Medicare's Reimbursement Policies for Durable Medical Equipment Should Be Modified and Made More Consistent

HRD-81-140: Published: Sep 10, 1981. Publicly Released: Sep 24, 1981.

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Because of complaints from suppliers of durable medical equipment to Medicare beneficiaries in some southeastern states that they were not being treated fairly by the Health Care Financing Administration's (HCFA) Atlanta regional office and Medicare carriers in that region, GAO was asked to look into selected Medicare reimbursement practices in Georgia, Alabama, Florida, and South Carolina in comparison with other states. Specifically, GAO was asked to determine: (1) whether standard hospital beds and wheelchairs are widely and consistently available to beneficiaries at the 25th percentile of charges; (2) whether suppliers in the HCFA Atlanta region were subject to different and more restrictive coverage and reimbursement criteria than were being applied to suppliers in other areas; and (3) the appropriateness of other payment practices and policies followed by carriers in the Atlanta region.

There were large geographical areas in most of the states reviewed containing thousands of Medicare beneficiaries where standard wheelchairs and hospital beds were not available at the lowest charge level. This condition was less critical for rental than for purchases because more suppliers took assignment for rentals than for purchases. Because carriers do not accumulate data on the number or rate of assignments for these items, HCFA does not know what the assignment rates are or their precise impact on availability. The unavailability of these items for purchase at the lowest charge levels tends to defeat the purpose of Public Law 95-142. In addition, there have been problems with developing, applying, and monitoring the provisions. The coverage and utilization screens used by the Atlanta region differ from those used in the Boston, San Francisco, and Kansas City regions. Even within the Atlanta region, carriers have differing requirements. Carriers in the Atlanta region were also the only carriers reviewed that used inherent reasonableness tests to assess the validity of durable medical equipment allowances.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: The agency only took action to correct the specific inequities GAO identified in one of the areas of the country.

    Recommendation: The Secretary of HHS should direct the Administrator of HCFA to ensure that the Medicare policies, practices, and coverage and utilization screens required by HCFA are consistently applied in all regions.

    Agency Affected: Department of Health and Human Services

  2. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of HHS should direct the Administrator of HCFA, to inform beneficiaries, or their doctors, of where items can be acquired at or below the allowed amount or suppliers that usually accept assignment.

    Agency Affected: Department of Health and Human Services

  3. Status: Closed - Not Implemented

    Comments: Although HHS acknowledges that the recommendation has merit, it believes that its implementation would be too costly.

    Recommendation: The Secretary of HHS should direct the Administrator of HCFA to require carriers to compute data on assignments for items subject to the lowest charge levels to monitor the availability of such items.

    Agency Affected: Department of Health and Human Services

  4. Status: Closed - Not Implemented

    Comments: The agency does not intend to act on this recommendation but believes that other changes it is making to its policies will somewhat alleviate the problems identified by GAO.

    Recommendation: The Secretary of the Department of Health and Human Services (HHS) should direct the Administrator of HCFA to discontinue applying the 25th percentile on purchases because: (1) there are not enough data to compute it; (2) equipment is not widely and consistently available at the computed price; and (3) the limits tend to defeat the purpose of Public Law 95-142 which would require purchase if less costly than rental.

    Agency Affected: Department of Health and Human Services

  5. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of HHS should direct the Administrator of HCFA to determine, to the extent practicable, the cost effectiveness of coverage and utilization screens before or during their implementation.

    Agency Affected: Department of Health and Human Services

 

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