FWA (TX)- MCO overpaid durable medical equipment vendors by more than $18,000



MM Curator summary

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[MM Curator Summary]: TX HHS says BCBS of TX can do better next time after finding $18k of DME improper payments it let slip through.


Clipped from: https://oig.hhs.texas.gov/about-us/news/mco-overpaid-durable-medical-equipment-vendors-more-18000

The OIG recently audited Blue Cross and Blue Shield of Texas (BCBS), finding the managed care organization lacked adequate controls to detect fraudulent claims for durable medical equipment (DME).  

According to the report, BCBS did perform some oversight activities for DME claims, including complying with pricing, timing and claim payment timeliness requirements. However, not all requirements were met before issuing reimbursements to vendors. Specifically, BCBS did not consistently: 

  • Comply with Texas Medicaid Provider Procedures Manual (TMPPM) benefit limits in accordance with the Uniform Managed Care Contract and the Uniform Managed Care Manual.
  • Conduct oversight activities to ensure DME was authorized, medically necessary, or received by members.
  • Validate or accurately price miscellaneous DME claims.

BCBS stated that its policy was to follow TMPPM requirements in processing DME reimbursements. Still, auditors found that the MCO had not provided a subcontractor with information on properly processing DME claims. The lack of suitable oversight resulted in 39 inappropriately processed claims totaling more than $18,105.57. 

In response to the audit, BCBS stated that it has already taken steps to improve its controls and prevent overpayments, including implementing a new system to verify the delivery of DME items. The MCO also updated policies to ensure reasonable prices and committed to reviewing and investigating potential fraud cases more thoroughly.

These efforts align with the OIG’s recommendations, including that BCBS: 

  • Ensure that its claims processing subcontractor implements edits to ensure claims are reimbursed according to required benefit limits and exclusions for: 


  • Total rental cost limits.
  • Allowed DME amounts. 
  • Multiple claims for the same DME to the same member in one calendar month. 
  • Duplicate claims. 
  • Develop and implement oversight processes to verify its claims processing subcontractor identifies and denies claims for related procedure codes in accordance with benefit limit and exclusion requirements.
  • Develop oversight processes or provide DME providers with guidance for (a) prior authorization requirements, (b) maintaining a physician’s order to demonstrate the member’s need for the DME, and (c) delivery confirmation demonstrating the member received the DME. 
  • Develop and implement a process to verify miscellaneous DME claims are paid in accordance with BCBS requirements.

Auditors also found that BCBS should repay the state of Texas $18,105 for processed claims that did not meet the TMPPM requirements.