Department of Health and Human Services 

OFFICE OF 

INSPECTOR GENERAL 

MEDICARE BENEFICIARY 

SATISFACTION WITH DMERC SERVICES 

JUNE GIBBS BROWN 

Inspector General 

JUNE 1997 

OEI-02-96-00200 
EXECUTIVE SUMMARY 

PURPOSE 

To determine the knowledge, experiences and satisfaction of Medicare beneficiaries who use 

durable medical equipment, prosthetics, orthotics and supplies with services provided by the 

Durable Medical Equipment Regional Carriers (DMERCs). 

This inspection will complement a larger study, currently planned, which will ascertain 

whether the establishment of the DMERCs has met its intended objectives. The Health Care 

Financing Administration (HCFA) established these in 1993 to improve processing of 

medical equipment and supply claims. Determining beneficiary satisfaction with DMERC 

services will help to evaluate how well these carriers are meeting their goals. 

BACKGROUND 

In October 1993, HCFA began processing medical equipment and supply claims through four 

regional carriers called the DMERCs. The DMERCs were given specific responsibilities for 

educating Medicare beneficiaries and responding to their questions and concerns. They must 

have staff available to respond to written, telephone, and in-person inquiries, and are 

required to meet certain standards of timeliness, accuracy, and clarity when responding to 

these beneficiary contacts. They must also have a beneficiary outreach program and are 

responsible for the first two of five stages of beneficiary appeals. 

We surveyed a stratified random sample of 2,000 Medicare beneficiaries who had at least 

one medical equipment or supply claim processed by the DMERCs during the first 6 months 

of 1996. We sent each of these a mail questionnaire asking about their knowledge, 

experiences and satisfaction with beneficiary services provided by the DMERC. We received 

responses from 1,487 beneficiaries, 187 of whom had contacted their carrier in the past 12 

months. We also conducted structured telephone interviews with DMERC staff from all four 

regions to gather information about their outreach activities and beneficiary services. 

FINDINGS 

Most Beneficiaries Who Have Had Contact With Their DMERC Are Satisfied With The 

Service They Received 

Twelve percent of beneficiaries report some contact with their DMERC in the past 12 

months. Of these, most (81 percent) called. A majority (86 percent) of these beneficiaries 

who report contacting their DMERC are very or somewhat satisfied with how their carrier 

has served them overall. However, overall satisfaction rates vary among the four regions. 

In three regions, over 80 percent of beneficiaries (83 percent, 91 percent, and 98 percent, 

respectively) who have contacted their DMERC are satisfied. Just 65 percent report being 

satisfied in the fourth region. 
Beneficiaries in all four regions who report discourteous staff and long waiting times are 

most likely to be dissatisfied. Additionally, beneficiaries with denied claims are less satisfied 

and those who wrote their DMERC are least likely to rate their contact favorably. Finally, 

most beneficiaries who have appealed a claim are satisfied with the appeals process. 

However, Beneficiaries Who Use Medical Equipment And Supplies Have Limited 

Knowledge Of Their DMERC, And Few Know Where To Go For More Information 

About Their Medicare Benefits 

Thirty-nine percent of Medicare users of equipment and supplies know they have a DMERC. 

Of this group, only 9 percent are able to correctly identify the name of their carrier, 41 

percent do not know the name, and 50 percent wrongly identify a different company as their 

DMERC. 

Not surprisingly, most beneficiaries do not use their DMERC as a source of information. 

Only 17 percent say they would contact the DMERC with questions about their Medicare 

benefits for equipment and supplies, and just 15 percent would contact the DMERC if they 

wanted to appeal a Medicare decision. 

Ten Percent Of Beneficiaries Who Use Medical Equipment And Supplies Report Having 

Some Experience With Possible Fraud And Abuse 

Five percent of beneficiaries have suspected fraud or abuse related to their medical 

equipment and supplies. Of these, 38 percent did not contact anyone about their suspicions, 

and nearly one-quarter contacted their supplier. Another 5 percent of beneficiaries, while 

saying they have never actually suspected fraud or abuse, report some other experience that 

strongly suggests that one or the other occurred. These beneficiaries report never receiving 

equipment or supplies, receiving equipment or supplies they did not need, or being charged 

more than they were told they would have to pay. 

While All Four DMERCs Conduct Beneficiary Outreach, They Do So Only To A 

Limited Extent And Report Difficulties In Their Efforts 

Staff at the four DMERCs devoted to outreach varies from one to 20; however, only one 

person in each DMERC works on outreach on a full-time basis. All four publish and 

distribute literature and also participate in conferences, health fairs, and other public events. 

Nevertheless, DMERC staff cite obstacles to conducting outreach, ranging from resolving 

scheduling conflicts with other organizations which also conduct outreach, to locating the 

most appropriate and effective individuals and organizations to disseminate information to. 

RECOMMENDATIONS 

Our findings of high satisfaction among beneficiaries who have had contact with their 

DMERC suggest that HCFA’s initiative to use only four regional carriers to process 

Medicare claims for medical equipment and supplies is having some success so far. 

However, we believe HCFA can take additional steps to improve the education and service 

ii 
of Medicare beneficiaries who use medical equipment and supplies. These steps would 

support wider HCFA initiatives to involve beneficiaries in managing their own health care 

and in detecting and reporting fraud and abuse. 

Specifically, HCFA should: 

1. Evaluate ways to increase beneficiary satisfaction with the one DMERC region with 

the lowest overall satisfaction rating; 

2. Instruct the DMERCs to emphasize the importance of courteous staff and timeliness in 

responding to beneficiary inquiries, since these two variables appear to be strongly 

related to overall beneficiary satisfaction; 

3. Look more carefully at effective ways to educate beneficiaries on what constitutes 

fraud and abuse and what to do if they suspect that one or the other occurs. 

COMMENTS 

We received comments on the draft report from HCFA and the Assistant Secretary for 

Planning and Evaluation (ASPE). They concur with our recommendations. The ASPE also 

provided suggestions for clarifications of the text which have for the most part been 

incorporated into the final report. 

The ASPE expressed some concern with our findings on the appeals process which suggest 

that almost 50 percent of beneficiary appeals are successful and that 50 percent take more 

than 2 months to be resolved, indicating that some beneficiaries may be waiting for necessary 

equipment and supplies. The ASPE therefore recommends that HCFA routinely examine 

DMERC denials and the outcomes of beneficiary appeals. We believe the number of 

beneficiaries in our survey who appealed a claim (34) is too small on which to base such a 

recommendation. While our data may be suggestive of procedural weaknesses, it is too 

limited to draw any general conclusions. However, we do believe that this is an important 

issue and we currently plan to undertake a broader review of the appeals process. 

The ASPE also recommends that HCFA encourage the DMERCs to look for more effective 

ways to conduct general outreach. We agree with the need for additional outreach, which 

could be conducted along with the more specific fraud and abuse outreach already planned by 

HCFA. 

... 

111 
TABLE OF CONTENTS 

PAGE 

EXECUTIVE SUMMARY 

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

FINDINGS ............................................... . 

� Beneficiaries Who Have Contacted Their DMERC Are Satisfied ............ 5 

� Beneficiaries Have Limited Knowledge of DMERCs ................... 7 

� Ten Percent Have Experience with Possible Fraud and Abuse ............. 9 

� DMERCs Conduct Outreach to a Limited Extent ..................... 9 

RECOMMENDATIONS ..................................... 12 

APPENDICES 

A: Sample Selection ....................................... A-l 

B: Confidence Intervals for Key Questions .......................... B-l 

C: Non-respondent Analysis ................................... C- 1 

D: Comments ........................................... D-l 
INTRODUCTION 

PURPOSE 

To determine the knowledge, experiences and satisfaction of Medicare beneficiaries who use 

durable medical equipment, prosthetics, orthotics and supplies with services provided by the 

Durable Medical Equipment Regional Carriers (DMERCs) . 

This inspection will complement a larger study, currently planned, which will ascertain 

whether the establishment of the DMERCs has met its intended objectives. The Health Care 

Financing Administration (HCFA) established these in 1993 to improve processing of 

medical equipment and supply claims. Determining beneficiary satisfaction with DMERC 

services will help to evaluate how well these carriers are meeting their goals. 

BACKGROUND 

Medicare Program 

Medicare provides health insurance for approximately 37 million elderly and disabled 

beneficiaries under two parts. Part A, hospital insurance, covers services furnished by 

providers, such as hospitals, home health agencies, and skilled nursing facilities. Part B, 

supplementary medical insurance, covers physician services, outpatient hospital services, and 

other medical services and supplies. The Health Care Financing Administration (HCFA) 

administers the Medicare program and contracts with carriers and fiscal intermediaries to 

process, review, and pay claims for covered services. 

One group of items covered under Medicare Part B is durable medical equipment, 

prosthetics, orthotics and supplies. Examples of these include wheelchairs, blood glucose 

monitors, hospital beds, neck braces, artificial limbs, and some anticancer and 

immunosuppressive drugs. 

In October 1993, HCFA began processing claims for these items through four regional 

carriers called the DMERCs. Their establishment was intended to help eliminate the 

inconsistency of coverage and reimbursement for DME that had been problematic in the past. 

The DMERCs are divided into regions A, B, C, and D, and cover the entire country. They 

were given specific responsibilities for educating Medicare beneficiaries and responding to 

their questions and concerns. However, the DMERCs have primary responsibility for 

providing such services for users of medical equipment and supplies. 

HCFA Beneficiary Services 

The HCFA publishes various literature for public distribution. One of its most important 

publications, the Medicare Handbook, includes a description of the DMERCs and how to 

contact them. Beneficiaries also learn about the DMERCs from their Explanation of 

Medicare Benefits forms, which they are sent after receiving Part B services. The form lists 
the name and telephone number of the carrier they should contact with any questions or 

problems with their claim. Finally, staff from HCFA also deal directly with the public by 

responding to beneficiary questions and complaints. 

DMERC Beneficiaq Services 

The four DMERCs are required to provide the following beneficiary services. 

Beneficiarv Inctuiries. The DMERCs must have staff available to respond to written, 

telephone, and in-person inquiries, problems and complaints, They are required to meet 

certain standards of timeliness, accuracy, and clarity when responding to these beneficiary 

contacts. More specifically, the carriers must provide a toll-free telephone service which 

operates during normal business hours for telephone inquires. This number must be separate 

from any numbers established for providers and be widely advertised, including being listed 

on Explanation of Medicare Benefits forms. The carriers must also have the capacity to deal 

with written correspondence and beneficiary visits. Timeliness standards include an interim 

or final response within 30 calendar days from receipt of a beneficiary’s letter, a telephone 

response within 2 minutes after acknowledgement of a beneficiary call, and a meeting with a 

carrier representative within 10 minutes of visiting an office in person. 

Beneficiarv Outreach and Education. The DMERCs are required to have a beneficiary 

outreach program. To meet this mandate, all four employ staff to conduct educational 

activities. These activities include participating in conferences, publishing and disseminating 

literature such as pamphlets and newsletters, and coordinating outreach efforts with local and 

State agencies such as the State Departments of Aging. Two DMERC ombudsmen also 

conduct beneficiary outreach activities. 

Fraud and Abuse Units. The DMERC fraud and abuse units are also active in enlisting the 

help of the public in combatting fraud and abuse. Beginning June 1, 1996, one Medicare 

fraud and abuse information specialist, operating out of region D, began coordinating all of 

the beneficiary outreach activities related to fraud and abuse in the four DMERCs. 

Beneficiary Apneals Process. The DMERCs are responsible for the first two of five stages 

of beneficiary appeals. When appealing a claim decision, a beneficiary can request a first 

stage of review by the DMERC reconsideration department within 6 months of the initial 

decision. Should the beneficiary wish to continue to a second stage of appeal, he or she can 

request a hearing with a hearing officer, an independent arbitrator working for the DMERC 

who adjudicates the claim. Appeals taken beyond these first two stages are no longer 

adjudicated by the DMERC. 

Operation Restore Trust 

This inspection is part of a Department of Health and Human Services anti-fraud initiative 

called Operation Restore Trust (ORT) designed to target fraud, waste and abuse related to 

home health agencies, nursing homes and DME suppliers. Recent reports and investigations 

by the OIG showed that these areas are particularly vulnerable to fraud, waste, and abuse. 
The ORT initiative targets California, Florida, New York, Illinois, and Texas. These five 

States account for 40 percent of the nation’s Medicare beneficiaries and program 

expenditures. 

METHODOLOGY 

Multiple Data Collection Methods 

We used three methods of data collection to conduct this inspection. First, we sent a mail 

survey to a stratified random sample of Medicare beneficiaries who had one or more claims 

submitted for durable medical equipment, prosthetics, orthotics and supplies in the first 6 

months of 1996. Second, we conducted structured telephone interviews with DMERC staff 

to gather information about their outreach activities and experience handling beneficiary 

inquiries. Third, we requested outreach materials from the DMERCs which we reviewed for 

content and clarity. 

See Appendix A for further discussion of the beneficiary sample selection, Appendix B for 

confidence intervals for key survey questions, and Appendix C for a non-respondent analysis. 

Beneficiary Survey 

We surveyed a stratified random sample of 2,000 Medicare beneficiaries, 500 from each of 

the four DMERCs, who had at least one claim processed by the DMERCs during the first 6 

months of 1996. Beneficiaries filed claims for a wide variety of medical equipment and 

supplies. Some of the most common included: oxygen equipment, blood glucose test strips, 

lancets, and wheelchairs. Thirty-four percent of these beneficiaries had at least one denied 

claim during this time. 

A questionnaire was then mailed to each of these beneficiaries which included questions 

about their awareness of the DMERCs; exposure to their literature and other outreach 

activities; satisfaction with DMERC performance; and experiences with fraud or abuse. The 

survey instructions allowed for a caregiver, family member, or friend to assist in filling out 

the items. 

After 6 weeks of data collection, during which time we conducted a second mailing to nonrespondents, 1,487 questionnaires were returned to us. We therefore achieved an overall 

response rate of 74.4 percent. Response rates between the strata were very similar: 72 

percent for Region A; 77 percent for Region B; 74 percent for Region C; and 74 percent for 

Region D. 

Upon reviewing the returned surveys, it became apparent that some beneficiaries were 

confused about the difference between their medical equipment supplier and their DMERC. 

Although the DMERC was clearly defined numerous times in the questionnaire, some 

respondents clearly answered questions about contact with the DMERC by referring to their 

medical equipment supplier. For example, some beneficiaries listed the name of a supplier 

when asked for the name of their DMERC, and indicated that the nature of their contact with 

3 
the “DMERC” was to pick up supplies. To prevent a potential distortion of study findings, 

we were careful to exclude answers that were obviously referring to medical equipment 

suppliers from questions about contact with the DMERC. 

After excluding these questionable cases, we were left with 185 beneficiaries who had 

contacted their DMERC by telephone, by mail or in-person, within the past 12 months. 

Of these 185 beneficiaries, 48 were from region A, 37 from region B, 46 from region C, 

and 54 from region D. Thirty-seven percent of beneficiaries who have contacted their 

DMERC had at least one denied claim during the sampling time frame. 

For the purposes of this inspection, we will refer to all durable medical equipment, 

prosthetics, orthotics and supplies as “medical equipment and supplies.” All differences 

reported between subgroups are statistically significant at the 95 percent level unless 

otherwise noted. 

DMERC Interviews and Outreach Literature Review 

We conducted structured telephone interviews with two staff members from each of the four 

DMERCs, for a total of eight interviews. Within each DMERC, one interview focused on 

outreach activities, while the other focused on beneficiary inquiries. 

Staff from the DMERCs were also asked to send us copies of materials used by their 

company for beneficiary outreach. We received outreach materials, including brochures, 

newsletters, and business cards, from three of the four DMERCs. We reviewed all of these 

materials for content and clarity. 

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

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

4 
FINDINGS 

MOST BENEFICIARIES WHO HAVE HAD CONTACT WITH THEIR DMERC ARE 

SATISFIED WITH THE SERVICE THEY RECEIVED 

Twelve Percent of Beneficiaries Report Contacting Their DMERC In the Past 12 Months 

Twelve percent of Medicare beneficiaries report some contact with their DMERC in the past 

12 months. Of these beneficiaries, 81 percent called, 12 percent wrote, and 18 percent 

visited the DMERC in person. These percentages vary little among the four regions. 

The most common reason cited by beneficiaries for calling and writing their DMERC was to 

discuss billing problems (19 and 20 percent, respectively). Other reasons given for calling 

include wanting more information about how Medicare covers medical equipment and 

supplies (17 percent) and wanting general information (17 percent). Nineteen percent of 

beneficiaries who wrote their DMERC wrote to appeal a claim decision. 

The most common reason given by beneficiaries for visiting the DMERC was to obtain 

information about different suppliers or types of medical equipment and supplies (24 

percent). Other common reasons for these visits were to obtain general information, to 

discuss billing problems, and to find out about Medicare coverage of medical equipment and 

supplies. 

Eighty-six Percent of Beneficiaries Who Say They Have Contacted Their DMERC Rate 

Overall Satisfaction With DMERC Service Positively 

A majority (86 percent) of the 185 beneficiaries who have contacted their DMERC are very 

or somewhat satisfied with how their carrier has served them overall. More specifically, 68 

percent are very satisfied and 18 percent are somewhat satisfied. Another 2 percent are 

neither satisfied nor dissatisfied, while 12 percent are somewhat or very dissatisfied. Of 

those who are satisfied, 15 percent of beneficiaries are able to correctly identify their 

DMERC by name. 

The main variables contributing to beneficiaries’ dissatisfaction in all four regions include 

being served by discourteous carrier staff, long waiting times to get through to the carrier, 

and having a claim denied. These variables are discussed in greater detail below. 

Overall satisfaction rates with services vary among the four DMERCs. In three regions, 

over 80 percent of beneficiaries (83 percent, 91 percent, and 98 percent, respectively) who 

have contacted their DMERC are satisfied. Just 65 percent are satisfied in the fourth region. 

However, beneficiaries rate DMERC telephone staff courtesy lowest in this region, and many 

of those who are dissatisfied report a lack of response or explanation from the DMERC as to 

why their claim was denied. 

5 
Beneficiaries Who Report Discourteous Staff and Long Waiting Times Are Least Likely TO 

Be Satisfied 

Beneficiaries’ satisfaction with the DMERC is associated with how they perceive staff 

courtesy. Ninety-one percent of beneficiaries who contacted their DMERC by telephone 

found the staff to be courteous; 97 percent of beneficiaries who visited found the staff to be 

so (the remaining 3 percent were neutral). Of those beneficiaries who say staff were 

courteous during their most recent telephone call, 89 percent are satisfied overall; however, 

of beneficiaries who say staff were not courteous, only 50 percent were satisfied overall. 

These findings linking staff courtesy to overall satisfaction are similar to prior beneficiary 

satisfaction surveys conducted by the OIG. 

Staff courtesy ratings vary among the four DMERC regions. More than 91 percent of 

beneficiaries report that staff were courteous during their most recent telephone contact in 

three of the four regions (92 percent, 94 percent, and 96 percent respectively). However, 

only 77 percent of beneficiaries in the fourth region say staff were courteous. This is also 

the region with the lowest overall satisfaction rate amongst its beneficiaries. 

Also consistent with findings from past studies, beneficiaries’ waiting time for a response to 

an inquiry is related to their overall satisfaction with the DMERC. Three-quarters (75 

percent) of beneficiaries calling their DMERC got through right away, while almost half (48 

percent) who had written to their DMERC and had received a response did so within 30 

days. Finally, three-quarters (75 percent) of beneficiaries who visited their DMERC office 

in person were able to meet with a staff member within 10 minutes. 

Eighty-nine percent of beneficiaries who got through right away when they called their 

DMERC are satisfied overall, compared to only 60 percent of those for whom it took more 

than half an hour to get through. 

Beneficiaries With Denied Claims are Less Satisfied 

Having at least one medical equipment or supply claim denied is negatively related to overall 

beneficiary satisfaction with DMERC service. Of those beneficiaries who have had no 

denied claims, 90 percent are satisfied overall. In comparison, just 79 percent of those who 

had at least one denied claim are satisfied overall. 

Beneficiaries Who Wrote Their DMERC Are Least Likely To Rate Their Contact Favorably 

Of those beneficiaries who called their DMERC, three-quarters say the DMERC did a very 

good or good job handling their inquiry; just 12 percent say the carrier did a poor job. A 

majority (89 percent) also found the information they got from their call helpful. Similarly, 

79 percent of beneficiaries who visited their DMERC say staff there did a very good or good 

job in handling their visit, with almost all (92 percent) saying the information they got as a 

result of their visit was helpful. 

Of the 25 beneficiaries who wrote their DMERC, however, only nine say the DMERC did a 

6 
very good or good job. Another nine say the DMERC did a poor job, five gave a neutral 

response, and two offered no opinion. The reasons given most often by these beneficiaries 

for their poor rating are either a negative decision from the DMERC (such as stopping a 

benefit) or the lack of a response from the DMERC. Furthermore, in comparison to 

beneficiaries who called or visited their DMERC, beneficiaries who wrote the carrier were 

less likely to say the information they received from the DMERC was helpful. 

Most Beneficiaries Who Have Appealed A Claim Are Satisfied With The Appeals Process 

Of the 185 respondents who had contacted their DMERC, 68 had at least one denied claim, 

34 of whom appealed their denial. Of these, 13 won their appeal, 12 lost, and the remainder 

are still awaiting a decision. Of those beneficiaries whose claims have been decided, almost 

half report that the entire appeals process took 2 months or less. Fourteen of the 25 

beneficiaries who have had a decision reached on their appeal report being satisfied with the 

process, nine are dissatisfied, and two gave no opinion. 

All Four DMERCs Have Similar Procedures In Place To Handle Beneficiary Inquiries 

All four of the DMERCs have similar procedures in place for responding to telephone calls 

from beneficiaries. They receive from 25,000 to 60,000 beneficiary calls in an average 

month, with volume varying across the regions. All four have staff devoted exclusively to 

responding to beneficiary calls, as well as a toll-free number for beneficiary use. Once a call 

is made, DMERC staff determine the nature of the inquiry and answer any questions 

immediately. If more research is necessary, they try to call back the beneficiary within 24 

hours. All calls are logged into a computer system, with records kept on the nature of each 

call made. 

Beneficiary inquiries by mail are made much less frequently than phone inquiries. Three of 

the DMERCs report having 500 or fewer inquiries by mail per month. Region C, however, 

reports receiving 7,800 inquiries each month by mail. Staff members available to handle 

mail inquiries vary among the four DMERCs from one to 42. All regions try to respond to 

beneficiary mail within 2 weeks. 

All four report having fewer than 10 beneficiary visits per month. Respondents from three 

regions say that these visits are handled by the correspondence or telephone staff. Two have 

a special area for staff to meet with beneficiaries. 

HOWEVER, BENEFICIARIES WHO USE MEDICAL EQUIPMENT AND SUPPLIES 

HAVE LIMITED KNOWLEDGE OF THEIR DMERC, AND FEW KNOW WHERE 

TO GO FOR MORE INFORMATION ABOUT THEIR MEDICARE BENEFITS 

Less Than One-Half of Medicare Users of Equipment and Supplies Know About Their 

DMERC 

Thirty-nine percent of the 1,487 survey respondents say they know they have a DMERC. 

However, many of these beneficiaries appear confused about who this is, perhaps because the 

7 
DMERCs were only recently established. Of these beneficiaries who claim to know about 

their DMERC, only 9 percent are able to correctly identify the name of their DMERC, 41 

percent do not know the name of their DMERC, and the remaining 50 percent wrongly 

identify a different company as their DMERC. Of this latter group, beneficiaries often give 

the name of another Medicare carrier, their medical equipment supplier, or private insurance 

company. 

These results do not generally differ among the four regions, with beneficiaries from all four 

reporting similar levels of awareness about the existence of the DMERC. However, 12 

percent of beneficiaries in region D and 14 percent in region A are able to correctly identify 

the name of their DMERC, compared to just 5 percent in regions B and C. 

Long term users of medical equipment and supplies (that is, those who have had them for 

more than 12 months) are somewhat more likely to know they have a DMERC than more 

recent users (those who have had their equipment and supplies for 12 months or less). 

Forty-five percent of the former know they have a DMERC, compared to 38 percent of the 

latter. 

Most Beneficiaries Do Not Use Their DMERC As a Source of Information 

Medicare beneficiaries appear to be using a variety of information sources for matters related 

to their equipment and supplies. For most, this is not the DMERC. Being able to obtain 

information related to their Medicare benefits is especially important, considering that twothirds (66 percent) do not know what percentage Medicare pays for their equipment and 

supplies. Furthermore, 35 percent do not know that their medical equipment supplier is 

required to meet certain customer service standards, such as honoring warranties and taking 

back bad equipment. 

Of the beneficiaries with questions about their Medicare benefits for equipment and supplies, 

one quarter state they would contact their physician and another quarter state they would 

contact somebody in “the Federal Government’s Medicare program.” Only 17 percent say 

they would contact their DMERC, while 12 percent would contact their supplier. Seventeen 

percent would not know who to contact. 

Furthermore, 36 percent of beneficiaries would contact the Medicare program if they wanted 

to appeal a Medicare decision related to their equipment and supplies. One quarter would 

not know who to contact if they wanted to appeal a Medicare decision, while only 15 percent 

state they would contact their DMERC. An additional 14 percent say they would contact 

their physician. Of those beneficiaries in the sample who have had at least one denied claim 

in 1996 (34 percent), only 15 percent would know to contact the DMERC to appeal their 

denial. 

Despite the fact that few Medicare beneficiaries are contacting their DMERC with matters 

related to their benefits for equipment and supplies, 10 percent say they would have 

contacted their DMERC had they known it existed. 

8 
TEN PERCENT OF BENEFICIARIES WHO USE MEDICAL EQUIPMENT AND 

SUPPLIES REPORT HAVING SOME EXPERIENCE WITH POSSIBLE FRAUD AND 

ABUSE 

Five Percent of Beneficiaries Have Suspected Fraud or Abuse Related To Their Equipment 

and Supplies 

Five percent of 1,487 survey respondents answered positively when asked if they had ever 

suspected fraud or abuse related to their equipment and supplies. Of these, 38 percent say 

they did not contact anyone about their suspicions. Another quarter contacted their medical 

equipment supplier, and 16 percent called their physician. Fourteen percent say they 

contacted the Medicare program, while 13 percent said they called their DMERC. Finally, 

just 1 percent of those who suspected fraud and abuse contacted the Inspector General’s 

hotline. 

Despite Never Suspecting Fraud and Abuse, Another 5 Percent of Beneficiaries Report 

Some Other Problem Which Strongly Suggests That One or the Other Occurred 

In addition to the 5 percent of beneficiaries who reported having suspected fraud or abuse, 

another 5 percent report having had one or more experiences which strongly suggest that one 

or the other occurred. Surprisingly, these beneficiaries say they have never actually 

suspected fraud and abuse. Two percent say they were billed for equipment or supplies that 

they never received, 2 percent report being charged more than they were told they would 

have to pay, and another 2 percent report receiving equipment or supplies that they did not 

need. 

Just Over Half of All Beneficiaries Would Call The Medicare Program If They Suspected 

Fraud and Abuse, But One-fifth Would Not Know Whom to Call, and Only 7 Percent 

Would Call the DMERC 

Fifty-four percent of all beneficiaries say they would call the “Federal Government’s 

Medicare program” to report suspected fraud or abuse. Another 22 percent report they 

would not know whom to contact to report suspected fraud or abuse. Ten percent say they 

would contact their physician, and only 7 percent would call their DMERC. Interestingly, 3 

percent would contact their medical equipment supplier to report abuse or fraud. 

WHILE ALL FOUR DMERCs CONDUCT BENEFICIARY OUTREACH, THEY DO 

SO ONLY TO A LIMITED EXTENT AND REPORT DIFFICULTIES IN THEIR 

EFFORTS 

DMERC Staff Devoted to Outreach Varies Between Regions 

The number of staff members handling outreach varies from one to 20 across the four 

DMERC regions. These numbers do not, however, represent the number of staff devoted to 

outreach activities on a full-time basis. In the region with 20 staff members working on 

outreach, only one does so full-time, while the rest are volunteers from within other 

9 
components of the company. In another region, three of the four individuals involved in 

outreach activities also do public relations. Finally, one region’s legislative specialist is also 

the sole staff person conducting outreach activities. 

All Four DMERCs Conduct Similar Outreach Activities 

All four of the DMERCs publish and distribute literature, such as pamphlets, newsletters and 

flyers, as an integral part of their outreach program. This literature cover topics such as 

Medicare coverage and non-coverage of DME, secondary payers, and combatting fraud. 

The DMERCs also publish newsletters which deal with specific issues, such as particular 

groups of supplies and capped rentals. 

These printed materials are distributed through mailing lists, consisting mostly of suppliers, 

advocacy groups for the elderly, and local and State Governments. Two DMERCs also 

routinely send out their pamphlets with all beneficiary correspondence. All four also 

distribute their printed materials at conferences and other public events. 

Overall, the outreach materials sent to us by the DMERCs provided useful information in 

simple terms. Each DMERC had a basic informational brochure with their name, address, 

and phone number clearly listed. The brochures discussed the basics of Medicare coverage, 

definitions and examples of durable medical equipment, prosthetics, orthotics and supplies, 

and the purpose of DMERCs. They also had information about how to appeal a claim and 

how to report suspicions of fraud or abuse. In addition to this basic brochure, the DMERCs 

had other types of materials, such as newsletters and flyers. Some of these items were also 

available in Spanish. 

All of the DMERCs also participate in conferences, seminars, or other public events. These 

events include trade shows and health fairs or expos, and are sponsored by local 

governments, hospital associations, and advocacy groups. The DMERCs’ participation at 

these events consists of giving presentations, setting up informational booths, and answering 

beneficiary inquiries. 

Few Beneficiaries Report Any Experience With Outreach Efforts 

One-quarter of beneficiaries (27 percent) have seen or read printed information, such as 

pamphlets and brochures, about Medicare coverage of equipment and supplies. Almost all 

(97 percent) say this information was helpful. Forty-four percent of these beneficiaries say 

this literature was published by the Federal Government’s Medicare program; just 15 percent 

report the literature was published by their DMERC. Almost half (46 percent) of the 

beneficiaries who have seen some literature related to medical equipment and supplies say it 

was sent to them without requesting it, mostly by the Federal Government’s Medicare 

program. Another 20 percent picked it up themselves. 

More than one-third (37 percent) of Medicare beneficiaries say they would like to receive 

more information about their Medicare benefits. Most of these beneficiaries would like 

general information on Medicare coverage and reimbursement. 

10 
Only 3 percent of Medicare beneficiaries report ever having attended any meeting, seminar 

or other public event about Medicare coverage of their medical equipment and supplies. All 

of this small group believe the meeting was helpful. 

DMERC Staff Cite Obstacles To Conducting Outreach, But Also Report Some Practices 

That Appear To Be Effective 

Staff at each of the four DMERCs report obstacles which hinder their outreach efforts. A 

staff person at one region believes it is difficult to locate the most appropriate and effective 

individuals and organizations within each of his region’s States to disseminate his information 

to; he is not sure that his information is actually reaching the beneficiaries. In another 

region, the outreach staff member cites scheduling conflicts due to the many different groups 

he coordinates his outreach activities with. A staff member at a third region identifies the 

cost associated with this type of work as the main obstacle to conducting outreach. He also 

believes that it is difficult to assess the effectiveness of outreach efforts. Finally, one 

employee cites a general lack of knowledge among beneficiaries about who the DMERC is, 

as well about Medicare benefits in general. She also believes that lack of attendance at the 

advertised events is a major obstacle to conducting effective outreach. 

The DMERC staff we interviewed reported what they viewed as effective practices in 

conducting outreach. These different practices ranged from using alternative methods of 

educating beneficiaries, such as using business cards to advertise their toll-free number, to 

promoting beneficiary involvement in outreach activities. One innovative approach being 

used involves having Medicare beneficiaries themselves present educational information at 

outreach events. Another DMERC distributed an informational video to libraries and cable 

companies. Several staff members stated that creative and persistent dissemination of 

outreach materials helps to overcome the obstacles they face in educating the Medicare 

population. 

11 
RECOMMENDATIONS 

Our findings of high satisfaction among beneficiaries who have had contact with their 

DMERC suggest that HCFA’s initiative to use only four regional carriers to process 

Medicare claims for medical equipment and supplies is having some success so far. 

However, we believe HCFA can take additional steps to improve the education and service 

of Medicare beneficiaries who use medical equipment and supplies. These steps would 

support wider HCFA initiatives to involve beneficiaries in managing their own health care 

and in detecting and reporting fraud and abuse. 

Specifically, HCFA should: 

1. Evaluate ways to increase beneficiary satisfaction with the one DMERC region with 

the lowest overall satisfaction rating; 

2. Instruct the DMERCs to emphasize the importance of courteous staff and timeliness in 

responding to beneficiary inquiries, since these two variables appear to be strongly 

related to overall beneficiary satisfaction; 

3. Look more carefully at effective ways to educate beneficiaries on what constitutes 

fraud and abuse and what to do if they suspect that one or the other occurs. 

COMMENTS 

We received comments on the draft report from HCFA and the Assistant Secretary for 

Planning and Evaluation (ASPE). They concur with our recommendations. The ASPE also 

provided suggestions for clarifications of the text which have for the most part been 

incorporated into the final report. 

The ASPE expressed some concern with our findings on the appeals process which suggest 

that almost 50 percent of beneficiary appeals are successful and that 50 percent take more 

than 2 months to be resolved, indicating that some beneficiaries may be waiting for necessary 

equipment and supplies. The ASPE therefore recommends that HCFA routinely examine 

DMERC denials and the outcomes of beneficiary appeals. We believe the number of 

beneficiaries in our survey who appealed a claim (34) is too small to base on which to base 

such a recommendation. While our data may be suggestive of procedural weaknesses, it is 

too limited to draw any general conclusions. However, we do believe that this is an 

important issue and we currently plan to undertake a broader review of the appeals process. 

The ASPE also recommends that HCFA encourage the DMERCs to look for more effective 

ways to conduct general outreach. We agree with the need for additional outreach, which 

could be conducted along with the more specific fraud and abuse outreach already planned by 

HCFA. 

12 
APPENDIX A 

SAMPLE SELECTION 

The universe for this inspection was selected by identifying all line items processed by the 

DMERCs and posted to HCFA’s 1996 National Claims History 1 percent sample file as of 

6130196. These 224,098 records were then summarized by DMERC and Medicare 

identification number to eliminate multiple billings for a beneficiary to the same DMERC. 

After limiting the line items to those for living beneficiaries, our universe consisted of 

31,283 records for 31,159 beneficiaries (several beneficiaries had claims submitted to 

multiple DMERCs). 

Pre-inspection research indicated that approximately 10 percent of Medicare beneficiaries 

who file claims for medical equipment or supplies contact their DMERC. To ensure that we 

captured a large enough number of these beneficiaries, we chose a sample size of 2,000 

records. This sample size was also based on the assumption of a 70 percent response rate, 

which we believed to be attainable based on past beneficiary survey inspections. 

From the identified universe, we selected a stratified random sample of 500 beneficiaries 

(one was sampled twice) from each of the four DMERCs as follows: 

STRATA (DMERC) UNIVERSE SAMPLE 

1 (B) 7,277 500 

2 63 12,055 500 

3 03 6,165 500 

4 (4 5,786 500 

TOTAL 31.283 2,000 

A- 1 
APPENDIX B 

CONFIDENCE INTERVALS FOR KEY QUESTIONS 

We calculated confidence intervals for 13 key questions from the beneficiary mail 

questionnaire. The response estimate and 95 percent confidence interval are given for each 

of the following: 

1. Before you started to answer this questionnaire, did you know that you have a 

Medicare medical equipment carrier (the private insurance company that contracts 

with the Federal Government to process Medicare claims for your medical equipment 

and/or supplies)? 

“Yes” response estimate: 39 % 

Lower interval: 36% 

Upper interval: 42 % 

2. What is the name of your Medicare medical equipment carrier? 

“I don’t know” response estimate: 41% 

Lower interval: 37% 

Upper interval: 45% 

3. Have you ever seen or read any printed information, such as pamphlets or brochures, 

about Medicare coverage of medical equipment and supplies? 

“Yes” response estimate: 27 % 

Lower interval: 25% 

Upper interval: 29% 

4. Do you know what percentage Medicare pays for your medical equipment and/or 

supplies? 

“Yes” response estimate: 34 % 

Lower interval: 31% 

Upper interval: 37% 

5. Who would you call if you had a question about your Medicare benefits for medical 

equipment and/or supplies? 

“My Medicare medical equipment carrier” response estimate: 17% 

Lower interval: 15% 

Upper interval: 19% 

6. Who would you call if you wanted to appeal a Medicare decision on your medical 

equipment and/or supplies claim? 

“My Medicare medical equipment carrier” response estimate: 15% 

Lower interval: 13% 

Upper interval: 17% 

B- 1 
7. Have you ever contacted your Medicare medical equipment carrier about any matter 

related to your medical equipment and/or supplies? 

“Yes” response estimate: 12% 

Lower interval: 10% 

Upper interval: 14% 

8. Overall, how satisfied have you been with how your Medicare medical equipment 

carrier has served you? 

“Satisfied” response estimate: 86% 

Lower interval: 81% 

Upper interval: 91% 

9. In general, how courteous or discourteous were the Medicare medical equipment 

carrier staff during this call? 

“Courteous” response estimate: 91% 

Lower interval: 85% 

Upper interval: 97% 

10. What happened when you called? 

“I got through right away” response estimate: 75% 

Lower interval: 68% 

Upper interval: 82% 

11. Does the beneficiary report having some experience with possible fraud or abuse? 

“Yes” response estimate: 10% 

Lower interval: 8% 

Upper interval: 12 % 

12. Have you ever suspected Medicare fraud or abuse related to your medical equipment 

and/or supplies? 

“Yes” response estimate: 5 % 

Lower interval: 4% 

Upper interval: 6 % 

13. Which of the following did you contact about your suspicions? 

“Nobody” response estimate: 38 % 

Lower interval: 24% 

Upper interval: 52% 

B-2 
APPENDIX C 

NON-RESPONDENT ANALYSIS 

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

from respondents. For this inspection, a beneficiary for whom a survey was not received is 

a non-respondent. To test for the presence of any bias, we first obtained information from 

HCFA’s 1 percent Common Working File for all 2,000 beneficiaries who were sent a mail 

questionnaire. A total of 1,487 surveys were returned, for a response rate of 74.4 percent. 

The following table illustrates the number of responses and the response rate by strata: 

STRATA (DMERC) 

1 (B) 

m 

3 CD) 

4 6% 

Total Respondents 

The survey data are analyzed 

NUMBER 

384 

372 

371 

360 

1,487 

RESPONSE RATE 

77% 

74% 

74% 

72% 

74% 

as a whole and not by strata. However, we did exceed the 

desired minimum 70 percent response rate for each strata. 

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

influence whether an individual would respond to the survey or that might affect his or her 

responses. For the 2,000 beneficiaries in our sample, we looked at sex, claim status (i.e., 

whether or not the beneficiary had one or more claims denied during our study period), and 

DMERC region. These categorical variables were tested using Chi-square with the 

appropriate degrees of freedom. 

The results of this analysis are presented in tables A, B and C. 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 rates by the different values of the variables. 

These tables show no statistically significant differences between respondents and nonrespondents 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 beneficiaries to whom 

the questionnaires were sent. We therefore believe that our survey results can be generalized 

to the universe of Medicare beneficiaries who had a medical equipment or supplies claim 

processed during the first 6 months of 1996. 

c- 1 

2 
TABLE A 

SEX 

Respondents Non-respondents Total Response 

Rate 

Male 608 41% 187 36% 795 76% 

Female 879 59% 326 64% 1,205 73% 

Total 1,487 513 2,000 74% 

CHI-SQ = 3.133 

Degrees of Freedom = 1 

TABLE B 

CLAIM STATUS 

Respondents Non-respondents Total Response 

Rate 

At least one 511 34% 191 37% 702 73% 

claim denied 

No claims 976 66% 322 63% 1,298 75% 

denied 

Total 1,487 513 2,000 74% 

CHI-SQ = 1.377 

Degrees of Freedom = 1 

c-2 
TABLE C 

DMERC REGION 

Non-respondents 

Total 1,487 513 2,000 74% 

CHI-SQ = 3.028 

Decrees of Freedom = 3 I( 

c-3 

II 
APPENDIX D 

COMMENTS ON THE DRAFT REPORT 

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

Administration and the Assistant Secretary for Planning and Evaluation. 

D-l