August 26,2008

Grassley seeks answers about inaccurate estimates of improper payments by Medicare

WASHINGTON — Senator Chuck Grassley has sent the letter below in response to a
new Inspector General report finding higher rates of improper payments by Medicare for medical
equipment than estimated and reported by the agency that administers Medicare. A copy of the
Inspector General Report is posted with this news release at

August 25, 2008

Kerry Weems
Acting Administrator
Centers for Medicare and Medicaid Services
U.S. Department of Health and Human Services
200 Independence Avenue, SW
Washington, DC 20201

Dear Acting Administrator Weems and Inspector General Levinson:

I am in receipt of the final report prepared by the Office of the Inspector General (OIG)
of the Department of Health and Human Resources (HHS) entitled: "Medical Review of Claims
for Fiscal Year 2006 Comprehensive Error Rate Testing Program" (Report). That Report was
conducted to:

1) Determine the adequacy of the Comprehensive Error Rate Testing Program (CERT)
contractor's 2006 medical review of Durable Medical Equipment (DME) claims; and

2) Assess the impact of reviewing additional medical records on the 2006 DME error rate.

To begin, I am deeply disturbed by the findings of the OIG Report and by the failures of
the Centers for Medicare and Medicaid Services (CMS) and its contractor, AdvanceMed.
Although you were not the Administrator of CMS at the time that the original 2006 error rate
was reported to me, Mr. Weems, I look to your leadership to address the serious concerns arising
out of the OIG Report.

In its Report the OIG determined that the 2006 DME error rate is not 7.5% as originally
reported to Congress, but instead is closer to 30%--more that four times as high as CMS reported
to Congress. What is even more alarming is that it appears that CMS may have deliberately
instructed the contractor to take the unusual step of undertaking a limited review of the available
data so as to make the error rate calculation far smaller than it was in reality. According to the
OIG Report, CMS orally instructed the CERT contractor to "deviate from written policies by
making determinations based primarily on the limited medical records available from
suppliers…, not the full medical records available from physicians and by applying clinical
inference when reviewing supplier medical records to reasonably infer that the DME provided
was medically necessary." See page 2 of Report.

This is unconscionable and an affront to every American taxpayer who is footing the bill,
especially because we are not talking about millions of dollars. Instead, we are talking billions
of dollars lost to fraud, waste and/or abuse in 2006.

Equally important is whether or not the 2007 DME error rate reported to Congress is as
inaccurate as the 2006 DME error rate reported to Congress. Accordingly, I am requesting
through this letter that the HHS OIG:

1) Examine the methodology being used to determine the CMS 2007 DME error rate; and

2) Investigate who at CMS directed AdvanceMed to deviate from established policies and
use clinical inference.

Additionally, I am interested in learning more about the CERT contractor, AdvanceMed.
In particular Mr. Weems, I would appreciate receiving a copy of the contract(s) executed
between CMS/HHS and AdvanceMed for the past five years. In addition, I would appreciate
receiving any and all reviews, assessments, evaluations or the like conducted of AdvanceMed
and its contract performance. Next, I would like to know to what extent AdvanceMed was
merely following the contract with CMS or, if not, what action CMS will take with regard to
AdvanceMed for its inadequate review of available documentation leading to an inaccurate DME
error rate being reported to Congress.

Thank you in advance for your attention to this important matter and I look forward to
receiving your responses and the material I requested as soon as possible.


Chuck Grassley
United States Senator
Ranking Member of the Committee on Finance