Fraud, waste, and abuse (FWA) in durable medical equipment (DME) billing continues to present costly challenges for health plans. With high-dollar items like back braces and respiratory devices frequently targeted, improper billing and documentation can quickly spiral into massive overpayments. Proactively identifying and addressing these issues is essential—not only to protect the health plan but also to help ensure that patients are receiving medically necessary care.
Proactive analysis uncovers an outlier provider
As Cotiviti’s investigators performed proactive data mining with our FWA review, one provider stood out for excessive DME billing of Medicare. This provider had been billing for HCPCS codes E0603 (electric breast pump), L2630 (pelvic control band and belt), and L0643 (lumbar-sacral orthosis), triggering suspicion due to unusually high volumes and questionable billing patterns. A tip was submitted to the plan, which agreed that further review was warranted.
Cotiviti’s initial claims data analysis revealed a troubling trend: the provider was submitting hundreds of claims—often without proper referral documentation. Over 500 claims for HCPCS E0603 were billed to members over the age of 40, including patients as old as 55—outside the typical demographic for this type of equipment. In addition, Cotiviti experts found that two of the codes, L2630 and L0643, were billed with no referring providers listed at all.
This pattern raised further red flags. Not only were items potentially unnecessary, but the provider’s business location appeared inconsistent with Medicaid facility requirements, raising the possibility of a false front operation. In such circumstances, a health plan would consider placing the provider on prepayment review, referring the provider to law enforcement agencies, and terminating the provider from its network.
A >$2.7 million overpayment backed by 100% error rate
Cotiviti’s special investigations unit (SIU) conducted two levels of internal review, examining medical records, delivery documentation, and other supporting materials. The results demonstrated a 100% error rate across the reviewed claims. Some of the most notable issues included delivery tickets that failed to show that the billing provider supplied the equipment and missing documentation from the ordering provider to support medical necessity.
This lack of proper documentation not only violated coverage requirements but directly contributed to major financial risk of nearly $2.76 million in identified overpayments. In response, the plan provided direct education to the provider, reinforcing the requirements for proper documentation, ordering procedures, and proof of delivery.
Key takeaways for health plans
Durable medical equipment represents a high-risk area for FWA, especially when documentation and billing practices fall short. Health plans can mitigate these risks by taking a proactive approach, including these steps:
- Use claims analytics to identify providers with outlier billing patterns for DME codes. Place these providers on prepayment review to prevent future issues.
- Review documentation thoroughly, especially when referrals or proof of delivery are missing, and compare with medical records and provider’s documentation.
- Educate providers on the specific coverage criteria for DME services.
- Implement system edits to block payment for improperly documented services.
Achieve better FWA outcomes with Cotiviti
By applying a proactive, data-driven review process, Cotiviti helps payers stay ahead of FWA trends and protect their members’ plan benefits. Learn how our 360 Pattern Review solution combines the power of prepay FWA identification with postpay investigation to reduce errors while supporting provider education and preserving relationships.
