WASHINGTON--According to a new report from the Office of Inspector General, Medicare Part B made $100.8 million in potential overpayments to DMEPOS suppliers on behalf of beneficiaries in Part A-covered skilled nursing facilities during 1999-2002--and the government wants the money back.

Those years, according to the report, were before CMS' Common Working File edits to prevent such overpayments were operational. As a result, the DMERCs were unable to initiate recovery actions. After the edits were fully implemented, OIG's computer match identified potential overpayments of $15.4 million in 2003.

Under the prospective payment system, home medical equipment furnished during beneficiaries' SNF stays is generally included in the facilities' Part A payments, so Part B payments by any of the four DMERCs to suppliers for such items were overpayments.

Now, when SNFs submit their claims before equipment suppliers submit theirs, prepayment edits identify and deny payments for inappropriately billed Part B services before CMS reimburses the suppliers, Inspector General Daniel Levinson explained in a letter accompanying the report. When suppliers submit their claims before SNFs submit theirs, postpayment edits identify Part B overpayments after CMS has reimbursed the suppliers, and those overpayments must be recovered through offset or collection activities.

The OIG undertook the review, Levinson said, to determine the amount of overpayments before the edits were in place, and to figure out how much of the overpayments had been recovered after the edits became operational.

According to the results, a statistical sample showed that the DMERCs had not recovered approximately 69 percent of the potential overpayments for 2003. "This problem occurred because two of the four DMERCs did not implement procedures to process and recover the backlog of overpayments created by the new edits. As a result, we estimate that the DMERCs did not recover $11.2 million of the $15.4 million in potential [2003] overpayments," Levinson said.

Based on its findings, the OIG recommended that CMS direct its contractors to:

--Review the $100.8 million in potential overpayments for 1999-2002 and make appropriate recoveries;
--Initiate recovery of the estimated $11.2 million in 2003 overpayments; and
--Ensure that they have established proper controls to recover overpayments that the Common Working File edits identify.

According to the OIG, CMS concurred with the recommendations.