Department of Health and Human Services 
OFFICE OF 
INSPECTOR GENERAL 
ORDERING MEDICARE EQUIPMENT 
AND SUPPLIES 
Physician Patient Relationship 
JUNE GIBBS BROWN 
Inspector General 
FEBRUARY 1999 
OEI-02-97-00080  OFFICE OF INSPECTOR GENERAL 
The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, is to 
protect the integrity of the Department of Health and Human Services programs as well as the 
health and welfare of beneficiaries served by them.  This statutory mission is carried out through a 
nationwide program of audits, investigations, inspections, sanctions, and fraud alerts.  The 
Inspector General informs the Secretary of program and management problems and recommends 
legislative, regulatory, and operational approaches to correct them. 
Office of Evaluation and Inspections 
The Office of Evaluation and Inspections (OEI) is one of several components of the Office of 
Inspector General.  It conducts short-term management and program evaluations (called 
inspections) that focus on issues of concern to the Department, the Congress, and the public.  The 
inspection reports provide findings and recommendations on the efficiency, vulnerability, and 
effectiveness of departmental programs. 
OEI's New York Regional Office prepared this report under the direction of John I. Molnar, 
Regional Inspector General and Renee C. Dunn, Deputy Regional Inspector General.  Principal 
OEI staff included: 
REGION  HEADQUARTERS 
Lucille Cop, RN  Brian Ritchie 
Steve Shaw  Barbara Tedesco 
Ellen Vinkey  Winnie Walker 
Stuart Wright 
Carmen Sanchez, Administration on Aging 
To obtain copies of this report, please call the New York Regional Office at (212) 264-2000. 
Reports are also available on the World Wide Web at our home page address: 
http://www.dhhs.gov/progorg/oei  E X E C U T I V E   S U M M A R Y  
PURPOSE 
To determine whether the relationship between the physician and the patient affects the 
certification for Medicare medical equipment and supplies 
BACKGROUND 
We are undertaking two studies to look at the role of the physician in certifying non-
physician services.  The first report, Ordering Medicare Equipment and Supplies, 
Physician Perspectives OEI-02-97-00081 is about physicians perceptions of the 
certification process for durable medical equipment, prosthetics, orthotics, and supplies 
(DMEPOS).  This second report looks at the relationship between the physician and the 
patient and its effect on the certification of  medical equipment and supplies. 
In general, Medicare recognizes the physician as the key figure in determining the 
appropriate utilization of all medical services.  Accordingly, Medicare requires that 
payment for certain non-physician services, such as medical equipment and supplies are 
conditional on the existence of a physicians order or certificate of medical necessity which 
must be kept on file by the supplier.  This report is based on the analysis of questionnaires 
sent to physicians who certified a sample of 1,000 medical equipment or supply items, a 
review of claims histories and medical records associated with those 1,000 medical 
equipment and supply items, telephone interviews with a sub-sample of 200 patients, a 
review of the certificates of medical necessity or physicians orders submitted by the 
suppliers and interviews with the 4 durable medical equipment regional carriers. 
FINDINGS 
Most Medical Equipment and Supplies are Prescribed by the Treating Physicians, 
But Some Problems Are Identified 
The referring physicians for 89 percent of the items billed knew and treated the patients 
for whom they ordered medical equipment and supplies.  Of the remaining 11 percent we 
determined that almost one half appear to be coding errors with the unique physicians 
identifying number.  In the remaining 6 percent of cases, the physician reported not 
knowing the patient without explanation.  Additionally, 13 percent of physicians who say 
they knew the patient did not order the equipment or supplies.  Ninety percent of patients 
1 
Ordering Medicare Equipment  OEI-02-07-00080  interviewed who received the medical equipment and supplies report being treated by the 
referring physician during the study period. 
Medicare Payments Were Questionable for Fourteen Percent of the Sample 
Medical Equipment and Supplies 
In nine percent of the medical records we received there was no documentation of  the 
need for the equipment or supplies billed.  In another four percent patients required the 
equipment when it was originally ordered but no longer needed it, patients receiving 
diabetic supplies were not insulin dependent as required by Medicare in 1996, billings 
were after the date of  the patients death, or equipment or supplies were inappropriately 
billed to skilled nursing facilities.  In one percent of the records there was sufficient 
evidence to fully prove that the equipment or supplies were unnecessary. 
Medical records are more often questioned when physicians report not ordering the 
equipment or supplies and less likely to be questioned when there was a recent encounter 
between the physician and patient. 
The questionable records represent $414 million of Medicare payments.  This is a 
conservative amount because it is based on a review of the 530 of 1000 records we 
received.  We did not receive an additional 470 records that we requested.  The failure of 
providers to supply us with these records makes it likely that the payment error rates were 
at least equal to or may even have been greater than those we received.  Thus the actual 
dollar amount of questionable Medicare payments is likely to be significantly higher than 
the amount we calculated. 
Vulnerabilities Exist in the Medical Equipment and Supply Ordering Process 
Currently Medicare regulations do not require the patients diagnosis, the physicians 
name, identifying number, or speciality on the claim.  Because there are diagnosis or 
physician speciality driven policies, the physicians name and identifying number are 
important in order to contact the referring physician for any information about the patient 
or to review a  medical record for the appropriateness of equipment or supplies.  The lack 
of an ongoing medical relationship between the durable medical equipment regional 
carriers and physicians hampers the educational efforts about supplies and equipment.  The 
durable medical equipment carrier does not have physician information readily available, 
and is not responsible for educating the physicians about the Medicare requirements for 
medical equipment or supplies. 
2 
Ordering Medicare Equipment  OEI-02-07-00080  RECOMMENDATIONS 
We found that when the referring physician knew the patient, more appropriate medical 
equipment and supplies were ordered.  Therefore we support the Health Care Financing 
Administration in its requirement that the referring physician be a physician who has 
treated the patient and recommend that: 
<	 the physician who orders the equipment or supplies be required to treat the patient 
prior to the order and 
<	 a systematic process be developed to assure that the supplier submits a new CMN 
or order to the DMERC when the physician changes, the equipment or supply or 
the medical need for the equipment or supply changes. 
We recognize that as a result of the Balanced Budget Act of 1997, physicians are required 
to provide diagnostic information to suppliers and the suppliers provide this information 
on claims for medical supplies and equipment when the DMERC has a medical review 
policy requiring such diagnostic information.  We support this, but recommend that: 
<	 the referring physicians name and specialty, the patients related diagnostic 
information be required on all claims for medical equipment and supplies. 
This report also supports the recommendation in our report entitled Ordering Medicare 
Equipment and Supplies, Physicians Perspectives OEI-02-97-0081.  This report 
recommended that the Health Care Financing Administration strengthen its efforts to 
educate physicians regarding their ordering of medical equipment and supplies and 
suggested the following approaches: 
<	 directing the carriers to furnish all physician providers with information about 
ordering medical equipment and supplies including any OIG Fraud Alerts.  Of 
particular interest is the OIG Fraud Alert on Physician Liability for Certifications in 
the Provision of Medical Equipment and Supplies and Home Health Services 
which specifically highlights physicians responsibilities in making certifications for 
durable medical equipment and supplies, and the legal significance of the 
certifications.  A copy of this fraud alert may be found in Appendix D; 
<	 routinely providing all physicians with any changes of coverage and payment rules 
for medical equipment and supplies; 
<	 providing all physicians with a contact person at the carriers to answer questions 
about equipment or supplies; and 
<  assuring that all certificates of medical necessity sent from the suppliers to 
3 
Ordering Medicare Equipment  OEI-02-07-00080  physicians include the coverage and payment rules and cost of equipment for the 
specific equipment or supplies ordered. 
We will refer all unnecessary and questionable cases and those where the physician did not 
see the patient or did not order the equipment or supplies to the appropriate Durable 
Medical Equipment Regional Carrier for further review. 
COMMENTS 
We received comments on the draft report from HCFA.  They generally concur with our 
recommendations.  Based on their comments we changed one of the suggested approaches 
in our recommendations  on providing physicians with information about ordering medical 
equipment and supplies by expanding it to apply to all physicians not just new ones.  The 
HCFAs comments are reproduced in Appendix E. 
We also received comments from the Assistant Secretary for Planning and Evaluation 
(ASPE).  We changed the wording of another of our suggested approaches in the 
recommendations to clarify that the information about coverage and payment rules had to 
do with the specific equipment and supplies ordered rather than general guidelines. 
4 
Ordering Medicare Equipment  OEI-02-07-00080  T A B L E   O F   C O N T E N T S  
PAGE

EXECUTIVE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

FINDINGS

Most physicians treat the patient  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Equipment and Supplies unnecessary and questionable . . . . . . . . . . . . . . . . . . . . . . . . . 13

DMERCs note vulnerabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

RECOMMENDATIONS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  17

APPENDICES

A: Confidence intervals for key questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

B: Medical review dollar projections  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

C: Tests for key findings  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

D: Fraud Alert . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

E: Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

5 
Ordering Medicare Equipment  OEI-02-07-00080  I N T R O D U C T I O N  
PURPOSE 
To determine whether the relationship between the physician and the patient affects the 
certification for Medicare medical equipment and supplies. 
BACKGROUND 
We are undertaking two studies to look at the role of the physician in certifying non-
physician services.  The first report, Ordering Medicare Equipment and Supplies, 
Physician Perspectives OEI-02-97-00081 is about physicians perceptions of the 
certification process for durable medical equipment, prosthetics, orthotics, and supplies 
(DMEPOS).  This includes: wheelchairs and hospital beds; prosthetics and orthotics; 
catheters, ostomy and wound care supplies, and enteral and parenteral nutrition.  For the 
purposes of our reports we refer to DMEPOS as medical equipment and supplies.  In the 
first report we found that physicians are generally satisfied with the process, but would 
like it to be easier and less time consuming.  They would also like more detailed rules and 
specific criteria regarding Medicare coverage and eligibility for medical equipment and 
supplies.  This second report looks at the relationship between the physician and the 
patient and its effect on the certification of  medical equipment and supplies. 
In general, Medicare recognizes the physician as the key figure in determining the 
appropriate utilization of medical services.  As one component of this process, Medicare 
requires that payment for certain non-physician services, such as home health agency, 
therapy and diagnostic services, as well as medical equipment and supplies are conditional 
on the existence of a physician's order.  According to Medicare regulation 42 CFR Section 
424, the provider of these services is generally responsible for obtaining the required 
physician certification and re-certification statements, and for keeping them on file for 
verification. 
Medicare Expenditures for Medical Equipment and Supplies 
According to published Health Care Financing Administration (HCFA) statistics, in 1996, 
Medicare paid an estimated $4.8 billion for medical equipment and supplies under Part A 
and Part B of the program.  Part A, hospital insurance, covers services which are furnished 
by hospitals, home health agencies, and skilled nursing facilities.  Part B, supplementary 
medical insurance, covers a wide array of non-institutionalized care.  These include 
6 
Ordering Medicare Equipment  OEI-02-07-00080  physicians services, medical equipment and supplies, outpatient hospital services, 
diagnostic laboratory tests, x-rays and ambulance services. 
The HCFA administers Medicare and contracts with private insurance companies to 
process and pay claims.  Contractors that process claims for Part A, such as those for 
home health agency services, are considered fiscal intermediaries.  Contractors that 
process claims for Part B, such as physician visits are considered carriers.  Intermediaries 
and carriers are also responsible to assure that Medicare coverage requirements are met 
before approving payment. 
Medicare Durable Medical Equipment Regional Carriers (DMERCs) 
In October 1993 HCFA began processing claims for medical equipment and supplies 
through 4 durable medical equipment regional carriers (DMERCs).  These 4 carriers are 
responsible for all 50 States, the District of Columbia, and Puerto Rico.  These entities are 
responsible for ensuring that coverage requirements for medical equipment and supplies 
are met before approving payment.  Although fiscal intermediaries also process some 
claims for medical equipment and supplies through the Part A coverage of home health 
agency services, this report will focus only on medical equipment and supplies covered by 
Part B and processed by the DMERCs. 
Certification of Durable Medical Equipment 
Medicare pays for medical equipment and supplies that are ordered or prescribed by a 
treating physician and is appropriate for the patients' diagnosis and symptoms as 
determined by the DMERCs.  Suppliers must obtain and keep on file a physician's order or 
prescription for all the medical equipment and supplies that they bill to Medicare.  The 
supplier usually puts the name and unique physician identification number (UPIN) of the 
referring physician and the patients diagnosis related to the equipment or supplies ordered 
on the claim, but the claim will be paid without this information. 
In addition to HCFA's requirement that suppliers are required to have a physician's order 
or prescription on file for all claims for medical equipment and supplies submitted for 
reimbursement, HCFA requires that certain equipment and supplies have a document 
called a certificate of medical necessity (CMN) stating that the service or item claimed for 
reimbursement is medically necessary and reasonable.  For the reimbursement of these 
items, a completed CMN must be submitted to the DMERCs, which process the claims for 
medical equipment and supplies. 
Some of the items within the following 14 groups require a CMN: 
!  hospital beds  !  motorized wheelchairs 
!  support surfaces  !  manual wheelchairs 
!  lymphedema pumps  !  osteogenesis stimulators 
7 
Ordering Medicare Equipment  OEI-02-07-00080  !  Transcutaneous Electrical  !  Continuous Positive Airway 
Nerve Stimulators (TENS)  Pressure (CPAP) devices 
!  seat lift mechanisms  !  power operated vehicles 
!  parenteral nutrition  !  enteral nutrition 
!  home oxygen therapy  !  infusion pumps 
The CMNs were revised in October of 1995.  They were standardized and reformatted by 
HCFA and the DMERCs.  Each of the aforementioned equipment and supply groups now 
have their own CMN form. 
CMNs now have four sections: A-D.  Section A is to be filled out by suppliers.  Section B 
lists the clinical justifications or the medical necessity of the device.  This section is not to 
be filled out by suppliers. The Durable Medical Equipment Regional Carriers prefer that a 
clinician fills out Section B, but there is no specific requirement to that effect.  Section C 
contains a narrative description of all items ordered, the suppliers charge and the 
Medicare fee schedule allowance.  Section D must be signed by the physician certifying 
the medical necessity of the device.  This certifying physician cannot have any financial or 
contractual relationship with the supplier of the item. 
The Omnibus Budget Reconciliation Act (OBRA) of 1990 prohibited suppliers from filling 
out the CMNs themselves.  The HCFA interpreted this to mean that suppliers could fill 
out only the administrative portion of the CMN.  In addition, in instances where the 
supplier initiates the process by filling out the administrative portion, HCFA requires that 
they must also send a letter to the physician indicating what their charge and Medicare's 
allowed amount for the item is. 
Balanced Budget Act of 1997 
The Balanced Budget Act of 1997 requires that when an item is ordered by a physician, 
but furnished by another entity such as a supplier, the entity furnishing the item, that is the 
supplier, must provide diagnostic or other medical information in order for payment to be 
made to the supplier.  The physician must provide this information to the supplier when 
the item is ordered.  This is effective January 1, 1998.  Physicians are required to provide 
this diagnostic information when ordering supplies when the carrier has put in place a local 
medical review policy requiring such diagnostic information from the supplier. 
OIG Activities 
There have been many OIG efforts related to the utilization of non-physician services. 
The following two studies have addressed the role of physician authorization in the 
provision of these services.  An OIG study entitled "The Physician's Role in Home Health 
Care" (OEI-02-94-00170) found that at least 91 percent of the physicians who certified 
8 
Ordering Medicare Equipment  OEI-02-07-00080  the plan of home health care had a pre-existing relationship with the patient for whom the 
plan was designed. 
Other related OIG work includes an audit of home health agency services in California, 
Illinois, New York and Texas (A-04-94-02121) to determine whether payments for these 
fulfilled Medicare reimbursement requirements.  The results of this audit showed that 
physicians did not always review or actively participate in developing plans of care they 
signed.  The report said that physicians relied heavily on home health agencies to make 
homebound determinations and develop the plans of care for home health services. 
METHODOLOGY 
Using a 1 percent sample of HCFAs 1996 National Claims History (NCH) data, we 
selected a stratified, random sample of 1000 medical equipment and supply items.  We 
stratified our sample between codes that require a CMN and codes that have no such 
requirement.  We then further stratified the CMN codes between oxygen and non-oxygen 
items.  This ensured that oxygen related items were not over-represented in our sample. 
Within the non-CMN stratum, we selected medical equipment and supply items from the 
procedure codes used for billing (HCPCS) where each item cost was more than $103 or 
where HCFA allowed more than $260,000 in 1996.  These codes accounted for 96 
percent of all the medical equipment and supply  items in 1996 and 99 percent of the total 
monetary amount allowed by HCFA in 1996.  We further divided the 724 non-CMN 
codes into three separate groups:  one containing five codes which account for 30 percent 
of all non-CMN line items; another with 20 codes which account for an additional 30 
percent; and, finally, one with the remaining non-CMN codes.  This prevented any over 
representation in our non-CMN stratum.  We randomly selected 200 line items from each 
of the 5 stratum for a total of 1000 items. 
From this sampling, we identified the beneficiary, his/her diagnosis, the supplier, the place 
of service, the certifying physician, and his/her specialty. 
Beneficiary Histories 
Using the appropriate codes for physician visits and other medical equipment and supplies 
in the beneficiary billing histories, we determined whether the referring physician identified 
from our sampling had billed Medicare for any physician encounters in a 6 month period 
prior to date of the claim.  We used this information as one source of the physician's prior 
treating relationship with the beneficiary. 
9 
Ordering Medicare Equipment  OEI-02-07-00080  Physician Survey and Medical Record Review 
We mailed a questionnaire to the 983 physicians certifying the equipment for the 1000 line 
items in our sample and asked them: if they have ever treated and how long they have 
known the beneficiaries for whom they certified these services; the date of their last visit 
with that beneficiary; and if they ordered the equipment or supplies.  We received 695 
completed questionnaires from sample physicians. 
We also requested the 1000 relevant medical records for each of the 985 beneficiaries in 
our sample.  We received 530 of the 1000 medical records requested from the physicians 
or from the facility where the physician told us the medical record was kept.  We 
developed a screening instrument to review the medical records to determine whether the 
information provided supported the need for the medical equipment or supplies that was 
provided to the beneficiary.  We used the HCFA requirements for reimbursing the 
particular equipment or supplies being reviewed to develop the screening instrument.  This 
instrument was reviewed by the DMERCs and changed according to their suggestions. 
The screening was done by a registered nurse on the inspection team to determine whether 
information provided by the physician in the medical record supported the need for the 
medical equipment or supplies provided.  The questionable medical records were referred 
to a DMERC and reviewed by their medical staff. 
We conducted a second and third mailing to non-respondents and 782 physicians 
responded to us in some form.  Seven hundred and fifty-one physicians either sent in the 
questionnaire, a medical record, or both.  Of the remaining 31 physicians, 20 notified us 
they are retired, and 11 directed us to a nursing home for the relevant patient information. 
The remaining physicians are non-respondents who we were either unable to locate or 
failed to respond.  We were able to gather information in some form on all but 32 sample 
physicians. 
Suppliers 
We identified the suppliers for each of the beneficiaries in our sample and  requested 
copies of the CMNs and/or physician orders for items supplied to those beneficiaries.  We 
examined these  forms to determine when they were signed and whether the physician who 
signed the CMN or ordered the item is also the referring physician in our sample.  We 
received 920 returns from the suppliers. 
Durable Medical Equipment Regional Carrier (DMERC) Interviews 
We interviewed by telephone and on-site the appropriate carrier staff to determine how 
the physician certification requirements are overseen.  We asked them to identify any 
existing prepayment screens and/or edits regarding physician authorization.  We also 
10 
Ordering Medicare Equipment  OEI-02-07-00080  discussed their post-payment efforts in this area.  Finally, we obtained and reviewed any 
policies or educational materials the carriers might have which address this issue. 
Beneficiary Survey 
We selected a random sub-sample of 200 beneficiaries for telephone interviews.  These 
interviews  included questions regarding: who initiated the provision of the service; 
whether, and how recently, the physician who had certified the service had treated the 
beneficiary; and whether the beneficiary had received and was satisfied with the overall 
process of obtaining the equipment.  We contacted and interviewed 145 beneficiaries in 
the sub-sample. 
This inspection was conducted in accordance with the Quality Standards for 
Inspections issued by the Presidents Council on Integrity and Efficiency. 
11 
Ordering Medicare Equipment  OEI-02-07-00080  F I N D I N G S  
Most medical equipment and supplies are prescribed by the 
treating physician, but some problems are identified 
Almost all physicians know the patient 
The referring physicians for 89 percent of the items billed knew and treated the patient for 
whom they ordered durable medical equipment and supplies.  Of the remaining 11 percent 
we determined that almost half appear to be coding errors with the unique physician 
identification number (UPIN).  Some of these UPIN problems include transposed numbers 
or numbers with the wrong prefix in the claim information.  Often, the name of a 
completely different physician and an inappropriate specialty appear on the claim. 
With regard to the remaining cases (6 percent) the claim and the certificate of medical 
necessity or order have the physicians name and signature but the physician reports not 
knowing the patient.  This could occur for a number of reasons.  The physician may not 
remember a patient who is seen in a location other than their office, such as a nursing 
home, because the records would be kept at the other site.  It may have been a patient 
whom they treated years ago and ordered equipment or supplies that do not require re-
certification or the supplier may have signed the physicians name to complete the form. 
Over one-half (52 percent) of the physicians who did not know the patient reside in 
California, Florida, and New York compared to 23 percent for all other States.  Eighteen 
percent of these physicians are general surgeons, although this physician specialty 
comprises only 4 percent in the sample.  There is no pattern relative to the  kinds of 
supplies and equipment billed. 
Additionally, thirteen percent of physicians who say they knew the patient did not order 
the equipment or supplies.  However, a review of the certificates of medical necessity or 
orders show that the physicians name was the same in three out of four cases.  This may 
occur for a number of reasons.  The doctor may not remember the patient or another 
physician in the office or an office assistant may have ordered the equipment or supplies. 
Another possibility is that the supplier signed the CMN or order. 
Almost all patients know the physicians 
Ninety percent of the patients receiving medical equipment and supplies report being 
treated by the referring physician during the study period.  The doctor was usually their 
regular physician (72 percent) who had treated them for several years.  In many cases the 
patient continues to be treated by the physician.  Ninety-six percent of the patients 
12 
Ordering Medicare Equipment  OEI-02-07-00080  confirmed receiving the medical equipment or supplies ordered in our sample.  More than 
three-fourths (79 percent) of beneficiaries who received medical equipment or supplies 
continue to use them. 
Many physicians did not treat the patient within 6 months of receiving the 
equipment 
A review of Medicare data showed that 39 percent of physicians did not bill Medicare for 
a physician visit 6 months prior to the claim.  Those physicians who had no encounter in 
the billing history were less likely to submit medical records than those with an encounter. 
Sixty-seven percent of those physicians who did not show an encounter sent in medical 
records compared to 85 percent who had an encounter. 
We attempted to contact those patients whose billing history showed no prior physician 
encounter  and whose physician did not send in a medical record or questionnaire.  We 
will refer to this group as non-respondents.  While only 19 of 51 patients were contacted, 
18 out of 19 reported knowing the physician on the claim.  Only one patient reported not 
knowing the physician on the claim.  While wheelchairs and wheelchair accessories 
represent 12 percent of our total sample, they comprise 18 percent of the non-respondent 
group.  Hospital beds represent 5 percent of our sample and 13 percent of the non-
respondent group. 
Medicare payments were questionable for fourteen percent 
of the sample medical equipment and supplies 
In 9 percent of the medical records we received there was no documentation of the need 
for the equipment or supplies billed.  There was no diagnosis or indication in the medical 
record that the item was ordered or received, although the diagnosis on the claim might 
have been appropriate.  In many cases the documentation was scanty, seemed incomplete, 
or was sometimes difficult to read. 
In another 4 percent of records that were questionable the patient required the equipment 
when it was originally ordered, but according to the medical record the patient no longer 
had a need for it.  An example is a patient who had a fractured hip and needed a 
wheelchair when she first came home from the hospital in 1995, but at the time of our 
sample billing the patient was walking independently on all surfaces according to the 
record.  Nevertheless Medicare continued to pay a monthly rental for a wheelchair for her. 
Other patients were receiving diabetic supplies and were not insulin dependent as required 
by Medicare  in 1996.  Some items were billed after the date of the patients death, and 
some were inappropriately billed to patients in skilled nursing facilities.  See Appendix B 
for further analysis. 
13 
Ordering Medicare Equipment  OEI-02-07-00080  Despite a high non-response rate, wheelchairs and hospital beds represented a large 
proportion of questionable medical records.  While wheelchairs and wheelchair accessories 
represent 12 percent of our total sample, they are  27 percent of the questionable medical 
records.  Hospital beds represent 5 percent of our sample and 13 percent of the 
questionable records.  Both wheelchairs and hospital beds are expensive items and are 
usually rented.  They do not require re-certification unless the physician or the need for the 
equipment changes.  There appears to be no established notification process when a 
patient may no longer fulfill the Medicare requirements for the item. 
In 1 percent of the medical records there was sufficient evidence to fully prove that the 
equipment or supplies were unnecessary.  All but one of the medically unnecessary records 
involved oxygen.  In these cases there was no indication in the medical records that the 
patients had any breathing problems or that oxygen was being used.  The equipment in the 
remaining case was determined unnecessary because the physician informed us that the air 
pressure mattress was never ordered by him and the patient has no history of bedsores. 
The medical record read,  Patient up and about as necessary.  According to the record, 
the only equipment ordered was a four pronged cane. 
Questionable records represent $414 million in Medicare payments 
The 14 percent of medical records that were questionable project to $414 million.  Sixty 
million of the $414 million represent the 1 percent of the records where there was 
sufficient evidence to fully prove that the equipment or supplies were unnecessary.  The 
$414 million is a conservative amount because it is based on a review of only those 530 of 
1000 records we received.  We did not receive an additional 470 records that we 
requested.  The failure of providers to supply us with these records makes it likely that the 
payment error rates were at least equal to or may even have been greater than those we 
received.  Thus the actual dollar amount of questionable Medicare payments is likely to be 
significantly higher than the amount we calculated. 
Medical records are more likely to be questioned  for physicians who report not 
ordering the equipment or supplies 
Of  the physicians who said that they know the patient but did not order the equipment or 
supplies, 22 percent of the records were questionable or unnecessary.  Of the physicians 
who report ordering the equipment, only 11 percent were questioned.  This difference is 
significant at the 90 percent level of confidence. 
Medical records are less likely to be questioned when there was a recent 
encounter between the physician and patient 
Only 12 percent of the medical records were questioned when the physician saw the 
patient in 1996 or later.  Twenty-seven percent of the records were questionable or 
14 
Ordering Medicare Equipment  OEI-02-07-00080  unnecessary when the physician reported not seeing the patient since 1995 or earlier.  This 
difference is significant at the 90 percent level of confidence. 
Vulnerabilities exist in the medical equipment and supply 
ordering process 
Lack of patients diagnosis on the claim 
Currently Medicare regulations do not require that the patients diagnosis be included on 
the claim, although certain items do have diagnosis requirements to determine eligibility. 
In 1996, diabetic supplies required a diagnosis of insulin dependent diabetes in order to be 
paid, although as of January 1998 the insulin dependency has been removed.  They also 
note that there are policies that require a patient diagnosis of obstructive sleep apnea 
before a continuous airway pressure device is eligible for payment. 
Some of the DMERCs suggested the use of more diagnosis driven claims.  This would 
facilitate more accurate claims processing.  In addition to the diagnosis on the claim, one 
DMERC medical director would like to see more  preauthorization or approval prior to 
supplying the item especially in the area of wheelchairs and wheelchair accessories. 
Referring physicians name or identifying number is not always on the claim 
There is no requirement that the referring physicians name or identifying number (UPIN) 
appear on the claim and no systematic procedure exists to verify them.  The DMERCs 
report that if the claim has the correct number of digits and a letter in the referring 
physician section, the number will be accepted and the claim processed.  We found a 
number of different problems with the UPIN in our review.  These include claims without 
any number so the referring physician could not be identified, the same number on both 
the claim and the CMN with different physicians names, transposed numbers or a prefix 
that gives us the name of a physician different from the patients physician, or a generic 
number that appears to indicate a hospital intern or resident.  In all of these cases it is 
impossible to contact the referring physician for any information about the patient.  One of 
the DMERCs indicated that if a physician is under sanctions, claims could be suspended by 
checking the UPIN number.  In order to review a medical record for the appropriateness 
of the equipment or supplies ordered, the proper physician needs to be identified on the 
claim. 
It is also important to capture the referring physicians specialty on the claim because 
Medicare only pays for some medical equipment and supplies when referred by certain 
physician specialties.  For example, power-operated vehicles may be used as an electric 
wheelchair when prescribed by specialists in physical medicine, orthopedics, rheumatology 
or neurology. 
15 
Ordering Medicare Equipment  OEI-02-07-00080  Difficulty identifying patient place of residence 
The DMERCs indicated that there is no way to verify the place of service on the claim 
because the name of the facility is not required by Medicare.  Certain medical equipment 
and supplies are not paid for in a skilled nursing facility.  The medical review in this report 
indicated that some items were inappropriately billed to beneficiaries in skilled nursing 
facilities.  These included wheelchairs and IV poles.  The prospective payment systems 
implementation in skilled nursing facilities in July of 1998 will include some supplies and 
equipment.  It will be essential to know if a patient is in a skilled nursing facility in order to 
process claims correctly. 
Lack of ongoing medical relationship between DMERCS and physicians hampers 
educational efforts 
The DMERCs usually have no ongoing relationship with the referring physicians who sign 
the orders or CMNs.  The suppliers have the responsibility to maintain the order or CMN 
on file and make them available to the DMERC for review.  The DMERC does not have 
physician data readily available,  and is not responsible for educating the physician about 
the criteria and eligibility requirements for medical equipment and supplies.  One medical 
director indicated that the weak link in the process is the physician.  One suggestion made 
by the DMERC medical staff  is to have the criteria and eligibility requirements on the 
CMN which the physician would then review before signing the form.  One DMERC 
attempted to use suppliers to distribute new policies to physicians but it did not work. 
Without direct access to the individual physicians, DMERCs must occasionally contact the 
appropriate Part B carriers to include new policies about supplies and equipment in their 
bulletins.  Other DMERCs have used seminars, contacts with State Medical Societies, 
articles, and individual phone calls and letters to educate the physicians about medical 
equipment and supplies. 
16 
Ordering Medicare Equipment  OEI-02-07-00080  R E C O M M E N D A T I O N S  
We found that when the referring physician knew the patient, more appropriate medical 
equipment and supplies were ordered.  Therefore we support the Health Care Financing 
Administration in its requirement that the referring physician be a physician who has 
treated the patient and recommend that: 
<	 the physician who orders the equipment or supplies be required to treat the patient 
prior to the order and 
<	 a systematic process be developed to assure that the supplier submits a new CMN 
or order to the DMERC when the physician changes, the equipment or supply or 
the medical need for the equipment or supply changes. 
We recognize that as a result of the Balanced Budget Act of 1997, physicians are required 
to provide diagnostic information to suppliers and the suppliers provide this information 
on claims for medical supplies and equipment when the DMERC has a medical review 
policy requiring such diagnostic information.  We support this, but recommend that: 
<	 the referring physicians name and specialty, the patients related diagnostic 
information be required on all claims for medical equipment and supplies. 
This report also supports the recommendation in our report entitled Ordering Medicare 
Equipment and Supplies, Physicians Perspectives OEI-02-97-0081.  This report 
recommended that the Health Care Financing Administration strengthen its efforts to 
educate physicians regarding their ordering of medical equipment and supplies and 
suggested the following approaches: 
<	 directing the carriers to furnish all physician providers with information about 
ordering medical equipment and supplies including any OIG Fraud Alerts.  Of 
particular interest is the OIG Fraud Alert on Physician Liability for Certifications in 
the Provision of Medical Equipment and Supplies and Home Health Services 
which specifically highlights physicians responsibilities in making certifications for 
durable medical equipment and supplies, and the legal significance of the 
certifications.  A copy of this fraud alert may be found in Appendix D; 
<	 routinely providing all physicians with any changes of coverage and payment for 
medical equipment and supplies; 
<	 providing all physicians with a contact person at the carriers to answer questions 
about equipment or supplies; and 
17 
Ordering Medicare Equipment  OEI-02-07-00080  18 
Ordering Medicare Equipment  OEI-02-07-00080  <	 assuring that all certificates of medical necessity sent from the suppliers to 
physicians include the coverage and payment rules and cost of equipment for the 
specific equipment or supplies ordered. 
We will refer all unnecessary and questionable cases and those where the physician did not 
see the patient or did not order the equipment or supplies to the appropriate Durable 
Medical Equipment Regional Carrier for further review. 
COMMENTS 
We received comments on the draft report from HCFA.  They generally concur with our 
recommendations.  Based on their comments we changed one of the suggested approaches 
in our recommendations  on providing physicians with information about ordering medical 
equipment and supplies by expanding it to apply to all physicians not just new ones.  The 
HCFAs comments are reproduced in Appendix E. 
We also received comments from the Assistant Secretary for Planning and Evaluation 
(ASPE).  We changed the wording of another of our suggested approaches in the 
recommendations to clarify that the information about coverage and payment rules had to 
do with the specific equipment and supplies ordered rather than general guidelines. 
19 
Ordering Medicare Equipment  OEI-02-07-00080  APPENDIX A 
Confidence Intervals for Key Survey Questions

We calculated confidence intervals for 12 key questions from the physician questionnaires, 
beneficiary telephone surveys, medical records, certificates of medical necessity or orders, 
and beneficiary histories.  The response estimate and 95 percent confidence interval are 
given for each of the following: 
Physician survey questions 
1.	 Is the patient referred to in the enclosed letter someone that you have ever treated? 
Yes response estimate: 89% 
Lower interval: 87% 
Upper interval: 92% 
2.	 Approximately when did you last treat this patient in person? 
1996" or 1997" response estimate: 88% 
Lower interval: 85% 
Upper interval: 91% 
3.	 Approximately how long have you treated this patient? 
More than one year response estimate: 87% 
Lower interval: 84% 
Upper interval: 90% 
4.	 Did you order the equipment or supplies referred to in the enclosed letter? 
Yes response estimate: 82% 
Lower interval: 79% 
Upper interval: 86% 
20 
Ordering Medicare Equipment  OEI-02-07-00080  Beneficiary survey questions 
5.	 Have you ever been examined by this physician? 
Yes response estimate: 90% 
Lower interval: 96% 
Upper interval: 85% 
6.	 Did you receive the equipment or supplies? 
Yes response estimate: 96% 
Lower interval: 93% 
Upper interval: 100% 
7.	 Is the physician your regular doctor or specialist you saw for a particular reason? 
Regular doctor response estimate: 72% 
Lower interval: 64% 
Upper interval: 81% 
8.	 Did you see the physician in 1996? 
Yes response estimate: 94% 
Lower interval: 89% 
Upper interval: 99% 
Medical record information 
9.	 Overall were the equipment/supplies reasonable and necessary according 
to Medicare guidelines? 
No response estimate: 14% 
Lower interval: 11% 
Upper interval: 17% 
Certificate of medical necessity/physicians order information 
10.	 Is the claim physician the same as the ordering physician? 
Yes response estimate: 83% 
Lower interval: 80% 
Upper interval: 85% 
21 
Ordering Medicare Equipment  OEI-02-07-00080  11.	 Is the date on the Certificate of Medical Necessity/Order before the claimed date? 
Yes response estimate: 70% 
Lower interval: 67% 
Upper interval: 73% 
Beneficiary history information 
12.	 Was there billing by the referring physician in the six month period prior to the 
date 
the equipment was ordered? 
Yes response estimate: 61% 
Lower interval: 58% 
Upper interval: 64% 
22 
Ordering Medicare Equipment  OEI-02-07-00080  APPENDIX B 
Medical Review Dollar Projections

We used the HCFA requirements for reimbursement and a screening instrument to 
determine whether information provided by the physician in the medical record supported 
the need for the medical equipment or supplies provided.  A registered nurse on the team 
completed a medical review screening instrument.  Questionable cases were referred to 
and reviewed by a DMERC medical staff.  Fourteen percent of medical equipment and 
supplies in our sample are medically unnecessary or questionable.  The weighted allowable 
monetary amount projects to $414,396,000 + or - $120,326,900 at the  95 percent 
confidence level.  See Table I below. 
Table I 
Medically Unnecessary or Questionable Dollar Projections 
Sample Size  530 medical record 
responses 
Weighted Size  487,200 
Total  $414,396,000 
Standard Error Total  $61,391,200 
95% Confidence Interval  $120,326,900 
Lower limit  $294,069,100 
Upper limit  $534,722,900 
Seventy-nine medical equipment or supply items were deemed questionable or medically 
unnecessary.  Wheelchairs and wheelchair accessories comprised over one-quarter of all 
questionable records.  Additionally, oxygen and oxygen accessories comprised 22 percent 
of all questionable records.  Table II below illustrates the breakdown of all questionable or 
medically unnecessary equipment or supplies. 
23 
Ordering Medicare Equipment  OEI-02-07-00080  Table II 
Unnecessary or Questionable Medical Equipment and Supplies 
Equipment or Supply  Number  Percent of Questionable 
Wheelchairs and accessories  21  27% 
Oxygen and accessories  17  22% 
Diabetic supplies  10  13% 
Hospital beds  10  13% 
Other  7  9% 
Enteral feeding supplies  5  6% 
IV poles  3  4% 
Alternating pressure mattress  2  3% 
Commode chair  2  3% 
Ostomy supplies  2  3% 
Total  79  100% 
24 
Ordering Medicare Equipment  OEI-02-07-00080  APPENDIX C 
Statistical Tests for Key Findings

We computed Chi-square values for three key findings.  All variables were analyzed at the 
90 percent level of confidence.  As shown in Table I below, all variables demonstrate 
statistically significant differences.  The direction of the differences below are discussed in 
the findings of this report. 
Table I 
Chi-Square Values for Testing Significant Differences 
Variables  Degrees of  Chi-Square  Significant 
Freedom  Difference 
Beneficiary History vs  2  23.95  *Yes 
Medical Records Received 
Questionable Items vs When Did  1  3.34  Yes 
the Physician Last See the Patient 
Questionable Items vs  1  3.26  Yes 
Did the Physician Order 
*There is a significant difference at the 95 percent level of confidence 
25 
Ordering Medicare Equipment  OEI-02-07-00080  APPENDIX D 
OFFICE OF 
INSPECTOR 
GENERAL 
SSPPEECCIIAALL  FFRRAAUUDD  AALLEERRTT

PHYSICIAN LIABILITY FOR CERTIFICATIONS IN THE 
PROVISION OF MEDICAL EQUIPMENT AND SUPPLIES AND 
HOME HEALTH SERVICES 
January 1999 
T
he Office of Inspector General (OIG) was established at the Department of Health
and Human Services by Congress in 1976 to identify and eliminate fraud, waste, and 
abuse in the Departments programs and to promote efficiency and economy in 
departmental operations.  The OIG carries out this mission through a nationwide program 
of audits, inspections, and investigations. 
To reduce fraud and abuse in the Federal health care programs, including Medicare and 
Medicaid, the OIG actively investigates fraudulent schemes that obtain money from these 
programs and, when appropriate, issues Special Fraud Alerts that identify segments of the 
health care industry that are particularly vulnerable to abuse.  Copies of all OIG Special 
Fraud Alerts are available on the internet at: 
http://www.dhhs.gov/progorg/oig/frdalrt/index.htm 
We are issuing this Fraud Alert because physicians may not appreciate the legal and 
programmatic significance of certifications they make in connection with the ordering of 
certain items and services for their Medicare patients.  While the OIG believes that the 
actual incidence of physicians intentionally submitting false or misleading certifications 
of medical necessity for durable medical equipment or home health care is relatively 
infrequent, physician laxity in reviewing and completing these certifications contributes 
to fraudulent and abusive practices by unscrupulous suppliers and home health providers. 
We urge physicians and their staff to report any suspicious activity in connection with the 
solicitation or completion of certifications to the OIG. 
26 
Ordering Medicare Equipment  OEI-02-07-00080  Physicians should also be aware that they are subject to substantial criminal, civil, and 
administrative penalties if they sign a certification knowing that the information relating 
to medical necessity is false, or with reckless disregard as to the truth of the information 
being submitted.  While a physicians signature on a false or misleading certification 
made through  mistake, simple negligence, or inadvertence will not result in personal 
liability, the physician may unwittingly be facilitating the perpetration of fraud on 
Medicare by suppliers or providers.  Accordingly, we urge all physicians to review and 
familiarize themselves with the information in this Fraud Alert.  If a physician has any 
questions as to the application of these requirements to specific facts, the physician 
should contact the appropriate Medicare Fiscal Intermediary or Carrier. 
THE IMPORTANCE OF PHYSICIAN CERTIFICATION FOR MEDICARE 
T
he Medicare program only pays for health care services that are medically necessary.
In determining what services are medically necessary, Medicare primarily relies on 
the professional judgment of the beneficiarys treating physician, since he or she knows 
the patients history and makes critical decisions, such as admitting the patient to the 
hospital; ordering tests, drugs, and treatments; and determining the length of treatment. 
In other words, the physician has a key role in determining both the medical need for, and 
utilization of, many health care services, including those furnished and billed by other 
providers and suppliers. 
Congress has conditioned payment for many Medicare items and services on a 
certification signed by a physician attesting that the item or service is medically 
necessary.  For example,  physicians are routinely required to certify to the medical 
necessity for any service for which they submit bills to the Medicare program. 
Physicians also are involved in attesting to medical necessity when ordering services or 
supplies that must be billed and provided by an independent supplier or provider. 
Medicare requires physicians to certify to the medical necessity for many of these items 
and services through prescriptions, orders, or, in certain specific circumstances, 
Certificates of Medical Necessity (CMNs).  These documentation requirements 
substantiate that the physician has reviewed the patients condition and has determined 
that services or supplies are medically necessary. 
Two areas where the documentation of medical necessity by physician certification plays 
a key role are (i) home health services and (ii) durable medical equipment (DME). 
Through various OIG audits, we have discovered that physicians sometimes fail to 
discharge their responsibility to assess their patients conditions and need for home health 
care.  Similarly, the OIG has found numerous examples of physicians who have ordered 
DME or signed CMNs for DME without reviewing the medical necessity for the item or 
even knowing the patient. 
27 
Ordering Medicare Equipment  OEI-02-07-00080  PHYSICIAN CERTIFICATION FOR HOME HEALTH SERVICES 
M
edicare will pay a Medicare-certified home health agency for home health care
provided under a physicians plan of care to a patient confined to the home. 
Covered services may include skilled nursing services, home health aide services, 
physical and occupational therapy and speech language pathology, medical social 
services, medical supplies (other than drugs and biologicals), and DME. 
As a condition for payment, Medicare requires a patients treating physician to certify 
initially and recertify at least every 62 days (2 months) that: 
#  the patient is confined to the home; 
#	 the individual needs or needed (i) intermittent skilled nursing care; (ii) speech or 
physical therapy or speech-language pathology services; or (iii) occupational 
therapy or a continued need for occupational therapy (payment for occupational 
therapy will be made only upon an initial certification that includes care under (i) 
or (ii) or a recertification where the initial certification included care under (i) or 
(ii)); 
#	 a plan of care has been established and periodically reviewed by the physician; 
and 
#	 the services are (were) furnished while the patient is (was) under the care of a 
physician. 
The physician must order the home health services, either orally or in writing, prior to the 
services being furnished.  The physician certification must be obtained at the time the 
plan of treatment is established or as soon thereafter as possible.  The physician 
certification must be signed and dated prior to the submission of the claim to Medicare. 
If a physician has any questions as to the application of these requirements to specific 
facts, the physician should contact the appropriate Medicare Fiscal Intermediary or 
Carrier. 
PHYSICIAN ORDERS AND CERTIFICATES OF MEDICAL NECESSITY FOR 
DURABLE MEDICAL EQUIPMENT, PROSTHETICS, ORTHOTICS, AND 
SUPPLIES FOR HOME USE 
D
ME is equipment that can withstand repeated use, is primarily used for a medical
purpose, and is not generally used in the absence of illness or injury.  Examples 
include hospital beds, wheelchairs, and oxygen delivery systems.  Medicare will cover 
28 
Ordering Medicare Equipment  OEI-02-07-00080  medical supplies that are necessary for the effective use of DME, as well as surgical 
dressings, catheters, and ostomy bags.  However, Medicare will only cover DME and 
supplies that have been ordered or prescribed by a physician.  The order or prescription 
must be personally signed and dated by the patients treating physician. 
DME suppliers that submit bills to Medicare are required to maintain the physicians 
original written order or prescription in their files.  The order or prescription must 
include: 
#  the beneficiarys name and full address; 
#  the physicians signature; 
#  the date the physician signed the prescription or order; 
#  a description of the items needed; 
#  the start date of the order (if appropriate); and 
#	 the diagnosis (if required by Medicare program policies) and a realistic estimate of 
the total length of time the equipment will be needed (in months or years). 
For certain items or supplies, including supplies provided on a periodic basis and drugs, 
additional information may be required.  For supplies provided on a periodic basis, 
appropriate information on the quantity used, the frequency of change, and the duration 
of need should be included.  If drugs are included in the order, the dosage, frequency of 
administration, and, if applicable, the duration of infusion and concentration should be 
included. 
Medicare further requires claims for payment for certain kinds of DME to be 
accompanied by a CMN signed by a treating physician (unless the DME is prescribed as 
part of a plan of care for home health services).  When a CMN is required, the provider 
or supplier must keep the CMN containing the treating physicians original signature and 
date on file. 
Generally, a CMN has four sections: 
#	 Section A contains general information on the patient, supplier, and physician. 
Section A may be completed by the supplier. 
#  Section B contains the medical necessity justification for DME.  This cannot be 
filled out by the supplier.  Section B must be completed by the physician, a non-
physician clinician involved in the care of the patient, or a physician employee. 
If the physician did not personally complete section B, the name of the person who 
29 
Ordering Medicare Equipment  OEI-02-07-00080  did complete section B and his or her title and employer must be specified. 
#	 Section C contains a description of the equipment and its cost.  Section C is 
completed by the supplier. 
#	 Section D is the treating physicians attestation and signature, which certifies that 
the physician has reviewed sections A, B, and C of the CMN and that the 
information in section B is true, accurate, and complete.  Section D must be 
signed by the treating physician.  Signature stamps and date stamps are not 
acceptable. 
By signing the CMN, the physician represents that: 
#	 he or she is the patients treating physician and the information regarding the 
physicians address and unique physician identification number (UPIN) is correct; 
#	 the entire CMN, including the sections filled out by the supplier, was completed 
prior to the physicians signature; and 
#	 the information in section B relating to medical necessity is true, accurate, and 
complete to the best of the physicians knowledge. 
IMPROPER PHYSICIAN CERTIFICATIONS FOSTER FRAUD 
U
nscrupulous suppliers and providers may steer physicians into signing or authorizing
improper certifications of medical necessity.  In some instances, the certification 
forms or statements are completed by DME suppliers or home health agencies and 
presented to the physician, who then signs the forms without verifying the actual need for 
the items or services.  In many cases, the physician may obtain no personal benefit when 
signing these unverified orders and is only accommodating the supplier or provider. 
While a physicians signature on a false or misleading certification 
made through mistake, simple negligence, or inadvertence will not result in personal 
liability, the physician may unwittingly be facilitating the perpetration of fraud on 
Medicare by suppliers or providers.  When the physician knows the information is false 
or acts with reckless disregard as to the truth of the statement, such physician risks 
criminal, civil, and administrative penalties. 
Sometimes, a physician may receive compensation in exchange for his or her signature. 
Compensation can take the form of cash payments, free goods, or any other thing of 
value.  Such cases may trigger additional criminal and civil penalties under the anti-
kickback statute. 
The following are examples of inappropriate certifications uncovered by the OIG in the 
course of its investigations of fraud in the provision of home health services and medical 
30 
Ordering Medicare Equipment  OEI-02-07-00080  equipment and supplies: 
#	 A physician knowingly signs a number of forms provided by a home health agency 
that falsely represent that skilled nursing services are medically necessary in order 
to qualify the patient for home health services. 
#	 A physician certifies that a patient is confined to the home and qualifies for home 
health services, even though the patient tells the physician that her only restrictions 
are due to arthritis in her hands, and she has no restrictions on her routine 
activities, such as grocery shopping. 
#	 At the prompting of a DME supplier, a physician signs a stack of blank CMNs for 
transcutaneous electrical nerve stimulators (TENS) units.  The CMNs are later 
completed with false information in support of fraudulent claims for the 
equipment.  The false information purports to show that the physician ordered and 
certified to the medical necessity for the TENS units for which the supplier has 
submitted claims. 
#	 A physician signs CMNs for respiratory medical equipment falsely representing 
that the equipment was medically necessary. 
#	 A physician signs CMNs for wheelchairs and hospital beds without seeing the 
patients, then falsifies his medical charts to indicate that he treated them. 
#	 A physician accepts anywhere from $50 to $400 from a DME supplier for each 
prescription he signs for oxygen concentrators and nebulizers. 
POTENTIAL CONSEQUENCES FOR UNLAWFUL ACTS 
A
physician is not personally liable for erroneous claims due to mistakes,
inadvertence, or simple negligence.  However, knowingly signing a false or 
misleading certification or signing with reckless disregard for the truth can lead to serious 
criminal, civil, and administrative penalties including: 
#  criminal prosecution; 
#  fines as high as $10,000 per false claim plus treble damages; or 
#	 administrative sanctions including:  exclusion from participation in Federal health 
care programs, withholding or recovery of payments, and loss of license or 
disciplinary actions by state regulatory agencies. 
31 
Ordering Medicare Equipment  OEI-02-07-00080  Physicians may violate these laws when, for example: 
#	 they sign a certification as a courtesy to a patient, service provider, or DME 
supplier when they have not first made a determination of medical necessity; 
#	 they knowingly or recklessly sign a false or misleading certification that causes a 
false claim to be submitted to a Federal health care program; or 
#	 they receive any financial benefit for signing the certification (including free or 
reduced rent, patient referrals, supplies, equipment, or free labor). 
Even if they do not receive any financial or other benefit from providers or suppliers, 
physicians may be liable for making false or misleading certifications. 
WHAT TO DO IF YOU HAVE INFORMATION ABOUT FRAUD AND ABUSE 
AGAINST MEDICARE OR MEDICAID PROGRAMS 
If you have information about physicians, home health agencies, or medical equipment 
and supply companies engaging in any of the activities described above, contact any of 
the regional offices of the Office of Investigations of the Office of Inspector General, 
U.S. Department of Health and Human Services, at the following locations: 
Field Offices  States Served  Telephone 
Boston	 MA, VT ,NH, ME,  617-565-2664 
RI, CT 
New York  NY, NJ, PR, VI  212-264-1691 
Philadelphia	 PA, MD, DE, WV,  215-861-4586 
VA, DC 
Atlanta	 GA, KY, NC, SC,  404-562-7603 
FL, TN, AL, MS 
Chicago  IL, MN, WI, MI,  312-353-2740 
32 
Ordering Medicare Equipment  OEI-02-07-00080  IN, OH, IA, MO

33 
Ordering Medicare Equipment  OEI-02-07-00080  Dallas  TX, NM, OK, AR,  214-767-8406 
LA, CO, UT, WY, 
MT, ND, SD, NE, KS 
Los Angeles  AZ, NV, So. CA  714-246-8302 
San Francisco	 No. CA, AK, HI  415-437-7961 
OR, ID, WA 
34 
Ordering Medicare Equipment  OEI-02-07-00080  APPENDIX E 
Comments on the Draft Report

We received comments from the draft report from HCFA.  They concur with our 
recommendations. 
35 
Ordering Medicare Equipment  OEI-02-07-00080  36 
Ordering Medicare Equipment  OEI-02-07-00080  37 
Ordering Medicare Equipment  OEI-02-07-00080  38 
Ordering Medicare Equipment  OEI-02-07-00080