A new OIG report raises questions about the effectiveness of CMS’s Comprehensive Error Rate Testing (CERT) program, along with the validity of CMS estimates of improper Medicare payments for durable medical equipment (DME). Based on the CERT contractor’s medical review, CMS had reported that the FY 2006 DME error rate was 7.5 percent, or about $700 million in improper payments. However, the OIG’s independent contractor’s reviews of beneficiaries’ medical records found errors in Medicare DME claims that CERT contractor had not identified and concluded that the estimated error rate for the FY 2006 CERT DME sample was actually 28.9 percent. The OIG attributes these review discrepancies to the CERT contractor’s reliance on clinical inference rather than additional medical records available from health care providers, CMS’s inconsistent policies regarding proof-of-delivery documentation, physicians’ lack of understanding of documentation requirements, and CMS’s lack of procedures for obtaining information on high-risk DME items from beneficiaries. The OIG recommends that CMS: (1) require the CERT contractor to review all available supplier documentation, (2) establish a written policy to address the appropriate use of clinical inference, (3) require the CERT contractor to review all medical records necessary to determine compliance with medical necessity requirements, (4) document oral guidance that conflicts with written policies, (5) instruct its Medicare contractors to provide additional documentation training to physicians, and (6) require the CERT contractor to contact beneficiaries named on high-risk claims to help determine whether the beneficiaries received the items and the items were medically necessary. CMS generally agreed with the OIG’s findings and recommendations.