

We  recommend  that  when  enteral  nutrition  is provided  in nursing  homes,  the 

Medicare  program  should  cover  enteral  formulas,  equipment,  and  supplies  under  the 

nursing  home  daily  rate  rather  than  under  Part  B.  Of beneficiaries  with  Part  B enteral 

nutrition  claims,  more  than  two-thirds  reside  in homes.  We  believe  if enteral  nutrition 

therapy  products  are  bundled  into  the  nursing  home  daily  rate,  nursing  homes  will be 

motivated  to  select  the  most  economical  and  appropriate  formulas  and  delivery 

methods  for  beneficiaries. 

COMMENTS 

A draft  of this  report  was  reviewed  by the  Health  Care  Financing  Administration 

(HCFA)  and  the  Assistant  Secretary  for  Planning  and  Evaluation.  Both  concurred 

with  our  recommendations.  In  addition,  HCFA  provided  information  about  several 

initiatives  they  are  pursuing  to  address  problems  raised  in this  report.  The  full text  of 

HCFAs  comments  are  in Appendix  C. 

. 
9 
 APPENDIX  A 
RECENT  OFFICE  OF INSPECTJOR GENERAL  STUDIES 
ON ENTERAL,  NUTRITION 
Issued  Title  and Number 
1997  Enteral  Nutrition  Therapy: Medical  Necessity, OEI-03-94-00022. 
1997 	 Medicare  Payments for  Enteral  Nutrition  Theran  Equipment  and  Supplies 
in Nursing Homes,  OEI-06-92-00866. 
1996  Enteral  Nuhient  Payments  in Nursing Homes,  OEI-06-92-00861. 
1996 	 Payments for  Enteral  Nutrition: Medicare  and  Other Payers, OEI-03-94-
00021. 
1995 	 Medicare  Payments for  Non-Professional  Services in Skilled Nursing 
Facilities,  OEI-06-92-00864. 
1995 	 Coverage  of Enteral  Nutrition  Therapy: Medicare  and  Other Payers, OEI-
03-94-00020. 
A-l  APPENDIX  B 

ESTIMATES  AND  CONFIDENCE  INTERVALS  PAGE 
Table  1.  Distribution  of Beneficiaries  by Determination  of Medical 
 B-2 
Necessity  for  Enteral  Nutrition  Therapy 

Table  2.  Questionable  Medicare  Allowance  Estimates  for  Enteral 
 B-2 
Nutrition  Therapy 

Table  3.  Distribution  of Beneficiaries  by Whether  Caloric  Criteria 
 B-3 
Were  Met 

Table  4.  Distribution  of Beneficiaries  by Whether  Special  Enteral 
 B-3 
Nutrition  Formula  Was  Used 

Table  5.  Distribution  of Beneficiaries  by Determination  of Medical 
 B-4 
Necessity  for  Special  Enteral  Nutrition  Formula 

Table  6.  Questionable  Medicare  Allowance  Estimates  for  Special 
 B-4 
Enteral  Formula 

Table  7.  Distribution  of Beneficiaries  by Whether  Pump  Delivery 
 B-5 
Method  Was  Used 

Table  8.  Distribution  of Beneficiaries  by Determination  of Medical 
 B-5 
Necessity  for  Pump  Delivery  Method 

Table  9.  Questionable  Medicare  Allowance  Estimates  for  Pump 
 B-6 
Delivery  Method  . 

Table  10.  Distribution  of Beneficiaries  Who  Met  Pump  Criteria  Based 
 B-6 
Solely  on Administration  Rate 

Table  11.  Questionable  Medicare  Allowance  Estimates  for 
 B-7 
Beneficiaries  Who  Met  Pump  Criteria  Based  Solely  on Administration 

Rate 

B-7 
Table  12.  Distribution  of Beneficiaries  by Place  of Service  on  May 
1995 Formula  Claim 
B-l  We  used  the  Survey  Data  Analysis  (SUDAAN)  software  package  to  compute  percentage, 
allowance  and  confidence  interval  estimates  presented  in the  following  tables.  Estimates  are 
weighted  based  on  the  stratified  random  sample  design  and  are  reported  at the  95 percent 
confidence  level.  Tables  presenting  questionable  allowance  estimates  are  followed  by narratives 
explaining  our  allowance  estimation  procedures. 
Table  1. 
Distriiution  of Beneficiaries 
by Determination  of Medical  Necessity 
for Enteral  Nutrition  Therapy 
AI1 Beneficiaries  Non-Grandfathered  Beneficiaries 
~ 
Weighted  95%  Confidence  Weighted  95%  Confidence 
Percent  Interval  Percent  Interval 
Met  Criteria  77.49  73.00-81.98  79.91  75.40-84.42 
Did Not  Meet  Criteria  3.92  1.84-6.00  3.18  1.22-5.14 
Insufficient/  18.59  14.42-22.76  16.91  12.68-21.14 
Conflicting  Documentation 
Table  2. 
Questionable  Medicare  Allowance  Estimates 
for Enteral  Nutrition  Therapy 
All Beneficiaries  Non-Grandfathered  Beneficiaries 
Weighted  95%  Confidence  Weighted  95%  Confidence 
Total  Estimate  Interval  Total  Estimate  Interval 
Questionable  $17,584,195  $12,177,027-$22991,363  $12,X6,757  $7,732,654-$16,600,860 
Medicare 
Allowances 
For  beneficiaries  who  did not  meet  enteral  medical  necessity  criteria,  SUDAAN  was used  to 
estimate  total  Medicare  allowances  for  unnecessary  enteral  therapy  claims,  including  formula, 
equipment  and  supplies.  The  SUDAAN  5 percent  May  1995 estimates  were  then  generalized  to 
100 percent  1995 estimates.  A second  allowance  estimate  was developed  after  removing 
grandfathered  beneficiaries  from  the  analysis.  The  allowance  estimate  drops  from  $17.6 million 
to $12.2 million  for  medically  unnecessary  enteral  therapy  claims  in  1995 after  removing 
grandfathered  beneficiaries. 
B-2 
 Table  3. 
Distriiution  of Beneficiaries 
by Whether  Caloric Criteria Were  Met 
All Beneficiaries  Non-Grandfathered  Beneficiaries 
Weighted  95%  Confidence  Weighted  95%  Confidence 
Percent  Interval  Percent  Interval 
Met  Caloric  Criteria  88.78  85.43-92.13  91.10  87.91-94.29 
Did Not  Meet  Caloric  4.42  2.26-6.58  3.19  1.29-5.09 
Criteria 
Conflicting  Information  6.79  4.10-9.48  5.72  3.07-8.37 
Table  4. 
Distriiution  of Beneficiaries 
by Whether  Special  Enteral  Nutrition 
Formula Was Used 
All Beneficiaries  Non-Grandfathered  Beneficiaries 
Weighted  Percent  95%  Confidence  Weighted  Percent  95%  Confidence 
Interval  Interval 
Beneficiaries  Used  26.73  22.52-30.94  24.40  20.13-28.67 
Special  Formula 
Beneficiaries  Did  73.27  69.06-77.48  75.60  71.33-79.87 
Not Use  Special 
Formula 
B-3 
 Table  5. 
Distribution  of Beneficiaries 
by Determination  of Medical  Necessity 
for Special  Enteral  Nutrition  Formula 
All Beneficiaries  Non-Grandfathered  Beneficiaries 
Weighted  Percent  95%  Confidence  Weighted  Percent  95%  Confidence 
Interval  Interval 
Need  for  Special  66.38  57.72-75.04  76.89  68.48-85.30 
Formula 
Documented 
Need  for  Special  22.96  15.41-30.51  10.25  4.78-15.72 
Formula  Not 
Documented 
Conflicting  10.66  4.64-16.68  12.86  5.73-19.99 
Information 
Table  6. 
Questionable  Medicare  Allowance  Estimates 
for Special  Enteral  Formula 
All Beneficiaries  Non-Grandfathered  Beneficiaries 
Weighted  95%  Confidence  Weighted  95%  Confidence 
Total  Estimate  Interval  Total  Estimate  Interval 
Questionable  $7,984,260  $5,518,183-$10,450,338  $2,907,435  $1,515,193-$4,299,678 
Medicare 
Allowances 
For  beneficiaries  where  medical  necessity  for  special  enteral  formula  was not  documented,  we 
used  SUDAAN  to  estimate  total  Medicare  allowances  and  services  for  undocumented  special 
formula  in  1995.  Special  formulas  are  those  with  HCFA  procedure  codes  B4151,  B4153-B4156, 
and  xX030-xX077.  Medicare  reimburses  at the  B4150  level  if medical  necessity  for  special 
formula  is not  documented. 
We  multiplied  undocumented  special  formula  services  by Medicares  per  unit  controlling 
allowable  for  code  B4150.  We  then  subtracted  this  quantity  from  Medicare  allowances  for 
undocumented  special  formula,  and  the  difference  is our  estimate  of questionable  allowances. 
When  grandfathered  beneficiaries  were  removed  from  the  analysis,  the  allowance  estimate  drops 
from  $8 million  to  about  $2.9 million  in questionable  allowances  for  undocumented  special 
enteral  formula  in  1995. 
B-4 
 Table  7. 
Distriiution  of Beneficiaries 

by Whether  Pump Delivery  Method  Was Used 

AI1 Beneficiaries  Non-Grandfathered  Beneficiaries 
Weighted  Percent  95%  Confidence  Weighted  Percent  95%  Confidence 
Interval  Interval 
Beneficiaries  Used  77.63  73.00-82.26  76.36  71.40-81.32 
Pump  Method 
Beneficiaries  Did  22.37  17.74-27.00  23.64  18.68-28.60 
Not  Use  Pump 
Method 
Table  8. 
Distriiution  of Beneficiaries 
by Determination  of Medical  Necessity 
for Pump Delivery  Method 
AI1 Beneficiaries  Non-Grandfathered  Beneficiaries 
Weighted  Percent  95%  Confidence  Weighted  Percent  95%  Confidence 
Interval  Interval 
Met  Puma  Criteria  1 80.29  1 75.33-85.25  1 84.76  1 80.00-89.52 
Did Not  Meet  13.58  9.35-17.81  8.91  5.15-12.67 
Pumn  Criteria 
Conflicting  6.13  3.05-9.21  6.33  3.06-9.60 
Information 
B-5 
 Table  9. 
Questionable  Medicare  Allowance  Estimates 
for Pump Delivery  Method 
I-
AI1 Beneficiaries  Non-Grandfathered  Beneficiaries
Weighted  95%  Confidence  Weighted  95%  Confidence 
Total  Estimate  Interval  Total  Estimate  Interval 
Questionable  $11,513,424  $7,062,657-$15,964,191  $7,535,529  $3,794,730-$11,276,328 
Medicare 
Allowances 
d 
For  beneficiaries  where  medical  necessity  for  the  pump  delivery  method  was not  documented,  we 

used  SUDAAN  to  estimate  total  Medicare  allowances  for  undocumented  pump  equipment  and 

supply  kit  claims.  We  computed  total  allowances  and  services  for  undocumented  pump 

equipment  and  supply  kits  separately,  because  when  Medicare  denies  pump  delivery  method 

claims,  it pays  for  the  substitute  gravity  delivery  method. 

We  multiplied  undocumented  pump  supply  kit  services  by the  difference  between  the  cost  of a 

pump  supply  kit  and  the  cost  of a substitute  gravity  supply  kit  to  estimate  questionable  Medicare 

allowances  for  undocumented  pump  supply  kits.  Medicare  paid  an  estimated  $8.2 million  for 

undocumented  pump  supply  kits  in  1995.  Medicare  allowances  for  undocumented  pump 

equipment  in  1995 totaled  an  estimated  $3.3 million.  By adding  these  two figures,  we estimated 

that  Medicare  paid  about  $11.5 million  for  undocumented  pump  delivery  method  claims  in  1995. 

When  we removed  grandfathered  beneficiaries  from  the  analysis,  the  allowance  estimate  drops  to 

$7.5 million  for  undocumented  pump  delivery  method  claims  in  1995. 

Table  10. 
Distribution  of Beneficiaries  Who Met Pump Criteria 
Based  Solely on Administration  Rate 
Ail Beneficiaries  Non-Grandfathered  Beneficiaries 
Weighted  Percent  95%  Confidence  Weighted  Percent  95%  Confidence 
Interval  Interval 
Administration  37.72  31.06-44.38  37.41  30.51-44.31 
Rate  Only  Criteria 
Documented 
Administration  62.28  55.62-68.94  62.59  55.69-69.49 
Rate  NOT  Only 
Criteria 
Documented 
B-6 
 Table  11. 
Questionable  Medicare  Allowance  Estimates 
for Beneficiaries  Who Met Pump Criteria 
Based  Solely on Administration  Rate 
All Beneficiaries  Non-Grandfathered  Beneficiaries 
95%  Confidence  Interval  Weighted  95%  Confidence  Interval 
Eate  I  Total  Estimate 
Questionable  $29,035,305  $22,200,311-$35,870,298  $28,000,773  $21,194,606-$34,806,940 
Medicare 
Allowances 
We  used  SUDAAN  to  estimate  questionable  Medicare  allowances  for  the  pump  delivery  method 
for  beneficiaries  where  medical  necessity  for  this  method  was documented  based  solely  on  the 
administration  rate  criterion.  The  procedure  used  to  compute  these  estimates  is explained  under 
Table  9. 
We  estimated  that  Medicare  and  its beneficiaries  could  have  saved  about  $29 million  in  1995 if 
these  beneficiaries  pump  delivery  method  claims  had  been  deemed  medically  unnecessary. 
When  grandfathered  beneficiaries  are  removed  from  the  analysis,  the  estimate  of potential 
Medicare  savings  drops  to  $28 million. 
Table  12. 
Distriiution  of Beneficiaries 
by Place  of Service  on May 1995 Formula  Claim 
Weighted  Percent  95%  Confidence  Interval 
Skilled  Nursing  Facility  .  61.02  56.47-65.57 
Nursing  Facility  7.03  4.70-9.36 
Custodial  Care  Facility  0.57  o-1.33 
Home  31.38  27.07-35.69 
B-7 
 APPENDIX  C 
COMMENTS  FROM  THE  HEALTH  CARE  FINANCING  ADMINISTRATION 
C-l  JUN-71997 
DATE; 
TO:  June GibbsBrawn 
FROM: 
suE3m: 
cc-21  tic-31  Page 2