Based on a review of a sample of 2007 claims, the OIG estimates that a claims modifier intended to ensure that Medicare DME claims met coverage and documentation criteria failed to prevent payment of inappropriate claims totaling approximately $314 million. As a condition of Medicare coverage, suppliers must use the KX modifier on certain filed claims, indicating that the claim meets Medicare coverage criteria and the supplier has the required documentation on file. Out of a sample of 400 claims, however, the OIG found that suppliers did not have the required documentation on file for 237 items. Types of missing or incomplete documentation included: physician orders, proof of delivery; use or compliant use follow-up statements; physician statements; and sleep studies. Items in the sample included continuous positive airway pressure systems, therapeutic shoes, respiratory assist devices, and pressure reducing support surfaces. According to the OIG, Medicare contractors electronic edits could not determine whether suppliers had the required documentation on file when suppliers used the KX modifier on claims. The OIG therefore recommends that CMS: ensure that contractors recover payments the OIG identified for which the supplier did not have the required documentation; develop a corrective action plan to improve the effectiveness of the KX modifier; address cases in which suppliers did not maintain proof of delivery; and issue a special alert on documentation requirements supporting the use of the KX modifier. CMS agreed with the OIG’s recommendations.