Department of Health and Human Services 

OFFICE OF 

INSPECTOR GENERAL 

ENTERAL NUTRITION THERAPY: 

MEDICAL NECESSITY 

SE~VICEs 

&+* ‘6sB 9

P JUNE GIBBS BROWN 

/// Inspector General 

JUNE 1997 

OEI-03-94-00022 
OFFICE OF INSPECTOR GENERAL 

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

452, is to protect the integrity of the Department of Health and Human Services 

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

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

inspections, sanctions, and fraud alerts. The Inspector General informs the Secretary 

of program and management problems and recommends legislative, regulatory, and 

operational approaches to correct them. 

Office of Evaluationand Inspections 

The Office of Evaluation and Inspections (OEI) is one of several components of the 

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

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

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

recommendations on the efficiency, vulnerability, and effectiveness of departmental 

programs. 

OEI’s Philadelphia Regional Office prepared this report under the direction of Robert 

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

Isabelle Buonocore, Project Leader 

Amy J. Semyak, Lead Analyst 

Donald Flythe, Program Analyst 

Cynthia Hansford, Program Assistant 

Robert A. Katz, Program Analyst 

Brian Levine, Intern 

Richard Lyons, Auditor, OIG/OAS 

Nancy J. Molyneaux, Program Analyst 

Linda Moscoe, Program Analyst 

Linda M. Ragone, Program Analyst 

Sarah Richards, Management Trainee 

Brian Ritchie, Program Analyst 

Ethan Shaw, Intern 

Barbara Tedesco, Mathematical Statistician 

Medical Reviewers 

Dr. Mark Delowery 

Dr. Thomas E. Martin 

To obtain a copy of this report, call the PhiladelphiaRegional Office at (800) 531-9562 
EXECUTIVE SUMMARY 

PURPOSE 

The purpose of this study was to determine whether Medicare Part B enteral nutrition 

therapy claims in 1995 met Medicare guidelines for medical necessity. 

BACKGROUNJD 

Enteral nutrition therapy, commonly called tube feeding, is a means of providing 

nourishment to patients who cannot swallow because of severe or permanent medical 

problems. Patients are fed nutritional formulas through a tube which is threaded 

through the nose, or a surgical opening, and leads directly to the stomach or intestine. 

The three methods of delivering enteral nutrition are syringe, gravity, and pump. 

In 1995, the Medicare program and its beneficiaries paid $660 million for enteral 

nutrition products. This cost covered formulas as well as equipment and supplies, with 

the equipment and supplies representing more than half the total. The pump delivery 

method cost approximately $281 million compared to $29 million and $18 millon for 

the gravity and syringe methods respectively. 

In this study, we obtained medical data from physicians, nursing homes, home health 

agencies, and suppliers for a national sample of beneficiaries whose 1995 enteral 

nutrition claims were paid by Medicare’s durable medical equipment regional carriers 

(DMERCs). We had physicians review the medical data and determine whether 

beneficiaries met medical necessity guidelines. 

FINDINGS 

Most benejidak met medicalnecessitygzdeline~for enter-alnutdim in 1495. 

Eighty percent of beneficiaries met Medicare criteria for enteral nutrition; 3 percent 

did not; and 17 percent had insufficient or conflicting documentation. We estimate 

that Medicare allowed about $12.2 million (in formula, equipment, and supplies) for 

the 3 percent of beneficiaries who did not meet guidelines for enteral nutrition. 

l%ere are vulnerabilities,howeva, withregardto the use of specialenteralform&s and 

thepump deliwry method 

b Special Enteral Formulas 

Twenty-four percent of beneficiaries used special formulas. Of that subgroup, 

10 percent did not meet medical necessity guidelines for special formulas; 77 

percent did; and 13 percent had conflicting information. We estimate 

i 
questionable Medicare allowances for beneficiaries who did not meet special 

formula criteria to be about $2.9 million. 

b Pump Delivery Method 

Seventy-six percent of beneficiaries use the pump delivery method of enteral 

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

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

information. The questionable allowance estimate for beneficiaries who did not 

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

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

Medicare’s slow administration rate criterion which our medical reviewers 

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

have medical conditions warranting a slow administration rate. Had these 

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

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

medical reviewers also believe Medicare’s aspiration criterion for the pump 

delivery method is vulnerable to abuse. Beneficiary medical charts generally 

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

condition that makes the pump delivery method necessary. 

IXFCOMMENDATIONS 

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

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

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

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

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

nursing homes. 

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

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

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

for all beneficiaries regardless of place of service. 

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

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

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

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

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

motivated to select the most economical and appropriate formulas and delivery 

methods for beneficiaries. 

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

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

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

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

HCFA’s comments are in Appendix C. 

.. . 111 
TABLE OF CONTENTS 

PAGE 

EXECUTIVESUMMARY .......................................... 

INTRODUCTION.. ............................................... 

FINDINGS 

� Medical necessity of enteral nutrition ................................ 

� Medical necessity of special formulas ................................ 

i 

1 

6 

6 

� Medical necessity of pump delivery method ........................... 7 

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

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

APPENDICES 

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

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

C: Comments on draft report ...................................... C-l 
INTRODUCTION 

PURPOSE 

The purpose of this study was to determine whether Medicare Part B enteral nutrition 

therapy claims in 1995 met Medicare guidelines for medical necessity. 

BACKGROUND 

Enteralrzutdiontherapy 

Enteral nutrition therapy, commonly called tube feeding, is a means of providing 

nourishment to patients who cannot swallow because of a severe or permanent 

medical problem. The patient receives a nutritional formula through a tube which is 

threaded through the nose, or a surgical opening, and leads directly to the stomach or 

intestine. 

Nutritional formulas vary in terms of ingredients. Each has a Health Care Financing 

Administration (HCFA) procedure code for reimbursement purposes. The most 

commonly used formulas are those coded B4150. They are composed of semisynthetic intact proteins and are appropriate for the majority of patients. When 

special formulas (other than B4150 and B4152) are claimed, such as those for persons 

with allergies or blood glucose fluctuations, billers must have documentation of 

medical need for those formulas. For example, there is a special formula for patients 

with diabetes, and its procedure code is xX033. If documentation of medical necessity 

for special formula is not supplied and the code billed is for a more expensive formula 

than the commonly used B4150 formulas, Medicare will reimburse the special formula 

claim at the less expensive B4150 formula rate. 

There are three methods of delivering formula to the digestive tract and each requires 

different supplies. The methods are syringe, gravity, and pump. The pump method is 

the most expensive and Medicare requires documentation that this method is 

medically necessary. If documentation is not supplied, Medicare will not pay for the 

pump equipment and will reduce the pump supplies reimbursement to the less 

expensive gravity supplies level. 

In clinical practice, the three delivery methods fall into two categories of feeding 

schedules: intermittent and continuous. The implementation of a continuous feeding 

schedule requires the use of a pump to deliver formula at a constant rate over 24 

hours. The pump method of delivery may be necessary when beneficiaries experience 

complications with the syringe or gravity method. For the person administering the 

enteral nutrition, the pump method is easier and more convenient. 
Enteral nutrition is administered by trained persons, e.g., nursing staff if the patient is 

in a nursing home. When the patient lives at home, enteral nutrition is likely to be 

administered by a family member or staff from a home health services agency. 

Regional M&are cati 

Since Medicare covers enteral nutrition therapy under the prosthetic device benefit, 

claims are processed by a durable medical equipment regional carrier (DMERC). 

There are four DMERCs. Prior to the start-up of DMERCs in Fiscal Year 1994, 

parenteral and enteral nutrition claims were processed by two specialty carriers, and 

durable medical equipment claims were processed by more than 30 other carriers. 

The DMERCs were created by Federal regulation in 1993 to process claims for 

durable medical equipment, prosthetics, orthotics, and supplies, including parenteral 

and enteral nutrition. The purpose of regionalization was to (1) streamline claims 

processing for these types of claims, (2) reduce costs, (3) strengthen control over 

abusive supplier practices, and (4) bring more uniform coverage to beneficiaries across 

the country. Suppliers of enteral products are reimbursed by the DMERC which 

services the region where the patient lives. 

With approval from HCFA, DMERCs establish medical policy and guidelines for the 

review of claims. Claims for enteral nutrition therapy must meet certain criteria in 

order to be considered medically necessary. Criteria include (1) severity or 

permanence of a condition which inhibits normal swallowing function, and (2) inability 

to take in, other than by tube feeding, the number of calories needed to maintain 

weight and strength commensurate with overall health status. Claims for special 

formulas (codes other than B4150 and B4152) must have documentation of medical 

need. 

Claims for the pump delivery method must also have documentation of medical need. 

Medicare’s medical necessity criteria for the pump include the following: (1) reflux or 

aspiration; (2) dumping syndrome (nauseabomiting); (3) severe diarrhea; (4) 

circulatory overload; (5) blood glucose fluctuations (diabetes); and (6) formula 

administration rate of less than 100 cc per hour. 

With initial enteral nutrition claims, the biller must send the DMERC a completed 

form known as a Certificate of Medical Necessity (CMN). A physician must complete 

the clinical portion of the CMN and sign it to attest that there is medical need for the 

enteral nutrition therapy. 

If the DMERC receives enteral nutrition claims for a beneficiary (1) whose claims 

were deemed medically necessary by the pre-DMERC carrier and (2) whose enteral 

nutrition is still prescribed by a physician, Medicare considers those claims 

grandfathered and the DMERC will reimburse them. Grandfather provisions vary 

slightly at each DMERC, but all accept the previous carrier’s determination that the 

beneficiary had medical need for enteral nutrition. 

2 
Cost of enteml nubition produck 

In 1995, the Medicare program and its beneficiaries paid approximately $660 million 

for enteral nutrition therapy products (according to HCFA’s Part B Extract and 

Summary System). This cost covered formulas as well as equipment and supplies, with 

the equipment and supplies representing more than half of the total cost. Below is a 

breakdown of the $660 million by formula, equipment, and supplies. 

Products 

Formulas 

IIIv Poles 

Pump equipment 

Pump supply kits 

Gravity supply kits 

Syringe supply kits 

IIOther suuulies 

1995Medicare Part B Allowances I 

$316,381,467 

6,238,856 

44,887,197 II 

236641,625 

29,436,137 II 

17,769,943 

II 6,101,893 

Recent Ojjke of Inspector General studies on enteral nut&on 

Five recent Office of Inspector General studies addressed enteral nutrition therapy 

from other perspectives. They (1) compared enteral nutrition coverage policies of 

Medicare Part B and other payers, (2) compared reimbursement methodologies of 

Medicare Part B and other payers, (3) examined Part B payment levels for enteral 

nutrition therapy for beneficiaries in nursing homes, (4) examined Part B payments for 

enteral equipment and supplies for beneficiaries in nursing homes, and (5) assessed 

Part B payments for non-professional services which are covered under the Part A 

skilled nursing facility benefit. A list of study titles is in Appendix A. . 

Several studies showed that Medicare Part B’s enteral nutrition therapy payments are 

higher than they should be. Recommendations focused on ways Medicare can save 

money, such as: (1) reducing reimbursement rates for specific products, (2) changing 

the reimbursement methodology in order to take advantage of market forces, (3) 

eliminating the enteral nutrition benefit from Part B when the beneficiary is in a 

nursing facility and folding enteral nutrition services into the nursing home daily rate 

rate. Together, the Inspector General’s studies on enteral nutrition therapy provide 

comprehensive information for decision makers. 

SCOPE AND METHODOLDGY 

We conducted this study from April 1996 through January 1997, beginning with a 

review of Medicare policies and guidelines for determining whether enteral nutrition 

3 
1 

2 

3 

4 

5 

6 

therapy claims are medically necessary. This study was part of Operation Restore 

Trust (ORT), the 2-year demonstration project of Federal and State Governments to 

identify, reduce, and prevent fraud, waste, and abuse in targeted areas. Targeted 

areas include nursing homes, hospices, home health agencies, and durable medical 

equipment companies. 

Sampling 

We selected a stratified random sample of 510 Medicare beneficiaries whose Part B 

claims were paid for enteral formula delivered in May 1995. The month was selected 

at random. Beneficiaries were selected from a HCFA 5 percent file of 1995 Medicare 

Part B enteral claims. Stratification was based on (1) whether beneficiaries lived in 

ORT or non-ORT States, and (2) whether beneficiaries had low, mid-range, or high 

monthly expenses for formula. (The ORT States are California, Florida, Illinois, New 

York, and Texas.) We did not select beneficiaries with formula expenses under $50 

for the month. Allowances of less than $50 accounted for only 0.2 percent of total 

‘May 1995 allowances. Of beneficiaries selected for the sample, the highest formula 

allowance for May 1995 was $1,567.72. Below is a table describing each stratum. 

Strata Criteria 

ORT, Low monthly expenses ($50 to $224) 

ORT, Mid-range monthly expenses ($225 to $399) 

ORT, High monthly expenses (greater than $400) 

Non-ORT, Low monthly expenses ($50 to $224) 

Non-ORT, Mid-range monthly expenses ($225 to $399) 

Non-ORT, High monthly expenses (greater than $400) 

Data Colkction 

Using the HCFA 5 percent file of 1995 Medicare Part B enteral claims, we identified 

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

beneficiaries in our sample. 

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

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

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

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

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

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

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

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

beneficiaries, so we requested this information from beneficiaries’ physicians. 

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

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

beneficiary’s condition; and (3) questions about the formula given and methods of 

4 
administration and delivery. We also requested that these providers send us 

documentation of medical need for enteral formula and equipment. Documentation 

included but was not limited to reports of x-rays, lab results, discharge summaries, 

progress notes, and operative reports. 

Medical Review and Data Analysis 

With the documents we received from each type of respondent, we compiled a 

medical chart for each sample beneficiary. A team of physicians from Federal 

Occupational Health, a division of the Public Health Service, reviewed charts for 387 

of the 510 sample beneficiaries to determine whether the claims for enteral nutrition 

therapy met Medicare’s medical necessity guidelines. Medical reviews could not be 

done for 123 of the 510 sampled beneficiaries for the following reasons: either billers 

could not be located, billers could not be contacted because they were under 

investigation by another agency, beneficiaries’ medical providers could not be 

identified, or beneficiaries were in the pretest sample. 

The medical reviewers examined four areas for which Medicare has medical necessity 

guidelines: (1) enteral nutrition, (2) caloric intake, (3) special formulas, and (4) pump 

delivery method. For each area, the reviewers determined whether the beneficiary 

met Medicare guidelines, did not meet Medicare guidelines, or a determination could 

not be made due to insufficient or conflicting information. For each area, we 

quantified the medical review results. We then estimated Medicare allowances for 

beneficiaries who did not meet medical necessity guidelines for enteral nutrition, 

special formula, and pump delivery method. We also quantified the place of service 

for all 510 sample beneficiaries and the subgroups who did not meet medical necessity 

guidelines for special formula, and pump delivery method. 

We sent the DMERCs lists of beneficiaries whose claims did not meet medical 

necessity guidelines and asked them to identify the grandfathered ones. We recognize 

that DMERCs are not responsible for medical necessity determinations on 

grandfathered claims. Those claims were deemed medically necessary by previous 

carriers. Since our medical review was based on the medical necessity guidelines used 

by the DMERCs, the findings in this report are presented for the total number of 

beneficiaries and a subtotal which excludes grandfathered beneficiaries. 

We used the Survey Data Analysis (SUDAAN) software package to compute 

percentage, allowance, and confidence interval estimates presented in the Findings 

section and Appendix B. Appendix B also contains explanations of how we arrived at 

allowance estimates. Estimates are weighted based on sample selection probabilities 

in each stratum. 

This study was conducted in accordance with the Quality Standards for Inspections 

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

5 
FINDINGS 

MOST BENEFICIARIES MET MEDICAL NECESSITY GUIDELINES FOR 

ENTERAL NUTRITION IN 1995 

Seventy-seven percent of beneficiaries with 1995 enteral claims met Medicare’s 

medical necessity criteria. When we factored grandfathering provisions into our 

analysis, the percentage of beneficiaries who met the criteria rose from 77 to 80 

percent. As we mentioned in the Background section, Medicare does not hold 

DMERCs accountable for medical necessity determinations for grandfathered claims. 

Four percent of beneficiaries did not meet medical necessity criteria for enteral 

nutrition. Excluding grandfathered beneficiaries, only 3 percent did not meet the 

criteria. We estimate that Medicare allowed $17.6 million for medically unnecessary 

enteral nutrition therapy in 1995, or $12.2 million when grandfathered beneficiaries 

are excluded. 

The remaining 19 percent of beneficiaries--and 17 percent of non-grandfathered 

beneficiaries--were ones for whom the medical review determination was “insufficient 

or conflicting documentation.” Our medical reviewers explained that most of these 

medical charts had insufficient rather than conflicting data. Beneficiaries’ physicians, 

nursing homes, or home health agencies did not send the supporting documents we 

requested, or the documents they sent were incomplete. 

Conjlicting data aboutpremibed calories 

Our medical reviewers frequently saw that beneficiaries’ caloric needs written on 

CMNs differed from caloric information provided by nursing homes and/or physicians. 

However, in most cases the discrepancy in calories still fell within the Medicare 

guidelines. The medical reviewers took a conservative approach to these medical 

charts. Instead of determining that due to conflicting documentation a determination 

could not be made, they determined that Medicare’s caloric guidelines were met. The 

results for nongrandfathered beneficiaries were that 91 percent of beneficiaries met 

the caloric guideline; 3 percent did not; and 6 percent could not be determined. We 

would add that a possible explanation for caloric discrepancies is that billers did not 

submit new CMNs, as required, when beneficiaries’ caloric prescriptions changed. 

MEDICAL NEED FOR SPECIAL FORMULAS WAS NOT ALWAYS 

DOCUMENTED 

Of the beneficiaries who used special formulas, 23 percent did not have documented 

medical need for them. Estimated questionable Medicare allowances for these 

undocumented special formulas totalled about $8 million. When we excluded 

grandfathered beneficiaries, 10 percent did not have the required documentation, and 

the questionable allowance estimate dropped to $2.9 million. 

6 
Medicare requires documentation of medical necessity for special formulas. For 

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

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

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

expensive formula rate. 

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

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

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

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

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

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

custodial care facilities, and 156 at home. 

SOME BENEFICIARIES DID NOT HAVE MEDICAL JUSTIFICATION FOR 

THEPUMP DELIVERY METHOD 

Seventy-eight percent of sample beneficiaries used the pump method of delivering 

formula to the digestive tract. Of those using the pump method, 80 percent met 

medical necessity guidelines, 14 percent did not, and 6 percent could not be 

determined. When we excluded grandfathered beneficiaries from our analysis, 85 

percent of beneficiaries using the pump method met the medical necessity guidelines, 

9 percent did not, and 6 percent could not be determined. 

We estimate that the Medicare program and its beneficiaries paid $11.5 million for 

medically unnecessary pump equipment and related supplies in 1995. If grandfathered 

beneficiaries are excluded, the estimated questionable amount is $7.5 million. 

Of the 41 sample beneficiaries who did not meet the pump criteria, 23 were in skilled 

nursing facilities, 4 were in regular nursing facilities, 1 was in a custodial care facility, 

and 13 were at home. Excluding grandfathered beneficiaries, 23 sample beneficiaries 

did not meet the pump *criteria, 11 were in skilled nursing facilities, 3 were in regular 

nursing facilities, 1 was in a custodial care facility, and 8 were at home. 

CERTAIN MEDICAL NECESSITY GUIDELINES FOR THE PUMP DELIVERY 

METHOD MAY BE VULNERABLE TO ABUSE 

Our medical reviewers believe two medical necessity criteria for the pump delivery 

method may be vulnerable to abuse. One is the formula administration rate of less 

than 100 cc per hour, and the other is the aspiration or reflux criterion. 

Thirty-seven percent of non-grandfathered beneficiaries who met medical necessity 

guidelines for the pump method of delivery did so based only on the administration 

rate criterion. But the medical reviewers found that these beneficiaries did not have 

documentation for conditions warranting a slow delivery rate. If these beneficiaries’ 
pump claims had been deemed medically unnecessary, Medicare and its beneficiaries 

would have saved an estimated $28 million in 1995. 

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

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

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

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

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

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

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

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

lived at home. 

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

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

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

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

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

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

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

did not demonstrate that aspiration was from refhrx. 

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

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

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

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

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

rate. 

8 
RECOMMENDATIONS 

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

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

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

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

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

nursing homes. 

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

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

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

for all beneficiaries regardless of place of service. 

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

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

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

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

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

motivated to select the most economical and appropriate formulas and delivery 

methods for beneficiaries. 

COMMENTS 

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

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

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

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

HCFA’s comments are in Appendix C. 

. 

9 
APPENDIX A 

RECENT OFFICE OF INSPECTJOR GENERAL STUDIES 

ON ENTERAL, NUTRITION 

Issued Title and Number 

1997 Enteral Nutrition Therapy: Medical Necessity, OEI-03-94-00022. 

1997 Medicare Payments for Enteral Nutrition Theran Equipment and Supplies 

in Nursing Homes, OEI-06-92-00866. 

1996 Enteral Nuhient Payments in Nursing Homes, OEI-06-92-00861. 

1996 Payments for Enteral Nutrition: Medicare and Other Payers, OEI-03-94-

00021. 

1995 Medicare Payments for Non-Professional Services in Skilled Nursing 

Facilities, OEI-06-92-00864. 

1995 Coverage of Enteral Nutrition Therapy: Medicare and Other Payers, OEI03-94-00020. 

A-l 
APPENDIX B 

ESTIMATES AND CONFIDENCE INTERVALS 

Table 1. Distribution of Beneficiaries by Determination of Medical 

Necessity for Enteral Nutrition Therapy 

Table 2. Questionable Medicare Allowance Estimates for Enteral 

Nutrition Therapy 

Table 3. Distribution of Beneficiaries by Whether Caloric Criteria 

Were Met 

Table 4. Distribution of Beneficiaries by Whether Special Enteral 

Nutrition Formula Was Used 

Table 5. Distribution of Beneficiaries by Determination of Medical 

Necessity for Special Enteral Nutrition Formula 

Table 6. Questionable Medicare Allowance Estimates for Special 

Enteral Formula 

Table 7. Distribution of Beneficiaries by Whether Pump Delivery 

Method Was Used 

Table 8. Distribution of Beneficiaries by Determination of Medical 

Necessity for Pump Delivery Method 

Table 9. Questionable Medicare Allowance Estimates for Pump 

Delivery Method . 

Table 10. Distribution of Beneficiaries Who Met Pump Criteria Based 

Solely on Administration Rate 

Table 11. Questionable Medicare Allowance Estimates for 

Beneficiaries Who Met Pump Criteria Based Solely on Administration 

Rate 

Table 12. Distribution of Beneficiaries by Place of Service on May 

1995 Formula Claim 

PAGE 

B-2 

B-2 

B-3 

B-3 

B-4 

B-4 

B-5 

B-5 

B-6 

B-6 

B-7 

B-7 

B-l 
We used the Survey Data Analysis (SUDAAN) software package to compute percentage, 

allowance and confidence interval estimates presented in the following tables. Estimates are 

weighted based on the stratified random sample design and are reported at the 95 percent 

confidence level. Tables presenting questionable allowance estimates are followed by narratives 

explaining our allowance estimation procedures. 

Table 1. 

Distriiution of Beneficiaries 

by Determination of Medical Necessity 

for Enteral Nutrition Therapy 

AI1 Beneficiaries Non-Grandfathered Beneficiaries ~ 

Weighted 95% Confidence Weighted 95% Confidence 

Percent Interval Percent Interval 

Met Criteria 77.49 73.00-81.98 79.91 75.40-84.42 

Did Not Meet Criteria 3.92 1.84-6.00 3.18 1.22-5.14 

Insufficient/ 18.59 14.42-22.76 16.91 12.68-21.14 

Conflicting Documentation 

Table 2. 

Questionable Medicare Allowance Estimates 

for Enteral Nutrition Therapy 

All Beneficiaries Non-Grandfathered Beneficiaries 

Weighted 95% Confidence Weighted 95% Confidence 

Total Estimate Interval Total Estimate Interval 

Questionable $17,584,195 $12,177,027-$22991,363 $12,X6,757 $7,732,654-$16,600,860 

Medicare 

Allowances 

For beneficiaries who did not meet enteral medical necessity criteria, SUDAAN was used to 

estimate total Medicare allowances for unnecessary enteral therapy claims, including formula, 

equipment and supplies. The SUDAAN 5 percent May 1995 estimates were then generalized to 

100 percent 1995 estimates. A second allowance estimate was developed after removing 

grandfathered beneficiaries from the analysis. The allowance estimate drops from $17.6 million 

to $12.2 million for medically unnecessary enteral therapy claims in 1995 after removing 

grandfathered beneficiaries. 

B-2 
Table 3. 

Met Caloric Criteria 

Did Not Meet Caloric 

Criteria 

Conflicting Information 

Distriiution of Beneficiaries 

by Whether Caloric Criteria Were Met 

All Beneficiaries Non-Grandfathered Beneficiaries 

Weighted 95% Confidence Weighted 95% Confidence 

Percent Interval Percent Interval 

88.78 85.43-92.13 91.10 87.91-94.29 

4.42 2.26-6.58 3.19 1.29-5.09 

6.79 4.10-9.48 5.72 3.07-8.37 

Distriiution of Beneficiaries 

by Whether Special Enteral Nutrition 

Formula Was Used 

Table 4. 

Beneficiaries Used 

Special Formula 

Beneficiaries Did 

Not Use Special 

Formula 

All Beneficiaries Non-Grandfathered Beneficiaries 

Weighted Percent 95% Confidence Weighted Percent 95% Confidence 

Interval Interval 

26.73 22.52-30.94 24.40 20.13-28.67 

73.27 69.06-77.48 75.60 71.33-79.87 

B-3 
Table 5. 

Distribution of Beneficiaries 

by Determination of Medical Necessity 

for Special Enteral Nutrition Formula 

Need for Special 

Formula 

Documented 

Need for Special 

Formula Not 

Documented 

Conflicting 

Information 

Table 6. 

Questionable 

Medicare 

Allowances 

All Beneficiaries Non-Grandfathered Beneficiaries 

Weighted Percent 95% Confidence Weighted Percent 95% Confidence 

Interval Interval 

66.38 57.72-75.04 76.89 68.48-85.30 

22.96 15.41-30.51 10.25 4.78-15.72 

10.66 4.64-16.68 12.86 5.73-19.99 

Questionable Medicare Allowance Estimates 

for Special Enteral Formula 

All Beneficiaries Non-Grandfathered Beneficiaries 

Weighted 95% Confidence Weighted 95% Confidence 

Total Estimate Interval Total Estimate Interval 

$7,984,260 $5,518,183-$10,450,338 $2,907,435 $1,515,193-$4,299,678 

For beneficiaries where medical necessity for special enteral formula was not documented, we 

used SUDAAN to estimate total Medicare allowances and services for undocumented special 

formula in 1995. Special formulas are those with HCFA procedure codes B4151, B4153-B4156, 

and xX030-xX077. Medicare reimburses at the B4150 level if medical necessity for special 

formula is not documented. 

We multiplied undocumented special formula services by Medicare’s per unit controlling 

allowable for code B4150. We then subtracted this quantity from Medicare allowances for 

undocumented special formula, and the difference is our estimate of questionable allowances. 

When grandfathered beneficiaries were removed from the analysis, the allowance estimate drops 

from $8 million to about $2.9 million in questionable allowances for undocumented special 

enteral formula in 1995. 

B-4 
Table 7. 

Beneficiaries Used 

Pump Method 

Beneficiaries Did 

Not Use Pump 

Method 

Table 8. 

Met Puma Criteria 

Did Not Meet 

Pumn Criteria 

Conflicting 

Information 

Distriiution of Beneficiaries 

by Whether Pump Delivery Method Was Used 

AI1 Beneficiaries 

Weighted Percent 

77.63 

22.37 

Non-Grandfathered Beneficiaries 

95% Confidence Weighted Percent 95% Confidence 

Interval Interval 

73.00-82.26 76.36 71.40-81.32 

17.74-27.00 23.64 18.68-28.60 

Distriiution of Beneficiaries 

by Determination of Medical Necessity 

for Pump Delivery Method 

AI1 Beneficiaries Non-Grandfathered Beneficiaries 

Weighted Percent 95% Confidence Weighted Percent 95% Confidence 

Interval Interval 

1 80.29 1 75.33-85.25 1 84.76 1 80.00-89.52 

13.58 9.35-17.81 8.91 5.15-12.67 

6.13 3.05-9.21 6.33 3.06-9.60 

B-5 
Table 9. 

Questionable 

Medicare 

Allowances 

Questionable Medicare Allowance Estimates 

for Pump Delivery Method 

I-AI1 Beneficiaries Non-Grandfathered Beneficiaries

Weighted 95% Confidence Weighted 95% Confidence 

Total Estimate Interval Total Estimate Interval 

$11,513,424 $7,062,657-$15,964,191 $7,535,529 $3,794,730-$11,276,328 

d 

For beneficiaries where medical necessity for the pump delivery method was not documented, we 

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

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

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

claims, it pays for the substitute gravity delivery method. 

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

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

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

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

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

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

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

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

Table 10. 

Distribution of Beneficiaries Who Met Pump Criteria 

Based Solely on Administration Rate 

Ail Beneficiaries Non-Grandfathered Beneficiaries 

Weighted Percent 95% Confidence Weighted Percent 95% Confidence 

Interval Interval 

Administration 37.72 31.06-44.38 37.41 30.51-44.31 

Rate Only Criteria 

Documented 

Administration 62.28 55.62-68.94 62.59 55.69-69.49 

Rate NOT Only 

Criteria 

Documented 

B-6 
Table 11. 

Questionable Medicare Allowance Estimates 

for Beneficiaries Who Met Pump Criteria 

Based Solely on Administration Rate 

All Beneficiaries Non-Grandfathered Beneficiaries 

95% Confidence Interval Weighted 95% Confidence Interval 

Eate I Total Estimate 

Questionable $29,035,305 $22,200,311-$35,870,298 $28,000,773 $21,194,606-$34,806,940 

Medicare 

Allowances 

We used SUDAAN to estimate questionable Medicare allowances for the pump delivery method 

for beneficiaries where medical necessity for this method was documented based solely on the 

administration rate criterion. The procedure used to compute these estimates is explained under 

Table 9. 

We estimated that Medicare and its beneficiaries could have saved about $29 million in 1995 if 

these beneficiaries’ pump delivery method claims had been deemed medically unnecessary. 

When grandfathered beneficiaries are removed from the analysis, the estimate of potential 

Medicare savings drops to $28 million. 

Table 12. 

Distriiution of Beneficiaries 

by Place of Service on May 1995 Formula Claim 

Weighted Percent 95% Confidence Interval 

Skilled Nursing Facility . 61.02 56.47-65.57 

Nursing Facility 7.03 4.70-9.36 

Custodial Care Facility 0.57 o-1.33 

Home 31.38 27.07-35.69 

B-7 
APPENDIX C 

COMMENTS FROM THE HEALTH CARE FINANCING ADMINISTRATION 

C-l 
JUN-71997 

DATE; 

TO: June GibbsBrawn 

FROM: 

suE3m: 

cc-21 
tic-31 
Page 2