Department of Health and Human Services 

OFFICE OF 

INSPECTOR GENERAL 

JUNE GIBBS BROWN 

Inspector General 

FEBRUARY 

OEI-02-97-00081 

ORDERING MEDICARE EQUIPMENT 

AND SUPPLIES 

Physicians’ Perspectives 

1999 
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 
EXECUTIVE SUMMARY 

PURPOSE 

To report perceptions of physicians about the process of ordering medical equipment and 

supplies for their Medicare patients. 

BACKGROUND 

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 physician's order or certificate of medical necessity which 

must be kept on file by the supplier. 

We are undertaking a series of studies to look at the role of the physician in certifying 

these non-physician services. This first report is about physicians’ perceptions of the 

certification process for durable medical equipment, prosthetics, orthotics, and supplies 

(DMEPOS). A subsequent report will look at whether the relationship between the 

physician and the patient affects the certification of the medical equipment and supplies 

provided. We based this report on the analysis of questionnaires sent to physicians who 

certified a sample of 1000 medical equipment or supply items. 

FINDINGS 

Two-thirds of Physicians Are Satisfied With the Current Process of Ordering 

Medical Equipment and Supplies; One-fifth Are Not 

When asked to describe their level of satisfaction with the current Medicare process of 

ordering medical equipment and supplies, two-thirds of physicians (68 percent) say they 

are either satisfied or very satisfied with the current process. Approximately one-fifth (22 

percent) of physicians are either dissatisfied or very dissatisfied with Medicare’s ordering 

procedure. Regardless of satisfaction, many physicians suggested changes such as making 

the ordering process easier and less time consuming. 

Ordering Medicare Equipment 1 OEI-02-97-00081 
Information About Medicare Requirements Plays a Significant Role in Physician 

Satisfaction Rates 

Seventy-nine percent of physicians who report receiving sufficient information about the 

requirements for ordering medical equipment or supplies are satisfied. Of physicians who 

report not receiving enough information, only 46 percent are satisfied. Almost onequarter of physicians surveyed requested additional information about the ordering 

process. The most commonly requested information includes more detailed rules and 

specific criteria regarding Medicare coverage and eligibility. Seventy-five percent of 

physicians reported they have never received any educational materials from their 

Medicare carrier concerning the equipment and supply ordering process. 

Medical Specialty Also Plays a Role 

Pulmonary disease specialists express the most dissatisfaction with the process. Almost 

one-half (43 percent) of them are dissatisfied as compared to the overall dissatisfaction 

rate of 22 percent. 

Half of Physicians View the Certificate of Medical Necessity as Effective; One-fifth 

Do Not 

While 56 percent of physicians say the certificate of medical necessity is effective, 21 

percent say it is not effective and another 23 percent don’t know. Physicians view the 

certificate of medical necessity as an effective monitor of fraud and abuse and quality of 

care. Sixty-seven percent of physicians report that on the average, it takes less than 15 

minutes to complete and sign a certificate. Another 31 percent report that this procedure 

takes somewhere between 15 and 30 minutes. 

Some Physicians Have Sometimes Refused to Sign Certificates of Medical 

Necessity 

Fifty-two percent of physicians say they have at some time refused a request to sign a 

certificate of medical necessity; however, two-thirds of these physicians say this rarely 

happens. Of the physicians who have refused to sign a certificate, the supplier has initiated 

the request approximately one-half of the time. The predominant reason physicians 

refused to sign these requests is because the patient did not need the equipment or supplies 

listed on the certificate. Additionally, physicians say their refusal is often because they did 

not know the patient. 

Ordering Medicare Equipment 2 OEI-02-97-00081 
Some Have Encountered Problems When Ordering Medical Equipment and 

Supplies 

Twenty-one percent of physicians encounter problems when they order medical equipment 

and supplies for their patients. Among these physicians, the problems include 

inappropriate equipment and supplies, upgrading and downgrading of equipment and 

supplies, and patients getting the wrong equipment and supplies. Further, physicians also 

see unclear rules for ordering medical equipment and supplies as a problem. 

RECOMMENDATION 

We recommend that the Health Care Financing Administration strengthen its efforts to 

educate physicians regarding their ordering of medical equipment and supplies. The 

following approaches are suggested: 

< 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 

physicians include the coverage and payment rules and cost of the equipment for 

the specific equipment or supplies ordered. 

COMMENTS 

We received comments on the draft report from HCFA. They generally concur with our 

recommendation. Based on their comments we changed one of the suggested approaches 

in our recommendation on providing physicians with information about ordering medical 

equipment and supplies by expanding it to apply to all physicians not just new ones. The 

HCFA’s comments are reproduced in Appendix E. 

Ordering Medicare Equipment 3 OEI-02-97-00081 
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 

recommendation to clarify that the information about coverage and payment rules had to 

do with the specific equipment and supplies ordered rather than general guidelines. 

Ordering Medicare Equipment 4 OEI-02-97-00081 
TABLE OF CONTENTS

PAGE

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

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

FINDINGS

Overall Satisfaction ................................................... 10

Need for Information about Medicare Requirements .......................... 11

Specialty Plays a Role ................................................. 12

Effectiveness of Certificates of Medical Necessity ............................ 13

Physicians Refuse to Sign Certificates .................................... 14

Problems Encountered in Ordering Supplies and Equipment ..................... 14

RECOMMENDATION .................................................... 16

APPENDICES

A: Confidence Intervals for Key Survey Questions ............................ 17

B: Non-respondent Analysis ............................................. 20

C: Statistical Tests for Key Findings ....................................... 24

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

E: Comments on the Draft Report ........................................ 33

Ordering Medicare Equipment 5 OEI-02-97-00081 
INTRODUCTION

PURPOSE

To report perceptions of physicians about the process of ordering medical equipment and 

supplies for their Medicare patients. 

BACKGROUND

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 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 physician 

certification and re-certification statements, and for keeping them on file for verification. 

We are undertaking a series of studies to look at the role of the physician in certifying 

these non-physician services. This first report 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, incontinence, enteral and parenteral nutrition, and wound care supplies. 

For the purposes of this report, we will refer to DMEPOS as medical equipment and 

supplies. A subsequent report will look at whether the relationship between the physician 

and the patient effects the certification of the medical equipment and supplies provided. 

Medicare Expenditures for Medical Equipment and Supplies

According to published Health Care Financing Administration statistics (HCFA), in 1995, 

Medicare paid an estimated $4.7 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 in an inpatient setting, home health agencies, and skilled nursing facilities. 

Part B, supplementary medical insurance, covers a wide array of non-institutionalized 

care. These include physician services, medical equipment and supplies, outpatient 

hospital services, diagnostic laboratory tests, x-rays, and ambulance services. 

Ordering Medicare Equipment 6 OEI-02-97-00081 
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 those for medical equipment and supplies, are 

considered carriers. 

Medicare Durable Medical Equipment Regional Carriers

In October 1993, HCFA began processing claims for medical equipment and supplies 

through four Durable Medical Equipment Regional Carriers (DMERCs). These four 

carriers are responsible for all 50 States, the District of Columbia, and Puerto Rico. These 

entities are responsible for ensuring that coverage requirements 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 that are covered by Part B and are 

processed by the DMERCs. 

Certification of Medical Equipment and Supplies

Medicare pays for medical equipment and supplies that are ordered or prescribed by a 

treating physician and are appropriate for the patient’s 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 they bill to Medicare. 

In addition to HCFA's requirement that suppliers have a physician's order or prescription 

on file, HCFA requires that certain medical equipment and supplies have a document 

called a certificate of medical necessity (CMN). It states 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. 

The items within the following 14 medical equipment and supply groups require a CMN: 

� hospital beds

� support surfaces 

� lymphedema pumps

� Transcutaneous Electrical

Nerve Stimulators (TENS) 

� seat lift mechanisms

� parenteral nutrition

� home oxygen therapy

� motorized wheelchairs 

� manual wheelchairs 

� osteogenesis stimulators 

� Continuous Positive Airway 

Pressure (CPAP) devices 

� power operated vehicles 

� enteral nutrition 

� infusion pumps 

Ordering Medicare Equipment 7 OEI-02-97-00081 
The CMNs requirements were revised in October of 1995. They were standardized and 

reformatted by HCFA and the DMERCs. Each of the aforementioned medical equipment 

and supply groups now have separate CMNs. 

CMNs now have four sections: A, B, C, and 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 the supplier, but may be completed and signed by a nonphysician clinician, or a physician’s employee. Section C contains information regarding 

the cost of the device and is to be filled out by the supplier. Section D must be signed by 

the physician certifying the medical necessity of the device and that the information in 

Section B is correct. With certain exceptions, this certifying physician cannot have any 

financial or contractual relationship with the supplier of the item. As of 1997, the 

physician signing section D must also be the patient’s treating physician. 

Office of Inspector General Activities

There have been many OIG efforts related to the utilization of non-physician services, 

including 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 the plan of home health care had a preexisting relationship with the patient for whom the plan was designed. 

Other related OIG work includes an audit of Medicare 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 auditors 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 HCFA’s 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 do not. We then 

further stratified the CMN codes between oxygen and non-oxygen items. This ensured 

that oxygen related line items were not over-represented in our sample. 

Within the non-CMN stratum, we selected medical equipment and supply line items from 

HCPCS codes 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 line items in 1996 and 99 percent of the total monetary amount 

Ordering Medicare Equipment 8 OEI-02-97-00081 
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. 

Physician Survey

We mailed a questionnaire to the physicians certifying equipment for the 1000 line items in 

our sample in November 1997 to gain their perceptions of the certification process. 

Physicians responded to questions about their level of satisfaction with the process for 

ordering medical equipment and supplies, their experiences with CMNs, and whether or 

not they would suggest any changes to the current process. Response estimates and 

confidence intervals for key questions in our survey are listed in Appendix A. 

We conducted a second and third mailing to non-respondents and 695 questionnaires were 

returned to us, for an overall response rate of 69 percent. Our response rates between 

strata were almost identical: 70 percent for non-CMN items (strata 1, 2, and 3) and 68 

percent for CMN items (strata 4 and 5). We then weighted the data collected from these 

695 questionnaires by stratum. 

Of the 305 physicians who did not complete the questionnaire, 243 physicians did not 

respond at all. Of the remaining 62 physician non-respondents, 38 physicians could not be 

located and 24 physicians were retired and refused to fill out the survey. We conducted a 

non-respondent analysis of all physicians in our sample by analyzing several variables that 

may have influenced responses. See Appendix B for this analysis. 

This inspection was conducted in accordance with the Quality Standards for 

Inspections issued by the President’s Council on Integrity and Efficiency. 

Ordering Medicare Equipment 9 OEI-02-97-00081 
 

Ordering Medicare Equipment 10

FINDINGS

Two-thirds of physicians are satisfied with the current

process of ordering medical equipment and supplies; Onefifth are dissatisfied

Sixty-eight percent of physicians are satisfied; twenty-two percent are

dissatisfied

When asked to describe their level of satisfaction with the current Medicare process of

ordering medical equipment and supplies, two-thirds of physicians (68 percent) say they

are either satisfied or very satisfied with the current process (See Figure A below). 

Approximately one-fifth (22 percent) of physicians are either dissatisfied or very

dissatisfied with Medicare’s ordering procedure. 

opinion.

OEI-02-97-00081

The remaining 11 percent expressed no
According to physicians, the process of ordering medical equipment and supplies generally 

occurs in several different ways. Most often the physician gives a prescription to the 

patient who takes it to the supplier. When the patient is in the hospital, the physician 

usually contacts the hospital discharge planner or social worker who orders the equipment 

or supplies. When the patient is receiving home health care, the physician may discuss the 

equipment or supplies with the home health agency person who actually places the order. 

Most physicians indicate that they, along with the patient or patient’s family, make the 

decision about what equipment or supplies the patient needs and which supplier to get it 

from. 

Most physicians (61 percent) also report that they find out whether the patient received 

the equipment or supplies through some sort of follow-up with the patient. More than half 

(54 percent) of the physicians describe the needed item in detail, while just over onequarter (27 percent) say that the supplier makes the decision about the particular brand of 

item to be furnished. 

Regardless of satisfaction, many physicians suggest changes to the current Medicare 

process for ordering medical equipment and supplies. Of the 22 percent of physicians who 

are dissatisfied, almost all suggest improvements to the present ordering system. 

Physicians report that they would like a simpler and less time consuming durable medical 

equipment ordering process. For example, one physician responded, “it is extremely 

difficult to give each request careful attention.” However, physicians also report concerns 

that there are not always enough safeguards in the process. One physician summed these 

contrasting opinions with his statement, “It’s never easy for either side when it comes to 

paperwork, but the paper trail is necessary to prevent abuses.” 

Physicians’ satisfaction levels do not differ significantly based upon the DMERCs that 

process their claims for medical equipment and supplies. Further, satisfaction levels are 

similar among the four US geographic regions that are designated by the Census Bureau: 

Northeast, Midwest, South, and West. Finally, physicians who order equipment that 

requires a certificate of medical necessity (CMN ) have identical satisfaction rates (79 

percent) as physicians who do not. See Appendix C for this analysis. 

Information about Medicare requirements plays a significant

role in physician satisfaction rates

Physicians that receive sufficient Information are more likely to be satisfied 

Seventy-nine percent of physicians who report receiving sufficient information about the 

requirements for ordering medical equipment or supplies are satisfied. Of physicians who 

report not receiving enough information, only 46 percent are satisfied. 

Ordering Medicare Equipment 11 OEI-02-97-00081 
Almost one-quarter of physicians requested additional information about the ordering 

process. The most commonly requested information includes more detailed rules and 

specific criteria regarding Medicare coverage and eligibility. Some physicians suggest that 

doctors who are new providers should get a packet of information on the Medicare 

process for ordering durable medical equipment. One respondent requested that a manual 

be distributed to all physicians about the certification of Medicare covered durable medical 

equipment. 

Physicians also report the need for additional information regarding the criteria for 

ordering equipment and supplies. In fact, 75 percent of physicians reported they have 

never received any educational materials from their Medicare carrier concerning the 

equipment and supply ordering process. One physician echoed the sentiments of many 

with his comment, “I am unclear as to the standards to be applied and documentation 

required. I would like more education.....” 

Medical specialty also plays a role

Pulmonary disease specialists are the most dissatisfied

Pulmonary disease specialists express the most dissatisfaction with the process. Almost 

one-half (43 percent) are either dissatisfied or very dissatisfied, as illustrated in Table A 

below. Reasons cited for physicians’ dissatisfaction include too much paperwork, 

complex forms, and time constraints. One pulmonologist expressed these thoughts, “I am 

being asked to re-document the need for equipment to treat chronic illnesses which never 

go away. Please stop making us do this over and over again.” 

General surgeons and ophthalmologists are the most satisfied among all specialties. Only 

5 percent of general surgeons and 6 percent of ophthalmologists expressed some degree of 

dissatisfaction. The dissatisfaction rate of the remaining physician specialties ranges 

between 17 percent and 29 percent. This is close to the overall physician dissatisfaction 

mean of 22 percent. 

Ordering Medicare Equipment 12 OEI-02-97-00081 
Table A 

Physician Dissatisfaction By Specialty

Specialty Percent Dissatisfied

Pulmonary Disease 43% 

Physical Medicine and Rehabilitation 29% 

Family Practice 28% 

Cardiology 25% 

Internal Medicine 22% 

Overall Specialty Average 22%

General Practice 22% 

Other 19% 

Orthopedic Surgery 18% 

Ophthalmology 6% 

General Surgery 5% 

Half of physicians view the certificate of medical necessity

as effective

While 56 percent of physicians say the CMN is effective, 21 percent say the CMN

is not effective and another 23 percent don’t know

Physicians in support of the CMN say it allows them to review the condition of their 

patients. The form reminds physicians to periodically check their patients’ status and 

analyze current and future equipment needs. Further, physicians point to the CMN as an 

effective monitor of fraud and abuse. One physician stated, “I believe that the vast 

majority of times the CMN assures the proper use of medical equipment.” 

Physicians who report the CMN as not being effective question whether or not the form 

assures improved utilization. These physicians also suggest that CMNs present additional 

unnecessary paperwork burdens and are often cumbersome. 

Ordering Medicare Equipment 13 OEI-02-97-00081 
However, 67 percent of physicians report that on the average, it takes less than 15 minutes 

to complete and sign a CMN. Additionally, another 31 percent report that this procedure 

takes somewhere between 15 and 30 minutes. Only 2 percent of physicians report 

spending more than thirty minutes to complete and sign a CMN. 

Physicians report the supplier sometimes fills out Section B

Section B of the CMN lists the clinical justifications or the medical necessity of the device. 

This section is not to be filled out by the supplier. This section may be completed by a 

non-physician clinician or a physician’s employee as well as the physician. When the 

physician signs the CMN, he agrees to the accuracy of the information provided in Part B. 

When asked who usually fills out Section B of the CMN, physicians usually gave more 

than one answer. One-fourth of physicians (24 percent) responded that the supplier 

sometimes fills it out. Additionally, 78 percent reported that the physician sometimes 

completes this section. Other responses include therapists or home health agency staff. 

Some physicians have sometimes refused to sign

certificates of medical necessity

Half of physicians have refused to sign a CMN at least once

While 52 percent of physicians say they have at some time refused to sign a CMN request, 

two-thirds of these physicians say this rarely happens. Of the physicians who have refused 

to sign a CMN, the supplier has initiated the request approximately one-half of the time. 

The predominant reason physicians refused to sign these requests is because the patient 

did not need the equipment or supplies listed on the CMN. Additionally, physicians say 

their refusal is often because they did not know the patient. 

Some have also encountered problems when ordering

medical equipment and supplies

One in five physicians have encountered problems when ordering equipment 

and supplies

Twenty-one percent of physicians encounter problems when they order medical equipment 

and supplies for their patients. Of these physicians, problems include inappropriate 

equipment and supplies, upgrading and downgrading of equipment and supplies, and 

Ordering Medicare Equipment 14 OEI-02-97-00081 
providing the wrong equipment and supplies. Physicians believe that inappropriate 

equipment and supplies and the wrong equipment and supplies are the greatest problems. 

Further, physicians request clearer ordering rules and detailed descriptions of equipment 

and supplies they order. One physician stated, “I would appreciate any updated equipment 

need criteria to ensure who qualifies for what equipment and what specific criteria must be 

met during the ordering process.” 

Ordering Medicare Equipment 15 OEI-02-97-00081 
RECOMMENDATION 

We recommend that the Health Care Financing Administration strengthen its efforts to 

educate physicians regarding their ordering of medical equipment and supplies. The 

following approaches are suggested: 

< 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 

physicians include the coverage and payment rules and cost of the equipment or 

supplies for the specific equipment or supplies ordered. 

COMMENTS 

We received comments on the draft report from HCFA. They generally concur with our 

recommendation. Based on their comments we changed one of the suggested approaches 

in our recommendation on providing physicians with information about ordering medical 

equipment and supplies by expanding it to apply to all physicians not just new ones. The 

HCFA’s 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 

recommendation to clarify that the information about coverage and payment rules had to 

do with the specific equipment and supplies ordered rather than general guidelines. 

Ordering Medicare Equipment 16 OEI-02-97-00081 
APPENDIX A 

Confidence Intervals For Key Survey Questions

We calculated confidence intervals for 14 key questions from the physician questionnaire. 

The response estimate and 95 percent interval are given for each of the following: 

1. How would you describe your level of satisfaction with current Medicare process 

for ordering medical equipment and supplies? 

“Very or somewhat satisfied” response estimate: 68% 

Lower interval: 66% 

Upper interval: 70% 

2. Would you make any changes to the process of ordering medical equipment 

and supplies? 

“Yes” response estimate: 54% 

Lower interval: 51% 

Upper interval: 57% 

3. Have you ever received any educational materials from your Medicare carrier 

regarding the provision of medical equipment or supplies? 

“No” response estimate: 75% 

Lower interval: 73% 

Upper interval: 77% 

4. Do you feel that you have been provided sufficient information with regard to the 

criteria for ordering medical equipment and supplies for Medicare beneficiaries? 

“No” response rate: 23% 

Lower interval: 21% 

Upper interval: 26% 

5. Who primarily decided the patient needed the equipment or supplies? 

“I did” and “the patient or the patient’s family” response estimate: 82% 

Lower interval: 80% 

Upper interval: 84% 

Ordering Medicare Equipment 17 OEI-02-97-00081 
6. Who primarily selected the company that provided the equipment or supplies? 

“I did” and “the patient or the patient’s family” response estimate: 55% 

Lower interval: 52% 

Upper interval: 57% 

7. Generally, how does the process of ordering medical equipment and supplies 

work for you? 

“I give a prescription to a patient who takes it directly to the supplier” 

response rate: 62% 

Lower interval: 60% 

Upper interval: 65% 

8. When you order equipment or supplies, who generally describes the type of item in 

detail? 

“I do” response rate: 54% 

Lower interval: 51% 

Upper interval: 56% 

9. How do you know if your patients receive the equipment or supplies? 

“I follow up/I call or see the patients” response rate: 61% 

Lower interval: 58% 

Upper interval: 63% 

10. Have you ever encountered any problems when ordering equipment or supplies 

for your patients? 

“Yes” response rate: 21% 

Lower interval: 19% 

Upper interval: 22% 

11. In your opinion, is the use of the CMN effective to assure the proper utilization of 

medical equipment and supplies? 

“Yes” response rate: 56% 

Lower interval: 53% 

Upper interval: 58% 

Ordering Medicare Equipment 18 OEI-02-97-00081 
12. Have you ever received a request to sign a CMN that you refused to sign? 

“Yes” response rate: 52% 

Lower interval: 50% 

Upper interval: 55% 

13. What are some of the reasons that you did not sign these requests? 

“The patient did not need the equipment or supplies” response rate: 70% 

Lower interval: 67% 

Upper interval: 73% 

14. Who is most likely to initiate a request that you do not sign? 

“The supplier” response rate: 44% 

Lower interval: 41% 

Upper interval: 47% 

15. On the average, how long does it take you to complete and sign a CMN? 

“Less than 15 minutes” response rate: 67% 

Lower interval: 64% 

Upper interval: 70% 

Ordering Medicare Equipment 19 OEI-02-97-00081 
APPENDIX B 

Non-respondent Analysis

When questionnaires are used to collect data, the results may be biased if non-respondents 

differ from respondents. For this inspection, a physician for whom a questionnaire was 

not received is a non-respondent. A total of 695 questionnaires were completed, for an 

overall response rate of 69 percent. The remaining 305 questionnaires were not 

completed, for a non-respondent rate of 31 percent. Table B illustrates the number of 

responses and the response rate by strata without weights: 

Table B 

Physician Response Rate By Strata 

Strata Number Response Rate 

1 144 72% 

2 152 76% 

3 126 63% 

4 147 73% 

5 126 63% 

Total Respondents 695 69% 

To test for the presence of any non-response bias, we analyzed the variables that might 

influence whether or not a physician would respond to the questionnaire. For the 

physicians in our sample, we examined geographic region, Durable Medical Equipment 

Regional Carriers, and physician specialty. These categorical variables were weighted and 

tested using Chi-square with the appropriate degrees of freedom. The results for this 

analysis are presented in tables B-1, B-2, and B-3. The Chi-square values given in the 

tables provide a test of the difference between the distribution of the respondents and that 

of the non-respondents for the variable of interest. Also provided in the tables are the 

response rate by the different values of the variables. 

Ordering Medicare Equipment 20 OEI-02-97-00081 
Table B-1 

Geographic Region 

Respondents Non-Respondents Total Response 

Rate 

Northeast 62603.61 20% 22827.42 16% 85431.03 73% 

Midwest 75503.61 24% 35977.64 26% 111481.25 68% 

South 128250.45 40% 61614.44 44% 189864.89 68% 

West 50456.71 16% 19126.42 14% 69583.13 73% 

Total 316814.38 100% 139545.92 100% 456360.30 69% 

CHI-SQUARE = 2.38 

Degrees of Freedom = 3 

Table B-2 

Durable Medical Equipment Regional Carriers 

Respondents Non-Respondents Total Response 

Rate 

Region A 62588.04 19% 23992.45 15% 86580.49 72% 

Region B 73518.87 22% 38621.84 24% 112140.71 66% 

Region C 131585.18 40% 73349.88 46% 204935.06 64% 

Region D 61067.50 19% 22692.24 15% 83759.74 73% 

Total 328759.59 100% 158656.41 100% 487416.00 68% 

CHI-SQUARE = 5.79 

Degrees of Freedom = 3 

Ordering Medicare Equipment 21 OEI-02-97-00081 
Table B-3 

Physician Specialty 

Respondents Non-Respondents Total Response 

Rate 

General Practice 32752.73 10% 16918.96 12% 49671.69 66% 

General Surgery 11799.07 4% 7418.73 5% 19217.80 61% 

Cardiology 8091.05 2% 3659.92 3% 11750.97 69% 

Family Practice 53930.38 17% 25022.69 17% 78953.07 68% 

Internal Medicine 96206.08 30% 55235.16 38% 151441.24 64% 

Ophthalmology 18632.00 6% 1199.24 1% 19831.24 94% 

Orthopedic Surgery 12230.46 4% 4213.56 3% 16444.02 74% 

PMR 7560.38 2% 3440.45 2% 11000.83 69% 

Pulmonary Disease 31448.39 10% 7993.13 6% 39441.52 80% 

Other 53159.64 15% 19448.40 13% 72608.04 73% 

Total 325810.18 100% 144550.24 100% 470360.42 69% 

CHI-SQUARE = 26.83 

Degrees of Freedom = 9 

Tables B-1 and B-2 show no statistically significant differences between respondents and 

non-respondents for geographic region and Durable Medical Equipment Regional Carrier. 

In order for the results to be statistically significant at the 95 percent confidence level, the 

Chi-square value must be higher than 7.81 with 3 degrees of freedom. 

Table B-3 shows a statistically significant difference between respondents and nonrespondents with respect to type of physician specialty. A Chi-square value higher than 

16.9 with 9 degrees of freedom suggests that physician specialty may influence whether or 

not a physician responded to the questionnaire. In order to test whether this difference 

introduced any bias, we analyzed the rates of overall satisfaction with the Medicare 

process for ordering medical equipment and supplies, for differences between internal 

medicine and all other physician specialties. We analyzed physician satisfaction in this way 

because internal medicine demonstrated a high percentage of the overall non-respondents. 

No significant difference exists as Table B-4 illustrates below. 

Ordering Medicare Equipment 22 OEI-02-97-00081 
Table B-4 

Satisfaction: Internal Medicine vs. All Other Specialties 

Respondents Non-Respondents Total Satisfaction 

Rate 

Internal Medicine 60300.52 30% 17419.68 28% 77720.20 78% 

All Other 

Specialties 

136870.41 70% 45193.21 72% 182063.62 75% 

Total 197170.93 100% 62612.89 100% 259783.82 76% 

CHI-SQUARE = 0.35 

Degrees of Freedom = 1 

Tables B-1, B-2, and B-4 show no statistically significant differences between respondents 

and non-respondents for any of the variables tested. Given the results of this analysis, we 

believe that the inspection findings fairly represent the experience and opinions of 

physicians to whom the questionnaires were sent. We therefore believe that our survey 

results can be generalized to the universe of physicians who ordered Medicare medical 

equipment and supplies during 1996. 

Ordering Medicare Equipment 23 OEI-02-97-00081 
APPENDIX C 

Statistical Tests for Key Findings 

We computed Chi-square values for differences in physicians’ overall satisfaction for eight 

variables. All variables were analyzed at the 95 percent confidence level. As shown in 

Table C-1 below, some variables demonstrate statistically significant satisfaction 

differences and some variables do not. The direction of the differences below are 

discussed in the findings of this report. 

Table C-1 

Chi-Square Values for Testing Significance of Differences in Satisfaction 

Variable Degrees of 

Freedom 

Chi-Square Significant Satisfaction 

Difference 

Physician Specialty 9 22.37 Yes 

Provided Sufficient Criteria 

for Ordering 

1 15.71 Yes 

Problems When Ordering 1 4.57 Yes 

Refused to Sign a CMN 1 11.21 Yes 

CMN Effective to Assure 

Proper Utilization 

1 73.97 Yes 

DMERC 3 1.85 No 

Geographic Region 3 1.69 No 

CMN Requirement 1 0.01 No 

Ordering Medicare Equipment 24 OEI-02-97-00081 
SPECIAL FRAUD ALERT

APPENDIX D 

OFFICE OF 

INSPECTOR 

GENERAL 

PHYSICIAN LIABILITY FOR CERTIFICATIONS IN THE 

PROVISION OF MEDICAL EQUIPMENT AND SUPPLIES AND 

HOME HEALTH SERVICES 

January 1999 

he Office of Inspector General (OIG) was established at the Department of Health Tand Human Services by Congress in 1976 to identify and eliminate fraud, waste, and 

abuse in the Department’s 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. 

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 

Ordering Medicare Equipment 25 OEI-02-97-00081 
to medical necessity is false, or with reckless disregard as to the truth of the information 

being submitted. While a physician’s 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 

he Medicare program only pays for health care services that are medically necessary. TIn determining what services are medically necessary, Medicare primarily relies on 

the professional judgment of the beneficiary’s treating physician, since he or she knows 

the patient’s 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 patient’s 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. 

PHYSICIAN CERTIFICATION FOR HOME HEALTH SERVICES 

Ordering Medicare Equipment 26 OEI-02-97-00081 
Medicare will pay a Medicare-certified home health agency for home health care

provided under a physician’s 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 patient’s 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 

ME is equipment that can withstand repeated use, is primarily used for a medical Dpurpose, and is not generally used in the absence of illness or injury. Examples 

include hospital beds, wheelchairs, and oxygen delivery systems. Medicare will cover 

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 

Ordering Medicare Equipment 27 OEI-02-97-00081 
must be personally signed and dated by the patient’s treating physician. 

DME suppliers that submit bills to Medicare are required to maintain the physician’s 

original written order or prescription in their files. The order or prescription must 

include: 

# the beneficiary’s name and full address; 

# the physician’s 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 physician’s 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 nonphysician 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 

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 

Ordering Medicare Equipment 28 OEI-02-97-00081 
completed by the supplier. 

# Section D is the treating physician’s 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 patient’s treating physician and the information regarding the 

physician’s 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 physician’s signature; and 

# the information in section B relating to medical necessity is true, accurate, and 

complete to the best of the physician’s knowledge. 

IMPROPER PHYSICIAN CERTIFICATIONS FOSTER FRAUD 

nscrupulous suppliers and providers may steer physicians into signing or authorizing Uimproper 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 physician’s 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 antikickback 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 

equipment and supplies: 

Ordering Medicare Equipment 29 OEI-02-97-00081 
# 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 

physician is not personally liable for erroneous claims due to mistakes, Ainadvertence, 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. 

Physicians may violate these laws when, for example: 

# they sign a certification as a “courtesy” to a patient, service provider, or DME 

Ordering Medicare Equipment 30 OEI-02-97-00081 
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 

IN, OH, IA, MO 

Dallas TX, NM, OK, AR, 214-767-8406 

LA, CO, UT, WY, 

MT, ND, SD, NE, KS 

Ordering Medicare Equipment 31 OEI-02-97-00081 
Los Angeles AZ, NV, So. CA 714-246-8302 

San Francisco No. CA, AK, HI 

OR, ID, WA 

415-437-7961 

Ordering Medicare Equipment 32 OEI-02-97-00081 
APPENDIX E 

Comments on the Draft Report

In this appendix, we present in full the comments from the Health Care Financing 

Administration. 

Ordering Medicare Equipment 33 OEI-02-97-00081 
Ordering Medicare Equipment 34 OEI-02-97-00081 
Ordering Medicare Equipment 35 OEI-02-97-00081 
Ordering Medicare Equipment 36 OEI-02-97-00081