Department of Health and Human Services 

OFFICE OF 

INSPECTOR GENERAL 

DURABLE MEDICAL EQUIPMENT


PAYMENTS IN NURSING HOMES


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JUNE GIBBS BROWN 

Inspector General 

MARCH 1996 

OEI-06-92-00862 
OFFICE OF INSPECTOR GENERAL 

The mission of the Oftlce of Inspector General (OIG), as mandated by Public Law 95-452, as 

amended, is to protect the integrity of the Department of Health and Human Services’ (HHS) 

programs as well as the health and welfare of beneficiaries served by those programs. This 

statutory mission is carried out through a nationwide network of audits, investigations, and 

inspectionsconducted by three OIG operating components: the Office of Audit Services, the 

OffIce of Investigations, and the OffIce of Evaluation and Inspections. The OIG also informs the 

Secretary of HHS of program and managementproblems and recommendscourses to correct them. 

OFFICE OF AUDIT SERVICES 

The OIG’SOffIce of Audit Services(OAS)provides all auditing services for HHS, either by 

conducting audits with its own audit resources or by overseeing audit work done by others. Audits 

examine the performance of HHS programs and/or its grantees and contractors in carrying out 

their respective responsibilities and are intendedto provide independentassessmentsof HHS 

programs and operations in order to reduce waste, abuse, and mismanagementand to promote 

economy and efficiency throughout the Department. 

OFFICE OF INVESTIGATIONS 

The OIG’SOffIce of Investigations(01) conducts criminal, civil, and administrative investigations 

of allegations of wrongdoing in HHS programs or to HHS beneficiaries and of unjust enrichment 

by providers. The investigativeefforts of 01 lead to criminal convictions, administrative 

sanctions, or civil money penalties. The 01 also oversees State Medicaid fraud control units which 

investigate and prosecute fraud and patient abuse in the Medicaid program. 

OFFICE OF EVALUATION AND INSPECTIONS 

The OIG’SOffIce of Evaluation and Inspections (OEI) conducts short-term management and 

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

Congress, and the public. The findings and recommendationscontained in these inspection reports 

generate rapid, accurate, and up-to-date information on the efficiency, vulnerability, and 

effectiveness of departmental programs. 

Dallas Staff Central OffIce 

Leah Bostick Jennifer Antico 

Kevin Golladay Brian Ritchie 

Sarah Taylor Barbara Tedesco 

Clark Thomas 

For further information contact: Kevin Golladay at 214/767-3310 or 1/800-848-8960. 
Department of Health and Human Services 

OFFICE OF 

INSPECTOR GENERAL 

DURABLE MEDICAL EQUIPMENT


PAYMENTS IN NURSING HOMES


# SERVICt$ 

~.+ c“ 

9 

$ JUNE GIBBS BROWN . 

.

< Inspector General z 

% 

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+

%.j~~ MARCH 1996 

> OEI-06-92-00862 
EXECUTIVE SUMMARY


PURPOSE 

To identifi Medicare Part B payments for Durable Medical Equipment (DME) services 

provided to residents in nursing homes. 

BACKGROUND 

DME is equipment which can withstand repeated use, is primarily used to serve a medical 

purpose, is generally not useful to a person in the absence of illness or injury, and is 

appropriate for use in the home. To be covered by Medicare Part B, the lMZJ!?must be 

furnished for use in the beneficiary’s home. Medicare defines a beneficiary’s home as his or 

her own dwelling, an apartment, a relative’s home, a home for the aged, or some other type of 

institution. However, a hospital or skilled nursing facility is specifically excluded as a 

resident’s home. A skilled nursing facility is defined as a facility primarily engaged in 

providing skilled nursing care. 

We obtained information about Part B expenditures from a 1992 nationally protectable sample 

of nursing home residents from 10 Stites and 150 nursing homes. This includes residents 

receiving Medicare extended care benefits in a skilled nursing facility (SNF), residents paying 

for their stay with private insurance or personal fimds, residents on Medicaid, or a 

combination of the above. 

This inspection was conducted as a part of Operation Restore Trust (ORT). The initiative, 

focused in five States, involves multi-disciplinary teams of State and Federal personnel 

seeking to reduce fraud, waste, and abuse in nursing homes and home health agencies, and by 

durable medical equipment suppliers. 

FINDINGS 

Medicare carriers allowed as much as $35 million in 1992 for DME during nursing 

home stays. Of this, $27 million was paid by Medicare. The remaining $8 million was paid 

by beneficiaries. 

No effective mechanism currently exists to ensure the appropriate payment of durable 

medical equipment under Medicare Part B for beneficiaries in nursing homes. To ensure 

correct payments, clarification is needed in the program policy utilized to determining which 

nursing homes are “primarily engaged” in providing skilled care. 

i 
RECOMMENDATIONS


In attempting to address this problem, we originally developed a series of options regarding 

coverage policy for durable medical equipment in nursing homes. One of those options, 

which we supported most strongly in our drafl report, was to exclude payment for any piece of 

durable medical equipment provided to any resident in a nursing home. We originally 

believed that this option should be pursued primarily because of its administrative simplicity 

and because it reflected a policy which holds nursing homes responsible for routine items 

needed by their residents. Afler considering both the Health Care Financing Administration 

(HCFA) and the Assistant Secretary for Planning and Evaluation (ASPE) comments on the 

draft report expressing concerns about the impact of such a policy on beneficiaries and 

consistency with current legal authority, we have chosen to eliminate this recommendation in 

our final report. 

Rather, we agree with both HCFA and ASPE that this issue should be considered within the 

confkes of current law. And while we appreciate and thank ASPE for its point about the 

distinction between routine and nonroutine items, which we agree can be important, our 

reading of current law would prohibit any DME payment made on behalf of a resident of a 

nursing facility primarily engaged in providing skilled nursing care. Further, if such a 

distinction could be made, it would be easier to make based on beneficiaries’ specific 

circumstances and the amount, duration and scope of need, than on categories of equipment. 

We believe that to make such a distinction based on categories might invite the routine billing 

of “non-routine” DME in order to qualify for payment under Part B, and potentially create an 

escalation in DME payments for residents in nursing homes. 

Thus, we recommend that HCFA develop and implement a workable and fair definition 

of what constitutes a skilled nursing facility, for the purposes of payment of DME under 

Part B. It might be that such a definition could implement a policy such as that discussed in 

our draft repo~ in which Medicare certified facilities are designated as skilled nursing 

facilities (whether or not they are also certified by Medicaid). However, other deftitions 

might be more appropriate. 

In any event, such a deffition should reflect the principle that (1) skilled nursing facilities are 

responsible for the provision of a basic range of services to the residents under their care, and 

(2) a skilled nursing facility cannot be considered a home for the purposes of DME coverage 

under Medicare Part B. 

We have previously recommended that HCFA institute appropriate payment safeguards 

to ensure that payments for DME are not made for beneficiaries in a Medicare covered 

SNF stay. The H(2FA agreed. We refer readers to our report, “Payment for Durable Medical 

Equipment Billed During Skilled Nursing Facility Stays,” for more discussion of the options 

we presented and HCFA’Sresponse. 

ii 
Cost Savings: The exact amount of savings that could be obtained by the Federal 

Government in implementing this recommendation depends on a number of factors, including 

the definition of skilled nursing facilities. To illustrate, assuming a scenario where 75 percent 

of the facilities are deemed to be skilled facilities, we estimate roughly $23.5 million in 

savings (of which 80 percent is saved by the program and 20 percent by beneficiaries) would 

accrue from implementing both this recommendation and our prior recommendation regarding 

payment during Medicare covered SNF stays. 

COMMENTS 

The fill text of the HCFA and the ASPE comments are provided in Appendix B. Since we 

revised the recommendation from the draft report, HCFA’Sproposed action to revise and 

improve the Medicare criteria for identifying a “skilled” facility would implement the action 

which we agree is appropriate. 

... 

111 
TABLE OF CONTENTS


EXECUTIVE SUMMARY


INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...1


FINDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...3


DMEpayments in 1992 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..3


Noeffective mectism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...5


RECOMMENDATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6


ENDNOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...9


APPENDICES


Part BClassification ofDMESemices . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1


AgencyComents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..B-1

INTRODUCTION


PURPOSE 

To identifi Medicare Part B payments for Durable Medical Equipment (DME) services 

provided to residents in nursing homes. 1 

BACKGROUND 

DME is equipment which can withstand repeated use, is primarily used to serve a medical 

purpose, is generally not usefid to a person in the absence of illness or injury, and is 

appropriate for use in the home. DME includes such items as wheelchairs, hospital beds, 

canes, crutches, oxygen concentrators, and nebulizers. In addition, reimbursement may be 

made for necessary repairs and maintenance of the equipment under specified conditions. 

DME is reimbursed using a fee schedule. Five categories of DME have been established, each 

with a different reimbursement methodology. These five principle DME payment categories 

include: 

1)	 inexpensive or other routinely purchased DME, defined as equipment costing less than 

$150 or which is purchased at least 75 percent of the time; 

2) items requiring frequent and substantial servicing; 

3)	 customized items, which are defined as equipment constructed or modified 

substantially to meet the needs of an individual patient, with fee schedule amounts 

determined by carriers without regard to average or reasonable charges; 

4) other DME frequently referred to as “capped rental”; and 

5)	 oxygen and oxygen equipment, requiring frequent and substantial servicing, with 

payment calculations based on the average Medicare reasonable charge. 

Equipment may be covered under Medicare’s Supplemental hxmrance Program (Part B), if it 

is fkrnished for use in the beneficiary’s home. Medicare defines a beneficiary’s home as his 

or her dwelling, an apartment, a relative’s home, a home for the aged, or some other type of 

institution. However, a hospital or skilled nursing facility is specifically excluded as a 

resident’s home. 

In the past, Medicaid nursing homes were classified as facilities providing skilled nursing care 

(SNF), providing intermediate care (ICF), or as providing both. The distinction was 

important, as some ICFS provided care at a level that could be considered a beneficiary’s 

residence for DME payment purposes. 2 This determination was generally made by the State 

agency and communicated to the local carrier. However, with legislative changes to the 

certification process prescribed in the Omnibus Budget Reconciliation Act of 1987, the 

ICF/SNF certification distinction was removed. All nursing homes now meet the same 

certification standards of a Medicare-participating SNF. 

This inspection was conducted as a part of Operation Restore Trust (ORT). The initiative, 

focused on five States, involves multi-disciplinary teams of State and Federal personnel 

seeking to reduce fraud, waste, and abuse in nursing homes and home health agencies and by 

durable medical equipment suppliers. 

1

SCOPE 

This report is one of two reports on DME for nursing home residents. The other report, 

Payment for Durable Medical Equipment Billed During Skilled Nursing Facility Stays, was 

limited to DME billed for residents receiving extended care benefits in a Medicare nursing 

home providing skilled or rehabilitative care. Since such a nursing home is specifically 

excluded as a beneficiary’s “home,” all Part B payments for DME in that setting should have 

been denied. We identified approximately $8.9 million in 1991 and $10.8 million in 1992 of 

incorrect DME payments in nursing homes providing extended care benefits. 

This report expands our review to include not only residents receiving extended care benefits 

in a Medicare-certified nursing home, but also any Medicare-eligible resident in any Medicare 

or Medicaid-certified nursing home. 

METHODOLOGY 

Data for this inspection was obtained from a nationally protectable two-stage random sample 

of 150 nursing homes from Californi~ Delaware, Florida, Indian% Kansas, Louisiana, Maine, 

Michigan, Montan~ and Wyoming (1Oper State). Stratification was based on facility size 

(large, medium, and small). 

Each sample nursing home provided us with a list of all Medicare-eligible residents residing 

in the nursing home during 1992, along with each resident’s corresponding date(s) of stay. 

After verification of the beneficiaries’ health insurance claim numbers (HICN) with the 

Medicare enrollment database, all Medicare services provided during the nursing home stay 

were extracted from the Medicare National Claims History File for calendar year 1992. The 

Supplementary Medical Insurance (SMI) for the Aged and Disabled services (Part B 

Medicare), processed by both the carrier and the intermediary, were identified. Data from the 

sample were projected to the total nursing home population (residents in Medicare or 

Medicaid-certified nursing homes). 

Our review was conducted in accordance with the Quali~ Standards for Inspections issued by 

the President’s Council on Integrity and Efficiency. 

2

FINDINGS


Carn”ersAllowed $35 Million in 1992 for DME During Nursing Home Stays. 

An estimated $35 million3 was allowed ($27 million paid) for DME billed during a 

beneficiary’s stay in a Medicare and/or Medicaid-certified nursing home. The remaining $8 

million was paid by or on behalf of beneficiaries. However, the exact amount of incorrect 

payment is dependent upon whether the nursing home qualified as the beneficiary’s residence. 

�	 Over 80 percent of the allowed charges were for wheelchairs, beds, oxygen equipment, 

and related supplies. 

Most of the DME payments were for the rental or purchase of oxygen equipment, wheelchairs, 

beds, and related items. (See Figure 1.) 

I Most DME Payments Were For 

Oxygen Equipment, Wheelchairs, 

Beds, and Related Items 

Other DME 

($6.7 

Oxygen Equipment 

and Supplies Hospital Beds ($14.2 Million) 

and Accessorle 

($5.1 Million) 

Wheelchairs and 

Acceesoriee 

($9.3 million) 

SourcmlS92 fnsslnghomessmpls 

Figure 1 

The most often rented or purchased oxygen equipment is the oxygen concentrator which 

delivers 4 liters per minute. The most expensive item in the wheelchair category is the 

standard wheelchair with fixed arms and detachable legs. For beds, the semi-electric bed is 

the largest expense. 

The items for which payments were made reflect atypical array of medical equipment 

necessary for nursing homes to have in order to serve their residents. Further, with the 

exception of some oxygen equipment and perhaps some wheelchairs, these are not 

sophisticated, customized, or high technology items. In addition to hospital beds and basic 

wheelchairs, the payments were for walkers, canes and crutches, commodes, seat/patient lifts, 

and pressure pads. 

3

“	 Overall, DME payments are attributable to less than 5 percent of all nursing home stays, 

with moderate differences between States and sizeable variations among nursing homes. 

During 1992,4.6 percent of all nursing home stays had DME allowed charges for Medicare 

residents in nursing homes. Among the 10 sample States, the percentage of stays with DME 

ranged from an estimated high of 7.7 percent in Maine to an estimated low of 1.4 percent in 

Kansas. However, among nursing homes, there are sizeable variations in the percent of stays 

with DME. While the average percent of stays with DME was 4.6 percent, some 38 percent 

of nursing homes exceeded this amount, and 10 percent exceeded 10 percent. 

�	 As much as a third of these DME payments may have been made for beneficiaries in a 

Medicare covered SNF stay. 

We previously estimated4 that approximately $11 million in DME payments under Medicare 

Part B were made for beneficiaries in Medicare covered SNF stays during 1992. This more 

general estimate, using a different methodology, includes these payments (as well as payments 

for beneficiaries who have exhausted their Medicare benefits and/or whose stays are paid by 

Medicaid, private insurance, or out of pocket). 

“ The certification status of the nursing home appears to have little impact on DME billing. 

We looked at the certification status of the nursing home and found little variation in the 

levels of DME billing. This was regardless of whether the nursing home was Medicarecertified, dually certified for both Medicare and Medicaid, or Medicaid-only certified. 

� 19 percent of the DME payments were made within one week of discharge or death. 

While DME should not be billed during a “skilled” nursing home stay, some of the billing 

may have been for DME intended for use at the beneficiary’s residence following his or her 

discharge from the nursing home, In reviewing payments occurring within a short time of 

discharge, we found $6.8 million (or 19 percent) billed within seven days of leaving the 

nursing home. However, we were unable to determine if the person went home or to another 

inpatient facility. We do know that one-half million dollars can be attributed to residents that 

died. Figure 2 shows the allowed charges within 7 days of discharge. 

4

--

Allowed 

Ii%%% 

2“51 

2.0 

1.5 

1.0 

0 

I 

I Source: 

19 Percent of DME Was Provided 

Within One Week of Discharge 

$2.3 

““”””””””””= 

----$1,2 2------------------------------------

$1.0 

m. . . . . . . . . w

1 2	 3 4 5 6 7 

DAYS TO DISCHARGE I 

1992 nursing home sample I 

Figure 2 

No effective mechanism currently exists to ensure the appropriate payment of durable 

medical equipment under Medicare Part B for beneficiaries in nursing homes. 

As indicated earlier, a skilled nursing facility is specifically excluded from consideration as a 

beneficiary’s residence, for the purposes of payment under Part B for durable medical 

equipment. 

While policy is clear that a resident in a Medicare covered skilled nursing facility @NF) stay 

would not be eligible for coverage of durable medical equipment under Part B (even though 

some such payments were still made, as discussed earlier), Medicare currently has no 

mechanism which otherwise determines when a beneficiary is residing in a skilled nursing 

facility. 

As indicated earlier, prior to passage of OBRA 1987, Medicare used certification tiorrnation 

to make the distinction between skilled nursing facilities and other facilities. The OBRA 

1987 eliminated this distinction and the mechanism Medicare used to make payment 

decisions. No new mechanism has been developed to replace it. 

Without a formal mechanism for defining whether, or under what conditions, DME is covered 

in a nursing home, carriers were forced to adopt their own policies. Resulting policies 

generally denied DME coverage if provided in a nursing home setting. Generally, this denial 

was based on the supplier’s designation of the place of service as a “nursing home.” This 

5

policy is confkned by our finding that virtually none (0.4?40)of the payments in our sample 

were coded with place of service “nursing home.” 

In 99 percent of instances where DME payments were made, suppliers submitted claims with 

the place of service coded as “home” (91 percent) or “other unlisted facility” (nine percent). 

We cannot say whether suppliers coded the place of service in this way in order to avoid a 

denial of the claim, or represented the place of service as home because they in fact 

considered it a beneficiary’s residence. 

6

RECOMMENDATIONS


In attempting to address this problem, we originally developed a series of options regarding 

coverage policy for durable medical equipment in nursing homes. One of those options, 

which we supported most strongly in our &all report, was to exclude payment for any piece of 

durable medical equipment provided to any resident in a nursing home. We originally 

believed that this option should be pursued primarily because of its administrative simplicity 

and because it reflected a policy which holds nursing homes responsible for routine items 

needed by their residents. After considering both HCFA and ASPE comments on the draft 

report expressing concerns about the impact of such a policy on beneficiaries and consistency 

with current legal authority, we have chosen to eliminate this recommendation in our final 

report. 

Rather, we agree with both HCFA and ASPE that this issue should be considered within the 

confbes of current law. And while we appreciate and thank ASPE for its point about the 

distinction between routine and nonroutine items, which we agree can be important, our 

reading of current law would prohibit any DME payment made on behalf of a resident of a 

nursing facility primarily engaged in providing skilled nursing care. Further, if such a 

distinction could be made, it would be easier to make based on beneficiaries’ specific 

circumstances and the amount, duration and scope of need, than on categories of equipment. 

We believe that to make such a distinction based on categories might invite the routine billing 

of “non-routine” DME in order to qualifi for payment under Part B, and potentially create an 

escalation in DME payments for residents in nursing homes. 

Thus, we recommend that HCFA develop and implement a workable and fair definition 

of what constitutes a skilled nursing facility, for the purposes of payment of DME under 

Part B. Itmight be that such a definition could implement a policy such as that discussed in 

our draft report, in which Medicare certified facilities are designated as skilled nursing 

facilities (whether or not they are also certified by Medicaid). However, other definitions 

might be more appropriate. 

In any event, such a definition should reflect the principle that (1) skilled nursing facilities are 

responsible for the provision of a basic range of services to the residents under their care, and 

(2) a skilled nursing facility cannot be considered a home for the purposes of DME coverage 

under Medicare Part B, 

We also suggest that HCFA consider a provision allowing for case-by-case, beneficiary based 

determinations of special circumstances; grandfathering in current beneficiaries receiving 

DME under Part B while in a nursing home, to avoid disruption in their services. We agree 

with ASPE that the policy should allow billing for DME provided in the last week of a 

resident’s nursing home stay, regardless of payer, to facilitate discharge planning when the 

DME is intended for use in the resident’s home. 

7

We have previously recommended that HCFA institute appropriate payment safeguards 

to ensure that payments for DME are not made for beneficiaries in a Medicare covered 

SNF stay. The HCFA agreed. We refer readers to our report, “Payment for Durable Medical 

Equipment Billed During Skilled Nursing Facility Stays,” for more discussion of the options 

we presented and HCFA’Sresponse. 

Cost Savings: The exact amount of savings that could be obtained by the Federal 

Government in implementing this recommendation depends on a number of factors, including 

the definition of skilled nursing facilities, programmatic controls implemented to expressly 

allow or prevent cost shifting to other parts of the Medicare program, the Medicaid program, 

or beneficiaries. Additionally, controls must be adequate to detect incorrect place of service 

coding by suppliers. 

A rough estimate of savings can be derived as follows. From the total $35 million in allowed 

amounts, we subtract $6.8 million for payments made in the last week of a nursing home stay. 

Of the remaining $28 million, roughly a third is addressed by implementing our previous 

recommendation regarding nonpayment during Medicare covered SNF stays, for a savings of 

$9.3 million. Assuming a new policy defining most nursing facilities as “skilled” 

(conceivable given marketplace conditions and law which have increased nursing facility 

capacity and staffing) would affect 75 percent of billings, savings for the remaining $19 

million would be $14.2 million. (These savings are shared by beneficiaries in copayments.) 

Thus, a total of $23.5 million savings (of which 80 percent is saved by the program and 20 

percent by beneficiaries) accrues by implementing both this recommendation and the prior 

recommendation we made regarding payment during Medicare covered SNF stays in this 

scenario. 

COMMENTS 

The key points of HCFA and ASPE comments are discussed in the introduction to our revised 

recommendation. The full text of their comments are provided in Appendix B. Since we 

revised the recommendation, HCFA’Sproposed action to revise and improve the Medicare 

criteria for identifying a “skilled” facility would implement the action which we agree is 

appropriate. 

8

ENDNOTES


1.	 While this report deals with DME services provided in nursing homes, a companion 

report, Payment for Durable Medical Equipment Billed During Skilled Nursing 

Facility Stays (OEI-06-92-00860) discusses DME services solely in the Medicare 

SNF environment. 

2.	 Until the nursing home reform of OBRA 1987, the Health Care Financing 

Administration administratively denied coverage of DME in nursing homes by the 

rules used to determine “primarily engaged in” (PEI). The PEI question was 

determined by a mathematical formula identifying the ratio of caregivers to nursing 

home beds or residents (e.g., if more than 1 caregiver to 15 residents, then the 

facility was deemed to be a PEI/ICF nursing home regardless of whether any skilled 

or rehabilitation patients were in the nursing home.) As a result, most Medicaid 

certified nursing homes providing (then) ICF level care could not qualify as a 

“home” under the administrative rules. 

As a result of OBRA 1987, certification is no longer based on levels of care and 

specific staffing ratios. Instead, facilities providing skilled care and/or rehabilitative 

services are categorized along with facilities that formerly were categorized as ICFS. 

Any nursing home providing any of these three types of care is now considered a 

nursing facility under the Federal statute affecting the Medicaid program. However, 

we learned that not all States have reorganized their State programs along these 

lines. Specifically, several States continue to license nursing home beds as skilled, 

intermediate, sheltered living, and other categories. 

3.	 At the 95 percent cotildence level, we project Part B charges for DME between 

27.4 million and 43.4 million were made in 1992 on behalf of residents during 

nursing home stays. 

4.	 Estimate can be found in our report entitled, “Payment for Durable Medical 

Equipment Billed During Skilled Nursing Facility Stays” (OEI-06-92-00860). 

9

APPENDIX A


PART B CLASSIFICATION OF DME SERVICES 

Components of DME and Applicable HCPCS Codes 

Hospital Beds and Accessories 

BedCodes: E0250,0251,0255,0260,0265,0266,0294,0296 

BedAccessoryCodes: E0272,0277,0310,0325 

Oxygen Equipment and Supplies 

Codes: EO41O,430,435,457, 1400,1401,1402,1403,1404,QO036, 

0040,0042,0043,0046 

Mist Code: E1399 

OxygenSupplyCodes: E0457 

Wheelchairs and Accessories 

WheelchairCodes: E1031,1060,1083,1084,1085,1086,1087, 

1088,1089,1090,1092,1093,1100,1130,1140, 

1150,1160,1170,1180,1213,1220,1221,1222, 

1223,1224,1240,1250,1260,1270,1280,1285, 

1290,1295,1296,1297,1298 

WheelchairAccessoryCodes: E0950,953,959, 961,963,971,978, 

990,991,992,993,994, 996,997, 

1069 

Walkers


Codes: E0130, 0135,0141,0143,0147


Canes and Crutches 

codes: Eoloo, 0105,0114 

Commodes


Codes: E0163, 0164,0165,0166,0167


Seat/PatientLifts 

Codes: )30627,0630 

Pressure Pad or Cushion or Mattress 

Codes: )30176,0178,0180,0181,0182, 0184,0185,0186,0191, 0192, 

0193,0196,0199 

A-1

--

APPENDIX B


*.4.,, 

..- . . 

> 

.-

‘...‘4“.,.%,.

c


w: 

ASSISTANT SECRETARY FOR PLANNING AND EVALUATION 

COMMENTS 

DEPARTMENT of HEALTH a HUMAN SERVICES€ OIhmdhw Ssm-v 

~ D.c -l 

JW16~ 

CIaudia Cooley 

Executive !hfxo~ 

I:ROI! . .Uting Assistant- tbr 

Phnirqg ond Evalusition 

. —. 

B-1

m a nursing home payment rate. .4s a resuh, we are unable to identi~ which Medicare Part B 

DhlE payrncntsarc made for routine nu~ing home sewims(i.e.,serviecsthat shouldbe incltid 

in a nursing home paymem rate) and which sre no~ Further, while we understand current law 

Iimi[s Part B DME to persons who are residing in [heir ‘%ome~ it is not clear when a numing 

home residcmt(i.e., in non-PartA covered stay} is permsndy residing in such a fidity, and, 

thus, is at home in the fkdity, versus a resid~t chat is reeeiving shon-term care and intends to 

rtm.umhome. ‘Io e~wc t&t kneficizi~ ~ @ iqpmpria~iy denied n~ed cOV~C, ~ 

twlicy prohibiting Part B IX4E payments to all nursing home residents would have to ~C 

hat Part B DME piiymerm are for rourine or core mtrsing ho~ semiccs and that there are no 

.ong-terrn, p~antilt nursioghome re~dm~ for ~~ be n~ing home ~, in tit, become 

their home. We do not be{ievethat these uc accuraN~~io~ Fuxther,we are concemcd 

lhdt denying Medicare Part B Di%lEpaymen~ to nursinghome~id~~ couldhave a negat.ivc 

[f*t on their quality of care. llerefo~ we bdieve, at leastin the interim the Department 

shotid presume that nursing~o~ ~iden~ in a ~on.p~ A~v~ SW s~y we rcsidlng in 

their “home’” and permit l’art B Dh& payments on behalf of such residents in need of these 

supp~ies, We recommend the OIG study this issue and recommend a categorization of 

equipment routinely covered in nursing home payment rates and DIMEnot routinely included in 

such rates. A review of State Medieaklnursingfheilhypayment methods may provide some 

insight into this issue. 

Finally, we recommend that the emclusion of thk report clearly indicate that Part B DME 

payments made within a week of dke.barge for ~ nw~ home resident (regardkss ofpaycr) 

who is c]igible for Part B are appropriateto faci[i~ dischargeplanning. 

I 1 

Part B Services in Nursing Homes I 

We rccmnmend includtig in the Bae@ound seet$n a discussion of the circ UMSWLCH under 

which Medkare PartB paymentson behalfof nursinghomeresidentsare appropri~, h 

diflicuhies in idcntifyhg when such payments are~inappropriat~and the variable impaot that 

proposals to limit MediearePartB paymentswill@veon difFerentnursing home residmna (i.e.. 

~ose k a Part AcoveredSl@stay, those who mpg and those who are also e@ible for 

Medicaid) and on State and Federal govesmmmts I 

We understand hat the OIG intends to umkrtak j study of Stale Medicaid nursing fm%lity 

payment rates and methods. We agree that such a study is needed in order to undcrstartd when 

dupliae payments have been made (i.c, Medkare and Me&aid both have paid) and when 

Medicaid cost sharing is inappropriate. 

B-2

HEALTH CARE FINANCING ADMINISTRATION 

COMMENTS 

,, $twc,’ 

*0+ +, 

** 

:

: DEPARTMENT OF HEALTH& HUMAN SERVICES Health Care Financing Administration 

s 

8 -g 

% .,,,M> The Administrator 

Washington, D.C. 20201 

DATE DEc1519m 

TO June Gibbs Brown 

FROM 

Administrator ~U 

SUBJECT OffIce of Inspector General Drafi Report: “Durable Medical Equipment . . Paymentsin Nursing Homes,”(OEI-&L92-00862) 

We reviewed the above-referenced report which examines how suppliers ensure their 

durable medical equipment payments will be made by submitting claims that incorrectly 

code the place of sewice as “home” or “othef’ rather than “nursing home.” Attached are 

our comments on the report recommendation. 

Thank you for the opportunity to review and comment on this draft report. 

Attachment 

B-3

Comments of the Health Care Financing Administration (HCFA) on Office of In.mector 

General (OIG) Dra.flReDort “Durable Medical Euuit)ment Pavments in Nursing Homes.” 

(OEI-06-92-00862j 

OIG Recommendation


OIG recommends that HCFA never pay for durable medical equipment (DME) suppIies


or equipment for any patient residing in a Medicare or Medicaid-catified nursing home,


regardless of level of care, by implementingthe followingactions:


Clearly designate that no Medicaid-or Medicare-certiiied facility, 

regardless of the patient’s level of care, is a patient’s “home” for DME 

payment purposes. 

Consider developing an additional Common Working File edit to ident@ a 

possible nursing home stay (in addition to the Medicare extended care 

benefit stay alert already in plan) overlapping any DME claim. 

Require Medicaid agencies to deny Medicare crossover ckirna for DME 

(crossover refers to claims processed and paid by Medicare for dual 

eligibles, for whom Medicaid is required to pay the coinsurance and 

deductible for the beneficiary) unless the State has determked the ikcility 

qualifies as a residence according to the previously stated criteria. Further, 

re@re Medicaidagenciesto report to HCFAall denialsinvolvingDME for 

dually eligible nursing home residents. 

. Direct contractorsto informnursinghomes of their status for DME 

payment purposes, and routinely communicate to suppliers that DIMEis not 

covered if provided to nursing home residents (clearly specifying that the 

DME can only be provided on or after the date of discharge to the 

beneficiary’s home fromthe nursinghome). 

HCFAResnonse


The above recwmrnendationwould imposea blanketPartB exclusion of DME payment in


all Medicare skilled nursing fkilities (SNF) and all Medicaid nursing fkilities (NF).


However, as the law is currently wri~ we cannot do this for all Medicaid NFs (see


attached).


We do hope to sirnpl@ this process considerablyby introducinga set of rebuttable 

administrativepresumptions undera proposedrule (BPD-834-P) thatwe are currently 

developing. The proposed rule would revise and improvethe Medicare criteria for 

identifying a “skilled facility” (i.e., a nursinghomemeetingthe basic definition of a SNF 

B-4

. . 

Medicare Pati B Coverwe Escluskn for Durabk MedicalEauipment 

(DME} tirnkbed m a Skilled Nurahu FaciKtv(~ 

o	 ‘l%cMc&amlaw(atsection 1861(n)ofthe SocialSeaxity Act(tk Act) providesfor 

PtiBm~ofD~~~ fm&ka_s-P=+*tit 

bmlleiaallidtutimthat meetsthe “ oft& Act at sections1861(e)(l)(fbr 

-) ~ 18f90#(l) (tl!rSNFs).~ 

o	 Section 1819(a)(l) (kncziy aec.tionI&l(j)(l)) ofthe A4 in- &&s an ‘SNF” 

-~w~ “ Uutiaprimarilyeugage dhlp-akiuednursing 

(dauae (A)) orrahabiiitatka services (clause (33))to its rasideats. 

+	 lbia~huhaivasNFd dinitionomitathes peci&lnomrwtridive . . emtamedrntbemnainckof aectkm1819+@nmeds tbatsn . . . m8&tutumustmeet rnaderto@kipate intk Medicampgramaaa 

Q!a#&4~. 

+ ~rnexcl&ngPartB's DMEcovcmgeilumWNFs"aadc6mxiinaection 

18M(8)(l~C4mgmaaintemkdfbrthisadlniontoqqllymtaaiyto . . . . ~sNP*butakotohmmutka *M~ . . . pmkl@mgin~ doprolidethetype ofcaXedmxibed rnthataectionof 

UU!lmu. 

B-6

OPERATION RESTORE TRUST 

AND NURSING HOMES 

On May 3, 1995, President Clinton announced a new anti-fraud initiative undertaken by the


Department of Health and Human Services. Led by the OffIce of Inspector General in


partnership with the Health Care Financing Administration and the Administration on Aging,


this project utilizes the expertise of many Federal, State, and private sector


personnel. They will direct their combined energies to crack down on Medicare and Medicaid


fraud, waste, and abuse initially associated with home health agencies, nursing homes,


hospices, and durable medical equipment suppliers. They will work closely with the


Department of Justice and an intergovernmental team comprised of other Federal and State


personnel.


In addition to identi~ing and penalizing those who defraud the government, the project is


designed to alert the public and industry to the ilaud schemes or vulnerable areas in policy.


To aid in this endeavor, the OffIce of Evaluation and Inspections will work within the OffIce


of the Inspector General to perform its primary mission of conducting evaluations that provide


timely, usefid, and reliable information and advice to the pertinent decision makers involved


in the demonstration. To this end, the following reports on nursing homes have been


completed:


Medicare Services Provided to Residents of Skilled Nursing Facilities (OJV-06-02-00863) 

Medicare Payments for Nonprofessional Services in Skilled Nursing Facilities (OEI-06-92-O0864) 

Payment for Durable Medical Equipment Billed During Skilled Nursing Facility Stays (OEI-06-92-

00860) 

Part B Services in Nursing Homes -An Overview (OEI-06-92-00865) 

Enteral Nutrient Payments in Nursing Homes (OEI-06-92-00861) 

Durable Medical Equ@ment Payments in Nursing Homes (OEI-06-92-00862) 

Ongoing evaluations are being conducted related to Medicare payments for residents of 

nursing homes for such services as mental health therapy, wound care, imaging, Jwspice, 

ambulance transportation, and nail debridement. Also under review are duplicate payments 

between Medicare and Medicaid for nursing home services.