Medicare officials underestimated improper payments: report

(Reuters) - Medicare officials had undervalued the amount of improper payments made for medical equipment in 2006 because it failed to review sufficient medical documents, according to a government report.

The report by the Health and Human Services inspector general's office said Medicare had matched purchases only with limited medical records from suppliers and not with orders from doctors.

Medicare had concluded it made about $700 million in improper payments in 2006 for equipment such as wheelchairs, oxygen and surgical supplies. It assumed that 7.5 percent of the claims were incorrect.

The federal report, issued on Aug 22, said the amount "would have been significantly higher" if Medicare had forced its auditors to review additional medical records from physicians and other health care providers.

Medicare had orally instructed its auditor to deviate from written policies by making its determination based on limited medical records available, the report said.

The inspector general's report concluded that about 29 percent of the claims were improper and were paid by Medicare, which provides health insurance for 44 million elderly or disabled patients in the United States.

The Centers for Medicare and Medicaid Services, which manages the Medicare program, was not immediately available for comments.

(Reporting by Saumyadeb Chakrabarty in Bangalore)