Department  of Health  and Human Services 
OFFICE OF 
INSPECTOR GENERAL 
MEDICARE  ALLOWANCES  FOR 
INCONTINENCE  SUPPLIES  Department  of Health and Human Services 
OFFICE OF 
INSPECTOR GENERAL 
MEDICARE  ALLOWANCES  FOR 
INCONTINENCE  SUPPLIES  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 
statuto~  mission  is carried  out  through  a nationwide  program  of audits,  investigations, 
inspections,  sanctions,  and  fraud  alerts.  The  Inspector  General  informs  the  Secretary 
of program  and  management  problems  and  recommends  legislative,  regulatory,  and 
operational  approaches  to correct  them. 
Office of Evaluation and Inspections 
The  Office  of Evaluation  and  Inspections  (OEI)  is one  of several  components  of the 
Office  of Inspector  General.  It conducts  short-term  management  and  program 
evaluations  (called  inspections)  that  focus  on issues  of concern  to the  Department,  the 
Congress,  and  the  public.  The  inspection  reports  provide  findings  and 
recommendations  on the  efficiency,  vulnerability,  and  effectiveness  of departmental 
programs. 
OEIS Philadelphia  Regional  Office  prepared  this report  under  the  direction  of Robert 
A. Vito,  Regional  Inspector  General.  Principal  OEI  staff included: 
REGION  HEADQUARTERS 
Nancy  J. Molyneaux,  Project  Leader	 Lisa A. Foley,  Program  Specialist 
Brian  Ritchie,  TSS 
To obtain  a copy of this report,  call the  Philadelphia  Regional  Office  at  1-800-531-
9562.  Department of Health and Human Services
OFFICE OF 
INSPECTOR GENERAL 
MEDICARE  ALLOWANCES  FOR 
INCONTINENCE  SUPPLIES 
JUNE  GIBBS  BROWN 
Inspector  General 
APRIL  1997 
0EI-03-94-O0773  EXECUTIVE  SUMMARY 
PURPOSE 
This  report  identifies  trends  in questionable  billing practices  for incontinence  supplies 
under  Medicare  Part  B in 1995. 
BACKGROUND 
Incontinence  is the  inability  of the  body  to  control  urinary  and  bowel  functions.  Under 
the  Medicare  Part  B program,  the  Health  Care  Financing  Administration  (HCFA)  will 
reimburse  suppliers  that  provide  incontinence  supplies  to aid individuals  whose 
incontinence  condition  ...is of long and  indefinite  duration.  Such  reimbursement  is 
provided  only as part  of Medicares  coverage  for prosthetic  devices  such  as catheters 
and  external  urinary  collection  devices.  The  HCFA  will also reimburse  for  accessories 
such as irrigation  syringes  and  sterile  saline  solutions  that  aid in the  effective  and 
therapeutic  use  of these  devices. 
We  determined  trends  in Medicare  allowances  for incontinence  supplies  in calendar 
years  1994 and  1995 from  a 1 percent  sample  of beneficiaries  from  HCFAS  National 
Claims  History  file.  We  focused  on questionable  practices  concerning  two facets  of 
billing:  1) accessories  that  can  only be  billed  with prosthetic  devices  and  2) frequency 
parameters  for female  external  urinary  collection  devices.  In December  1994, the 
Office  of Inspector  General  (OIG)  issued  a report  which  identified  over  $100 million 
in questionable  allowances  for incontinence  supplies. 
Since  our  initial  study began,  there  have  been  aggressive  efforts  by HCFA,  Durable 
Medical  Equipment  Regional  Carriers  (DMERCS),  and  the  OIG  to prevent 
questionable  allowances  for incontinence  supplies.  For  example,  both  DMERCS  and 
the  OIG  have  issued  fraud  alerts  concerning  inappropriate  billings  for incontinence 
supplies.  In October  1994, the  DMERCS  issued  a draft  policy clarifying  coverage  and 
frequency  parameters  for incontinence  supplies.  The  final version  was issued  in 
October  1995. 
FINDINGS 
Abusivebillingsfor incontinencesupplieshaveallbutdisappeared. 
Questionable  billings  for supplies  have  declined  by over  75 percent  since  1994. 
Medicare  allowances  for supplies  related  to questionable  billings  decreased  from  $111 
million  in  1994 to only $26 million  in 1995. 
Allowances  for supplies  billed  without  prosthetic  devices  totaled  $80 million  in 1994. 
In  1995, this type  of questionable  billing  for supplies  dropped  to less than  $22 million, 
i  a decrease  of 73 percent.  In the  last  quarter  of 1995, following  the  DMERCS 
implementation  of their  new guidelines,  such billings  dropped  to $1.7 million. 
In  1994, billings  for  excessive  female  external  urinary  collection  devices  (EUCDS) 
reached  a high of $31 million.  In 1995, this figure  dropped  to $3.8 million,  a decrease 
of 88 percent.  In the  last  quarter  of 1995, no such billings  occurred. 
Total  Medicare  allowances  for incontinence  supplies  have  declined  for the  first time 
since  1991.  Allowances  decreased  by over  40 percent  from  $260 million  in  1994 to 
$150 million  in 1995. 
Approximately$49 millionhus been recoveredthroughseizuresand restitutionfsrom 
abusiveincontinencesuppliers. 
As part  of an initiative  to investigate  fraud  in incontinence  billing,  the  Office  of 
Investigations,  along  with  other  law enforcement  agencies,  has  developed  eight  cases 
against  incontinence  suppliers  and  has  recovered  approximately  $49 million. 
CONCLUSION 
Concerted  efforts  by HCF~  OIG,  and  other  law enforcement  agencies,  in the  form  of 
changes  in payment  and  coverage  policy, fraud  alerts,  reports,  and  prosecutions,  have 
contributed  to the  declines  in Medicare  allowances  documented  in this report.  The 
new policy  has made  billing  for questionable  supplies  more  difficult.  The  fraud  alerts 
and  reports  concerning  incontinence  supplies  have  made  DMERCS  and  others 
concerned  with  claims  processing  aware  of questionable  billing practices.  Along  with 
published  documents,  prosecutions  of and  payment  of restitutions  by incontinence 
suppliers  has  sent  a message  that  fraudulent  billing for incontinence  supplies  will not 
be  tolerated. 
Based  on our  analysis, we estimate  that  declines  in questionable  billings  saved  the 
Medicare  program  $85 million  in 1995.  Assuming  questionable  billing  levels will 
remain  at the  1995 fourth  quarter  level  ($1.7 million),  total  questionable  allowances  in 
1996 will be  approximately  $6.8 million,  resulting  in savings of $104 million  over  1994 
levels.  If this trend  continues,  we estimate  that  Medicare  will save  $542 million 
between  1996 and  2000. 
We  will refer  information  on suppliers  who  continue  to submit  questionable  claims  for 
supplies  without  prosthetic  devices  to the  appropriate  agencies.  Continued  vigilance  in 
this area  will make  questionable  allowances  for incontinence  supplies  even  lower  in 
the  future. 
ii  a decrease  of 73 percent.  In the  last  quarter  of 1995, following  the  DMERCS 
implementation  of their  new guidelines,  such billings  dropped  to $1.7 million. 
In  1994, billings  for excessive  female  external  urinary  collection  devices  (EUCDS) 
reached  a high  of $31 million.  In  1995, this figure  dropped  to $3.8 million,  a decrease 
of 88 percent.  In the  last  quarter  of 1995, no such billings  occurred. 
Total  Medicare  allowances  for incontinence  supplies  have  declined  for the  first time 
since  1991.  Allowances  decreased  by over  40 percent  from  $260 million  in  1994 to 
$150 million  in  1995. 
Approximately$49 millionhas been recoveredthroughseizuresand restituths from 
abwve incontinencesuppliem 
As part  of an initiative  to investigate  fraud  in incontinence  billing,  the  Office  of 
Investigations,  along  with  other  law enforcement  agencies,  has  developed  eight  cases 
against  incontinence  suppliers  and  has  recovered  approximately  $49 million. 
CONCLUSION 
Concerted  efforts  by HCF~  OIG,  and  other  law enforcement  agencies,  in the  form  of

changes  in payment  and  coverage  policy, fraud  alerts,  reports,  and  prosecutions,  have

contributed  to the  declines  in Medicare  allowances  documented  in this report.  The

new policy has made  billing for questionable  supplies  more  difficult.  The  fraud  alerts

and  reports  concerning  incontinence  supplies  have  made  DMERCS  and  others

concerned  with  claims  processing  aware  of questionable  billing  practices.  Along  with

published  documents,  prosecutions  of and  payment  of restitutions  by incontinence

suppliers  has  sent  a message  that  fraudulent  billing  for incontinence  supplies  will not

be  tolerated.

Based  on our  analysis, we estimate  that  declines  in questionable  billings  saved  the

Medicare  program  $85 million  in 1995.  Assuming  questionable  billing  levels will

remain  at the  1995 fourth  quarter  level  ($1.7 million),  total  questionable  allowances  in

1996 will be  approximately  $6.8 million,  resulting  in savings of $104 million  over  1994

levels.  If this trend  continues,  we estimate  that  Medicare  will save $542 million

between  1996 and  2000.

We will refer  information  on suppliers  who  continue  to submit  questionable  claims  for

supplies  without  prosthetic  devices  to the  appropriate  investigative  agencies.

Continued  vigilance  in this area  will make  questionable  allowances  for incontinence

supplies  even  lower  in the  future.

11
 TABLE  OF  CONTENTS 
PAGE

EXECUTIVE  SUMMARY

INTRODUCIION  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..1

FINDINGS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...5

 
Declines  unquestionable  Billings  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...5

 
OIGProsecutions  and Recoveries  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...6

CONCLUSION  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  7

APPENDIX  A

kAllowed  Amounts  and  Confidence  Intervals  . . . . . . . . . . . . . . . . . . . . . . . . .A-l  INTRODUCTION 
PURPOSE 
This  report  identifies  trends  in questionable  billing  practices  for incontinence  supplies 
under  Medicare  Part  B in 1995. 
BACKGROUND 
MixlicareCoverageof IiacontinencSeupplies 
Incontinence  is the  inability  of the  body  to control  urinary  and  bowel  functions. 
Reimbursement  for incontinence  supplies  is included  as part  of Medicares  coverage 
for prosthetic  devices.  According  to Medicare  Carriers  Manual  section  2130, 
prosthetic  devices  (other  than  dental)  which  replace  all or part  of an internal  body 
organ  (including  contiguous  tissue),  or replace  all or part  of the  function  of a 
permanently  inoperative  or malfunctioning  internal  body  organ  are  covered  when 
furnished  on a physicians  order. 
Under  the  Medicare  Part  B program,  the  Health  Care  Financing  Administration 
(HCFA)  will reimburse  suppliers  that  provide  incontinence  supplies  to aid individuals 
whose  incontinence  condition  ...is of long and  indefinite  duration.  Certain  items, 
such  as absorbent  undergarments  or diapers,  are  specifically  excluded  from  coverage. 
Incontinence  supplies  include  prosthetic  devices  such  as catheters  and  external  urinary 
collection  devices  such  as pouches  or cups.  Catheters  are  flexible,  tubular  instruments 
used  to control  urinary  flow.  The  HCFA  will also reimburse  accessories  that  aid in 
the  effective  and  therapeutic  use  of these  devices.  These  accessories  include  items 
such  as drainage  bags,  irrigation  syringes,  and  lubricants.  However,  accessories  are  not 
covered  in the  absence  of a prosthetic  device. 
Between  1991 and  1994, Medicare  allowances  for incontinence  supplies  rose  sharply 
from  $108 million  to $260 million.  In  1993, nearly  one-half  ($ 107 million)  of the  total 
allowances  for incontinence  supplies  was related  to questionable  billings.  These 
billings  represented  claims  for supplies  billed  without  prosthetic  devices  and  excessive 
utilization  of certain  prosthetic  devices. 
Cam-erhocessing of IncontinenceSupplyClizirns 
Beginning  in October  1993, four  Durable  Medical  Equipment  Regional  Carriers 
(DMERCS)  have  been  responsible  for processing  claims  for durable  medical 
equipment,  prosthetics,  orthotics,  and  supplies.  To  ensure  consistency  in medical 
review  policies,  all DMERCS  issue identical  coverage  and  reimbursement  policies  that 
implement  Medicare  guidelines.  The  DMERCS  issued  a single national  policy for  urological  supplies  in October  1995.  This  policy redefines  and  clarifies  some  of the 
definitions  used  in claims  for incontinence  and  urological  supplies.  The  policy  stresses 
the  non-coverage  of diapers  and  similar  absorptive  pads.  The  policy  also reinforces 
the  condition  of permanence  for coverage  purposes  and  stresses  that  accessories  not 
used  in conjunction  with  covered  catheters  or external  urinary  collection  devices  are 
not  covered.  The  policy  also highlights  frequency  parameters  for  certain  items. 
Supplies  such as skin barriers  are  not  considered  necessary  for the  effective  use  of a 
prosthetic  device  and  are  not  covered.  The  data  presented  in this report  reflect  trends 
in 1995 incontinence  allowances  in the  three  quarters  before  and  in one  quarter  after 
this policy was implemented. 
FraudAlen3 
A Medicare  Fraud  Alert  issued  by the  Office  of Inspector  General  (OIG)  in

December  1994 described  a scheme  to market  a new disposable  drainage  bag which

needs  to be  changed  daily and  bill under  the  code  for  a standard  drainage  bag which is

changed  2 to 4 times  per  month  or under  the  code  for a drainage  bottle  which  is

changed  once  every  6 months.  The  alert  pointed  out  that  daily reimbursement  under

the  drainage  bottle  code  would  result  in allowances  of nearly  $4,000 over  6 months.

One  DMERC  issued  a Medicare  Fraud  Alert  in August  1995 describing  how suppliers

were  billing  for female  external  urinary  collection  devices  but  providing  beneficiaries

with  adult  diapers  which  are  not  covered  under  Medicare.  The  alert  also points  out

that  none  of the  beneficiaries  had  permanent  incontinence,  a requirement  for

Medicare  coverage  of incontinence  care.

l%or Ojjiceof ImpectorGeneralWork 
The  1994 report  Questionable  Medicare  Payments  for  Incontinence  Supplies  (OEI-03-94-
00772)  identified  over  $100 million  in questionable  allowances  in 1993 and  is one  of a 
series  of reports  concerning  Medicare  payments  for incontinence  supplies.  Marketing 
of Incontinence  Supplies  (OEI-03-94-O0770)  described  supplier  and  nursing  home 
practices  that  can  lead  to  questionable  allowances  and  examined  issues  concerning 
Medicare  beneficiaries  use  of incontinence  supplies.  Medicaid  Payments  for 
Incontinence  Supplies  (OEI-03-94-00771)  examined  how the  Medicaid  program 
processes  claims  for incontinence  supplies  in  14 States. 
In addition,  the  OIG  had  undertaken  a nationwide  investigation  of companies  abusing 
Medicares  incontinence  benefit.  Since  these  studies  and  investigations  were  initiated, 
there  have  been  efforts  by DMERCS  and  the  OIG  to prevent  questionable  allowances 
for incontinence  supplies.  For  example,  both  DMERCS  and  the  OIG  have  issued 
fraud  alerts  concerning  inappropriate  billing  for incontinence  supplies.  In October 
1995, the  DMERCS  implemented  a new policy clarifying  coverage  and  frequency 
limitations  for incontinence  supplies.  Considering  the  level  of activity  concerning 
incontinence  supplies  occurring  in  1995 and  given that  this was the  most  recent  year 
2
 for which  complete  data  was available,  the  OIG  determined  that  this was the  most 
appropriate  time  frame  for  a follow-up  to its 1994 report. 
METHODOLOGY 
To  determine  trends  in allowances  for incontinence  supplies,  we selected  a 1 percent 
sample  of claims  for 51 incontinence  codes  from  HCFAS National  Claims  History  file 
for calendar  year  1995.  We  compared  this data  with the  1993 data  obtained  for our 
1994 report  Questionable  Payments  for  Incontinence  Supplies  and  with  1994 data.  Our 
data  includes  the  eight  incontinence  codes  added  after  our  1994 report  was issued. 
Earlier  OIG  work  identified  two types  of questionable  billing:  1) supplies  being billed 
without  prosthetic  devices,  and  2) female  external  urinary  collection  devices  billed  in 
excess  of one  per  day.  To  determine  the  nature  and  extent  of questionable  billing 
practices,  we applied  October  1995 DMERC  guidelines  to the  services  billed  in  1995. 
To identify  trends  in supplies  billed  without  prosthetic  devices  in 1995, we categorized 
68 codes  as either  supplies  or prosthetic  devices.  Because  11 of the  26 incontinence 
supply  codes  could  also be  used  in ostomy  care,  we added  17 ostomy  prosthetic  device 
codes  to  our  original  51 codes.  This  prevented  ostomy  supplies  billed  with  ostomy 
prosthetic  devices  from  erroneously  appearing  in our  totals  for supplies  billed  without 
devices.  We  identified  supplies  billed  without  devices  in a 1 percent  sample  of 
HCFAS National  Claims  History  File.  We  compared  our  1995 data  with  data 
obtained  through  a similar  process  for  1994 and  1993 claims. 
We  did not  include  services  billed  under  code  A4323,  sterile  saline  solution,  when 
they were  not  billed  in conjunction  with  incontinence  supplies.  According  to DMERC 
officials,  code  A4323  may be used  in conjunction  with non-incontinence  supplies  such 
as enteral  nutrition  products. 
To  determine  trends  in the  over-utilization  of female  external  urinary  collection 
devices  in  1995, we identified  all claims  for these  devices  in excess  of one  per  day in a 
1 percent  sample  of HCFAS National  Claims  History  file.  Again,  our  1995 data  was 
compared  with  allowances  for excess female  urinary  collection  devices  in 1994 and 
1993. 
We  arrayed  the  data  by procedure  code,  carrier,  supplier,  and  quarter  billed. 
Although  the  guidelines  were  implemented  after  the  dates  of most  of the  billings 
examined  in our  study, they  provide  a useful  standard  to identify  vulnerabilities  in the 
earlier  billings which  may  still be  present. 
1 Allowed  payments  include  both  the  80 percent  Medicare  payment  and  the  20 
percent  coinsurance  paid  by the  beneficiary. 
3  We  projected  our  estimates  to the  universe  of incontinence  claims by multiplying 
sample  results  by 100.  Confidence  intervals  are  presented  in Appendix  A. 
This  report  continues  our  earlier  work  concerning  Medicare  allowances  for 
incontinence  supplies. 
This inspection  was conducted  in accordance  with the  Quality  Standards  for  Inspections 
issued  by the  Presidents  Council  on Integrity  and  Efficiency. 
4
 FINDINGS

ABUSIVE  BILLINGS  FOR  INCONTINENCE  SUPPLIES  HAVE  ALL  BUT 
DISAPPEARED. 
Total  Medicare  allowances  for incontinence  supplies  have  declined  for the  first time 
since  1991.  Allowances  decreased  by over  40 percent  from  $260 million  in  1994 to 
$150 million  in  1995.  Questionable  billing for supplies  has  declined  by over 
three  quarters  since  1994.  Medicare  allowed  nearly  $26 million  in  1995 for  supplies 
related  to the  two types  of questionable  billing we examined,  a drop  of 77 percent 
from  $111 million  in 1994.  Allowances  for supplies  billed  without  prosthetic  devices 
were  $80 million  in 1994.  In  1995, this type  of questionable  billing for  supplies 
dropped  to $22 million,  a decrease  of 73 percent.  In  1994, billing  for excessive 
EUCDS  reached  a high of $31 million.  In  1995 this figure  dropped  to $3.8 million,  a 
decrease  of 88 percent. 
Allowancmfor accessoriesbilledwithoutprostheticdevicesdeclinedsiW#icant~. 
In order  for Medicare  to pay for incontinence  accessories,  the  beneficiary  must  have  a 
prosthetic  device  such  as a catheter  or a urinary  collection  device.  Allowances  for 
accessories  without  prosthetic  devices  have  declined  considerably.  The  $22 million  in 
questionable  billings  for supplies  represents  only 15 percent  of the  total  $150 million 
allowed  for incontinence  supplies  in 1995.  In  1994, questionable  billings  made  up  43 
percent  of allowances  for incontinence  supplies. 
Two DMERCS  accounted  for over  two-thirds  of the  allowances  for incontinence 
supplies  billed  without  prosthetic  devices.  This  represents  over  $14 million  of the  $22 
million  in questionable  billings  in all of 1995. 
Nearly  70 percent  of all allowances  for  supplies  without  prosthetic  devices  were  made 
to just  10 suppliers.  These  suppliers  represent  less than  3 percent  of all suppliers  with 
questionable  billings in  1995. 
In  1995, nearly  92 percent  of the  $22 million  in allowances  ($20 million)  were  made 
prior  to the  implementation  of HCFAS  new policy on October  1, 1995.  This  policy 
clearly  delineated  that  Medicare  would  not  reimburse  claims  for incontinence  supplies 
billed  without  prosthetic  devices.  After  the  policy was implemented,  allowances 
dropped  from  $12 million  in the  first quarter  of 1995 to $1.7 million  in the  fourth 
quarter,  a decline  of 85 percent.  This  indicates  savings to Medicare  of $58 million 
from  1994 allowances  for  supplies  without  devices. 
Two DMERCS  accounted  for three-quarters  of the  allowances  for incontinence 
supplies  billed  without  prosthetic  devices  in the  fourth  quarter  of 1995.  This 
represents  over  $1.3 million  of the  $1.7 million  in questionable  billings  in the  fourth 
quarter.  More  than  half  of all allowances  for supplies  without  prosthetic  devices  in 
J  the  fourth  quarter  of 1995 were  made  to just  three  suppliers.  These  suppliers 
represent  less than  3 percent  of all suppliers  with  questionable  billings  in the  fourth 
quarter. 
Billingsfor excessiveEUCDS huve been eliminated. 
According  to DMERC  guidelines,  female  EUCDS  may not  be billed  in excess  of one 
per  day.  We  identified  $3.8 million  in 1995 allowances  for female  EUCDS  in excess  of 
one  per  day.  This  represents  78 percent  of the  total  allowed  for EUCDS.  However, 
after  HCFA  implemented  its new policy in the  fourth  quarter  of 1995, there  were  no 
allowances  for EUCDS  in excess of one  per  day.  This  means  that  the  problem  has,  for 
all practical  purposes  been  eliminated,  saving Medicare  over  $27 million  from  1994 
levels. 
One  DMERC  processed  nearly  half the  claims for EUCDS  in excess  of one  per  day in 
1995.  This  DMERC  was responsible  for $1.6 million  of the  total  $3.8 allowed  for 
excessive  EUCDS. 
Fifty-seven  percent  of all allowances  for excessive  EUCDS  were  made  to just  three 
suppliers.  All of the  allowances  for excessive  EUCDS  made  to these  suppliers  were 
made  by one  DMERC. 
APPROXIMATELY  $49 MILLION  HAS  BEEN  RECOVERED  THROUGH 
SEIZURES  AND  RESTITUTIONS  FROM  ABUSIVE  INCONTINENCE 
SUPPLIERS. 
As part  of OIG  efforts  to reduce  questionable  allowances  for incontinence  and 
prosecute  suppliers  involved  in such billings, the  Office  of Investigations  (01)  launched 
a national  investigation  known  as Incontinent  Care  Case  Project.  Under  this  initiative, 
01,  along  with  other  law enforcement  agencies,  has  developed  eight  cases  against 
incontinence  suppliers.  These  cases  involved  approximately  $61 million  in fraudulent 
Medicare  claims.  The  01  has recovered  approximately  $49 million  through  seizures 
and  restitutions.  In most  of the  cases,  suppliers  were  billing for female  external 
urinary  collection  devices  but  providing  beneficiaries  with  diapers,  which  are  not 
covered  under  Medicare. 
Thus  far,  these  8 cases  have  resulted  in 12 prosecutions.  In one  case,  five fraudulent 
suppliers  were  prosecuted  and  sentenced  for schemes  involving  submitting  claims  to 
carriers  with  the  highest  reimbursement  and  billing for items  not  supplied.  A second 
case  resulted  in the  prosecution  of a supplier  for the  same  kind  of schemes.  In 
another  case,  five people  pled  guilty to Medicare  fraud.  In one  case,  a supplier  was 
sentenced  to 5 years  in prison  for money  laundering,  witness  tampering,  mail  fraud, 
and  interstate  transportation  of property  obtained  by fraud.  As a result  of one  case  a 
supplier  has been  arrested.  Other  cases  involved  searches  and  seizures  of property. 
6
 CONCLUSION 
Concerted  efforts  by HCFA,  OIG,  and  other  law enforcement  agencies,  in the  form  of 
changes  in payment  and  coverage  policy, fraud  alerts,  reports,  and  prosecutions,  have 
contributed  to the  declines  in Medicare  allowances  documented  in this report.  The 
new policy  has  made  billing for questionable  supplies  more  difficult.  The  fraud  alerts 
and  reports  concerning  incontinence  supplies  have  made  DMERCS  and  others 
concerned  with  claims  processing  aware  of questionable  billing practices.  Along  with 
published  documents,  prosecutions  of and  payment  of restitutions  by incontinence 
suppliers  has  sent  a message  that  fraudulent  billing for incontinence  supplies  will not 
be  tolerated. 
Based  on our  analysis, we estimate  that  declines  in questionable  billings  saved  the 
Medicare  program  $85 million  in 1995.  Assuming  questionable  billing  levels will 
remain  at the  1995 fourth  quarter  level  ($1.7 million),  total  questionable  allowances  in 
1996 will be  approximately  $6.8 million,  resulting  in savings of $104 million  over  1994 
levels.  If this trend  continues,  we estimate  that  Medicare-will  save  $542 million 
between  1996 and  2000. 
We will refer  information  on suppliers  who continue  to submit  questionable  claims  to 
the  appropriate  agencies.  Continued  vigilance  in this area  will make  questionable 
allowances  for incontinence  supplies  even  lower  in the  future.  OFFICE  OF  INSPECTOR  GENERAL 
The  mission  of the  Office  of Inspector  General  (OIG),  as mandated  by Public  Law 95-
452, is to protect  the  integrity  of the  Department  of Health  and  Human  Services 
programs  as well as the  health  and welfare  of beneficiaries  served  by them.  This 
statutory  mission  is carried  out  through  a nationwide  program  of audits,  investigations, 
inspections,  sanctions,  and  fraud  alerts.  The  Inspector  General  informs  the  Secretary 
of program  and  management  problems  and  recommends  legislative,  regulatory,  and 
operational  approaches  to  correct  them. 
Office of Evaluation and Inspections 
The  Office  of Evaluation  and  Inspections  (OEI)  is one  of several  components  of the 
Office  of Inspector  General.  It conducts  short-term  management  and  program 
evaluations  (called  inspections)  that  focus  on issues  of concern  to the  Department,  the 
Congress,  and  the  public.  The  inspection  reports  provide  findings  and 
recommendations  on the  efficiency,  vulnerability,  and  effectiveness  of departmental 
programs. 
OEIS Philadelphia  Regional Office prepared  this report  under  the  direction  of Robert 
A. Vito,  Regional  Inspector  General.  Principal  OEI  staff included: 
REGION  HEADQUARTERS 
Nancy  J. Molyneaux,  Project  Leader	 Lisa A. Foley,  Program  Specialist 
Brian  Ritchie,  TSS 
To  obtain  a copy of this report,  call the  Philadelphia  Regional  Office  at  1-800-531-
9562.