Washington Here's a tip for the Health Care Financing Administration: Want to stop wasting Medicare dollars? Stop reimbursing dead beneficiaries.

Medicare paid nearly $5 million for durable medical equipment claims in which the beneficiaries had already passed away-and HCFA knew about it, according to a Health and Human Services Office of Inspector General report.

In evaluating a 1 percent sample of 1997 claims, the OIG found that Medicare paid an estimated $20.6 million for services that began after the beneficiaries' deaths. Of this total, $12.6 million was paid for claims in which the dates of death had not yet been posted on HCFA's computer system. The remaining $8 million, however, went for services in which the dates of death had been posted. More than half-$4.8 million-was for durable medical equipment, according to the report.

The OIG also found significant flaws in HCFA's procedures for identifying and recovering payments for deceased beneficiaries. According to the report, contractors receive updated beneficiary information, such as date of death, from HCFA whenever claims are returned to them. But once HCFA is notified of a beneficiary's date of death, contractors update this information only if they send another claim to HCFA.

"Therefore, it is possible that the contractors' systems may never be updated with this beneficiary date of death information," the report states. "In turn, when the contractors perform their post-payment reviews looking for payments made for deceased beneficiaries, they may miss a significant number of payments because the beneficiary's date of death was never posted to their own internal claims processing system."

To rectify such problems, the OIG made several recommendations. Because payments for services in which the date of death has not been posted cannot be denied, the OIG recommended that HCFA require contractors to conduct annual post-payment reviews to identify and recover these payments. The OIG also said HCFA should ensure that contractors have the most up-to-date information before conducting these reviews.

In regard to the discrepancies the OIG found between the dates of death posted on the databases that HCFA uses to process claims, the OIG recommended that HCFA periodically reconcile this information to ensure that accurate dates of death are recorded in these files.

HCFA administrator Nancy-Ann Min DeParle said HCFA agrees with and will implement the recommendations, including requiring contractors to conduct reviews and reconciling date-of-death information. An attempt is under way to recover the improperly paid claims, she said.

To obtain a copy of this report, call the OIG at 800/531-9562 or access its Web site at www.dhhs.gov/progorg/oei.