News & Views

DME Suppliers Cheat Medicare When They Bill for Skilled Nursing Facility Patients

Medicare pays a bundled payment to skilled nursing facilities that cover all of a patient’s needs, including the provision of durable medical equipment (DME). In turn, DME suppliers are not permitted to seek separate Medicare reimbursement for skilled nursing facility patients.

Some DME suppliers may be  circumventing these Medicare rules by misrepresenting patient locations.

For instance, in a recent intervened False Claims Act qui tam action, the government alleged that splint supplier Dynasplint knowingly misrepresented the location of service for hundreds of skilled nursing facility patients. According to the Justice Department, it conducted an investigation of Dynasplint which found that 100% of the claims reviewed were submitted with false codes indicating the home as the place of service, when the claims for DME supplies were submitted for patients located in skilled nursing facilities.

The qui tam action was filed by a Dynasplint sales representative, who witnessed the alleged fraud scheme. Of particular note, soon after the relator filed the qui tam action, CMS suspended all payments to Dynasplint “based upon credible allegations of fraud.” As evident by CMS’s quick suspense decision, the government does have the ability to act quickly.

In December 2015, Dynasplint and its president agreed to pay the government approximately $10.3 million to resolve allegations that Dynasplint violated the False Claims Act by improperly billing Medicare for splints provided to patients in skilled nursing facilities.

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