DME/HH-H Improper Payments Contribute to 30% of Medicare Losses

March 19, 2015

CONTACT: Kristin Walter
(202) 898-0995


DME/HH-H Improper Payments Contribute to 30% of Medicare Losses

Washington, D.C. – Data released recently by the Center for Medicare and Medicaid Services (CMS) show the Durable Medical Equipment and Home Health and Hospice (DME/HH-H) providers improperly bill the Medicare Trust Fund in more than half of all claims, amounting to a loss of $15 billion.


Error Rate

Amount Lost

Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) 53.1% $5.10 billion
Home Health (HH) part of Part A, non-hospital 51.4% $9.40 billion
Hospice (H) part of Part A, non-hospital 3.8% $0.47 billion
Hospice (H) part of Part A, hospital-based 8.6% $0.12 billion
TOTAL   $15 billion

Table 1. DME/HH-H Error Rates[i]

Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) have a startling error rate of 53.1%[ii], which means their claims are inaccurate in more than half of cases. It is estimated that these errors cost the Medicare Trust Fund $5.1 billion annually[iii].

Similarly, Home Health (HH) claims have an error rate of 51.4%[iv] – also demonstrating that these claims are inaccurate more than half of the time. These improper claims cost the Medicare Trust fund an additional $9.4 billion[v] annually. Interestingly, the rate of underpayments for Home Health claims is 0%[vi].

Hospice (H) claims are broken into non-hospital-based and hospital-based. These claims have error rates of 3.8% and 8.6%, respectively[vii]. This type of billing error costs the Medicare Trust Fund $600 million combined[viii].

The Medicare Trust Fund consistently loses more than $46 billion per year.[ix] With a $15 billion loss, DME/HH-H contributes to 30 percent[x] of program funds wasted in FY2014.

DME/HH-H claims account for the highest CERT error rate[xi], causing CMS to shine a spotlight on these specific claims. Late last year, the CMS moved forward to award the first national recovery audit contract to identify Medicare improper payments among DME/HH-H claims.

The previous recovery audit contracts ended June 1, 2014, halting all Medicare oversight by the program. As an interim step, CMS allowed the previously contracted recovery auditors to restart on a limited basis while awaiting the award of the new contracts. However, reviews of DME, HH and H medical records are not included in the Recovery Audit Contractor (RAC) program’s current scope.

“DME/HH-H Medicare billing has historically been ridden with errors. Looking at the data, it becomes clear that more, not less, oversight is needed,” said Kristin Walter, spokesperson for the Council for Medicare Integrity. “It’s time to get the RAC program back on track and reviewing claims at previous levels. We ask Congress make the longevity of the Medicare Trust Fund a priority to ensure that the program will be there for the 50 million Americans who rely on it every day.”

Congress mandated the creation of the RAC program to review Medicare claims, identify billing errors and return misused funds to the Medicare Trust Fund. Since the program began in 2009, recovery auditors have returned more than $9 billion[xii] to the Trust Fund, while reviewing less than 2 percent of Medicare claims from any given provider. Recovery auditors have also returned more than $800 million in underpayments to providers. In FY 2013, an independent validation contractor found that recovery auditors had an average accuracy rate of 96.4%[xiii].


For more information, please visit: www.medicareintegrity.com

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About the Council for Medicare Integrity

The Council for Medicare Integrity is a 501(c)(6) non-profit organization. The Council’s mission is to educate policymakers and other stakeholders regarding the importance of healthcare integrity programs that help Medicare identify and correct improper payments.

As a 501(c)(6) organization, the Council files IRS Form 990s annually with the IRS as required by law. Copies of these filings and exemption application materials can be obtained by mailing your request to the Secretary at: Council for Medicare Integrity, Attention: Secretary, 9275 W. Russell Road, Suite 100, Las Vegas, Nevada 89148. In your request, please provide your name, address, contact telephone number and a list of documents requested.  Hard copies are subject to a fee of $1.00 for the first page and $.20 per each subsequent page, plus postage, and must be made by check or money order, payable to the Council for Medicare Integrity. Copies will be provided within 30 days from receipt of payment. These documents are also available for public inspection without charge at the Council’s principal office during regular business hours. Please schedule an appointment by contacting the Secretary at the address above.

[i] Medicare Fee-for-Service 2014 Improper Payments Report, Supplementary Appendices, pages 7-8.

[ii] The Supplementary Appendices for the Medicare Fee-for-Service 2014 Improper Payments Report, Table B2, page 7.

[iii] Ibid, page 7.

[iv] Ibid, page 8.

[v] Ibid page 53.

[vi]Ibid, page 59.

[vii] Ibid, Table B3, page 8.

[viii] Ibid, Table B3, page 8.

[ix] GAO: Government Efficiency and Effectiveness, Page 26: http://www.gao.gov/assets/670/668828.pdf

[x] Medicare Fee-for-Service 2014 Improper Payments Report, Supplementary Appendices, Pages 7-8, HHS FY 2013 Agency Financial Report

[xi] http://www.cms.gov/Research-Statistics-Data-and-Systems/Monitoring-Programs/Medicare-FFS-Compliance-Programs/CERT/index.html?redirect=/cert

[xii] Accumulation of Medicare FFS Recovery Audit Program Quarterly Reports: http://www.cms.gov/Research-Statistics-Data-and-Systems/Monitoring-Programs/Medicare-FFS-Compliance-Programs/Recovery-Audit-Program/Recent_Updates.html

[xiii] FY2013 RAC Report to Congress, page 42. http://www.cms.gov/Research-Statistics-Data-and-Systems/Monitoring-Programs/MedicareFFS-Compliance-Programs/Recovery-Audit-Program/Downloads/FY-2013-Report-ToCongress.pdf


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