Durable Medical Equipment:

Specific HCFA Criteria and Standard Forms Could Reduce Medicare Payments

HRD-92-64: Published: Jun 12, 1992. Publicly Released: Jun 12, 1992.

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Leslie G. Aronovitz
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Pursuant to a legislative requirement, GAO studied Medicare payments for durable medical equipment, focusing on the: (1) adequacy of the Health Care Financing Administration's (HCFA) criteria for determining medical necessity; and (2) potential of standardized certification forms for reducing unnecessary payments.

GAO found that: (1) in 1990, Medicare paid about $1.7 billion for durable medical equipment claims; (2) Medicare pays millions of dollars annually for equipment that beneficiaries do not need; (3) HCFA coverage criteria for determining the necessity of durable medical equipment are vague and subjective and do not include sufficient information about specific medical conditions, condition severity, or the necessity for additional or sophisticated features on basic equipment; (4) HCFA agrees with carriers that more detailed coverage criteria could reduce unnecessary Medicare payments for durable medical equipment, but believes that it is unreasonable to list all possible conditions for coverage; and (5) to reduce unnecessary payments, HCFA requires suppliers to have prescriptions before delivering certain equipment to beneficiaries, suggests that carriers use more detailed medical necessity certification forms, and proposes to consolidate the processing of medical equipment claims. GAO also found that: (1) carriers have significantly reduced unnecessary equipment payments by using certification forms that require physicians to provide narrative, more detailed justification for equipment; and (2) HCFA plans to develop additional suggested forms for carriers to use to certify medical equipment necessity.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: The four regional carriers for DME claims have developed specific medical review policies for the 100 most frequently utilized items of durable medical equipment. These policies contain detailed criteria that supplement HCFA's broad criteria.

    Recommendation: The Secretary of Health and Human Services should direct the Administrator, HCFA, to develop and issue specific coverage criteria for equipment HCFA identifies as subject to unnecessary payments.

    Agency Affected: Department of Health and Human Services

  2. Status: Closed - Implemented

    Comments: HCFA has developed, and is continuing to develop, medical necessity forms for equipment subject to unnecessary payments. However, these forms generally do not require specific narrative justifications. Rather, they typically are composed of detailed, specific questions that can be addressed through a "yes", "no", or scale indicator response. HCFA believes that these types of forms provide carriers with specific answers to the questions that they most need addressed in order to make a claims payment determination.

    Recommendation: The Secretary of Health and Human Services should direct the Administrator, HCFA, to require that the medical necessity certification forms being developed by HCFA for equipment subject to unnecessary payments require physicians to provide detailed narrative justification documenting the medical necessity for the prescribed equipment.

    Agency Affected: Department of Health and Human Services


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