The Centers for Medicare & Medicaid Services did not detect $18.4 million in inappropriate claims for durable medical equipment in skilled nursing facilities, despite having systems intended to catch bad claims, a government watchdog agency said last week.

The incorrect payments represented 6% of all spending for DME during noncovered stays, which is a stay not covered by Medicare, the Health and Human Services Office of Inspector General reported.

Nursing homes and DME suppliers failed to “submit full and accurate information required,” leading to CMS’s failure to detect improprieties, according to the report. The analysis was written by Deputy Inspector General for Evaluations and Inspections Suzanne Murrin.

Oxygen and wheelchair equipment accounted for 67% of the incorrect payments.

Separate Medicare payments for DME are not allowed unless the facility is the beneficiary’s home. Coders failed to designate the SNF as a facility for 72% of the inappropriate DME claims, instead coding the place of service as the beneficiary’s home. This allowed the claims to bypass the CMS payment editing program.

CMS also might have allowed $3.7 million in Medicare payments for incorrect DME claims provided during stays in Medicaid-only nursing facilities. The agency could not verify whether the facilities qualified as homes because it does not collect and maintain information on the level of care those facilities provide, the report explained.

OIG said the regulatory agency should strengthen oversight of place-of-service codes and target education to DME suppliers “who frequently submit inaccurate place-of-service codes.” The agency agreed with much of the OIG’s assessment and said it would instruct Medicare contractors to review its coding procedures. It also said it would pursue repayment of incorrect payments and would determine whether providing targeted education to problematic providers would be cost-effective.