oversight

Control Needed Over Excessive Use of Physician Services Provided Under the Medicaid Program in Kentucky

Published by the Government Accountability Office on 1971-02-03.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

           ,,s’




 REP6RT TO THE CONGRESS




’ Control Needed Over
  Excessive Use Of
  Physician Services Provided Under
  The Medicaid. Program In’ Kentucky
                                                B-764031   (3)

 Social and Rehabilitation Service
 Department of Health, Education,
  and Welfare


                                      . llllllllllllll
                                               ll
                                             093385




 BY THE COMPTROLLER GENERAL
 OF THE UNITED STATES


           7/ 3 ‘713                 FEB. 3J971            l
.
           COMPTROLLER     GENERAL     OC   THE UNITED   STATES
                         WASHINOTDN.    D.C. a#u




B- 164031(3)




To the President of the Senate and the
Speaker of the House of Representatives

       This is our report on control needed
                                         .       over excessive use
of physician services provided under the Medicaid program in
Kentucky.   Medicaid is a grant-in-aid     program administered
at the Federal level by the Social and Rehabilitation      Service,
Department    of Health, Education,   and Welfare.    Our review
was made pursuant to the Budget and Accounting         Act, 1921
(31 U.S.C. 53), and the Accounting and Auditing Act of 1950
(31 U.S.C. 67).

       Copies of this report are being sent to the Director,
Office of Management and Budget, and to the Secretary        of
Health, Education,   and Welfare.




                                            Comptroller.General
                                            of the United States
.



    .
                         C,ontents
                                                                Page
DIGEST                                                 fb            1
                                                   .          x,p.
CHAITER
  1        INTRODUCTION                                              4
               Administration  of Medicaid program                   5
               Persons eligible for Medicaid                         6
               Medicaid program in Kentucky                          6
               Requirements for utilization  review                  8

  2        CONTROLNEEDEDOVEREXCESSIVEUSE OF
            PHYSICIANSRRVICES                                    11
              Need for effective procedures to avoid
                over-utilization of physician services           11
              Need for improved monitoring of utili-
                zation review activities                         20
              Conclusions                                        23
              Recommendations to the Secretary of
                Health, Education, and Welfare                       23
              Agency comments and actions                            24

  3        SCOPEOF REVIEW                                            26

APPENDIX
       I   Letter dated October 8, 1970, from the
             Assistant Secretary, Comptroller, De-
             partment of Health, Education, and
             Welfare to the General Accounting Office                29

  II       Commentsdated September 8, 1970, from the
             Commissioner, Kentucky Department of
             Economic Security                                       32

 III       Principal officials      of the Department of
             Health, Education, and Welfare having
             responsibility      for the administration  of
             activities     discussed in this report                 34
                       ABBREVI~~,IONS

GAO General Accounting Office
HEM Department of Health,   Education, and Welfare
    COMPTROLLER GENERAL ‘S                CONTROLNEEDEDOVER EXCESSIVE USE OF
    REPORT TO THE CONGRESS                PHYSICIAN SERVICES PROVIDEDUNDERTHE
                                          MEDICAIDPROGRAMIN KENTUCKY
                                          Social and Rehabilitation Service
                                          Department of Health, Education, and
                                          Welfare B-164031(3)

    DIGEST
    ------

    WHY THE REVIEW WU MADE

         Under Medicaid, the Department of Health, Education, and Welfare (HEW)
         shares with the States the costs of providing medical care to individ-
         uals unable to pay. About $4.2 billion   was spent under the program
         during fiscal year 1969; the Federal share was $2.2 billion.

         The Social Security Amendments of 1967.require that the States safe-
         guard against unnecessary use of medical services.   Because Medicaid's
         spending for physician services, nationally,  amounted to $505 million
.        in fiscal year 1969, the General Accounting Office (GAO) reviewed this
         aspect of the program.

         The percentage of Medicaid expenditures for physician services in
         Kentucky--where GAOmade its review--was substantially   higher than the
         nationwide average." Kentucky reported Medicaid expenditures for fiscal
         year 1969 of about $53 million; of this amount, about one fourth was
         for physician services.

    FINDINGS   AND CONCLUSIONS

          HEWdid not provide the States with guidelines   to follow in evaluating
          the need, quality,  quantity, or timeliness of medical services pro-
          vided.  HEW also did not adequately supervise or monitor, on a contin-
          uing basis, Kentucky's evaluation of medical services provided.

          Although Kentucky had established    some procedures for reviewing physi-
          cian services and had identified    instances of physician services being
          misused, more effective  action by the State was needed to curb ex-
          cesses in using the program.     (See p. 11.)

          Kentucky formed a committee in November 1968 to         review the Medicaid
          services.   At the time of GAO's fieldwork    (July     1969 to Apr. 1970),
          the committee was understaffed    and had directed      its efforts  primarily
          to reviewing pharmacy services;    relatively  little      attention had been
          given to physician services, which accounted for          almost one fourth of
          the State's Medicaid costs.     (See p. 9.)
    GAO selected 100 Medicaid recipients'    cases to review the use of physi-
    cian services.     GAO's selection was made from recipients identified      by
    the State's review committee as having received large quantities       of
    drugs.   Interviews with the physicians who attended these recipients
    or reviews of correspondence between the State,and prescribing       physi-
    cians showed that:

      --84 recipients     received an excessive number of prescriptions and
         were overusing physician services.     They received an average of
         18 prescriptions    a month at an average monthly cost of $47.

      --Of the 84 recipients,        62 were averaging five visits a month to
         different physicians       at an average monthly cost of $33.

    For example one recipient  obtained services 170 times during a 14-month
    period, or about once every 3 days, from six different    physicians.      He
    sometimes visited two physicians on the same day. During one 3-month
    period, Medicaid paid for 50 prescriptions   for this recipient.      (See
    p. 16,)

    Although Kentucky had taken steps to advise physicians on matters con-
    cerning the quantity and quality of medical care under the program,
    the physicians visited by GAO generally expressed the view that they--
    and the recipients--had not been ade uately informed by the State about
    the purposes and uses of Medicaid.   ?See p. 17.)
    An obstacle to examining and evaluating the quantity and/or frequency
    of physician services is the HEWregulation--adopted    by Kentucky--which
    allows providers of service to submit bills   for payment under Medicaid
    up to 2 years after the services are provided.    (See p. 12.)

    It appeared to GAO that        staffing limitations at both the Federal and
    State'levels  contributed       to these problems and that better monitoring
    of Kentucky's activities        by HEWwould have assisted In their solution.
    (See pp. 20 to 23.)


L&VXWlMEI?DATIOiVS
--              OR SUGGESTIONS                                     .
    HEW should
      --provide   the States with guidelines to assist in effectively      re-
         viewing the use of physician services,  including limits     as to the
         quantity and/or frequency of medical services,

      --increase       its monitoring    of the States'   evaluations      of physician
         services,       and
      --reduce       the 2-year period    during which providers       may bill   for ser-
         vices.        (See p. 23.)



                                          2
ACE;NCY
-.. ___I ACTIONS AND UNRESOLVWISSUifS
     HEWsaid that guidelines   for evaluating the use of medical services had
     been prepared in draft form and it was hoped that such would be issued
     in the near future.   In addition,  contracts had been awarded to Colo-
     rado, Oklahana, Rhode Island, and West Virginia   for a pilot surveil-
     lance and review program. (See p. 24.)
     HEWhas (1) provided for an increase in the Medicaid program staff,
      (2) agreed to increase its monitoring of State evaluations of physi-
     cian services, and (3) agreed to shortly institute    a closer monitoring
     and liaison   program with each individual State agency. HEWfeels that
     this will provide for more frequent visits   and detailed reviews of
     State operations.    Kentucky has advised HEWthat it is adding to the
     staff of its Medicaid program as rapidly as it can. (See pp. 24 and 25.)

     HEWsaid that it was in the process of amending its regulations    to re-
     quire submission of bills within 6 months of the date the services were
     provided rather than 2 years.   Kentucky put such a limitation into ef-
     fect on October 1, 1970. (See p. 25.)    -

     GAO believes that these actions will help to improve the effectiveness
     of evaluations  of the use of physician services.


MATTERSFOR CONSIDERATIONBY THE ‘COIcI%RESS

     GAO is sending this report to the Congress because of congressional
     interest in the Medicaid and other health-related programs.




                                                        .




                                   3
                         CHAPTER1

                       INTRODUCTION
       The General Accounting Office has reviewed the adequacy
of controls over the use of physician services under Ken-
tucky's Medicaid program. The Medicaid program--authorized
by title XIX of the Social Security Act, as amended
(42 U.S.C. 1396)--is a grant-in-aid   program under which the
Federal Government partici.pates in costs incurred by the
States in providing medical assistance to individuals who
are unable to pay for such care. Medicaid is administered
at the Federal level by the Social and Rehabilitation   Ser-
vice of the Department of Health, Education, and Welfare.
      Since inception of the program in January 1966, the act
has required State Medicaid programs to provide inpatient
hospital services, outpatient hospital services, laboratory
and X-ray services, skilled nursing home services, and physi-
cian services.    Additional services, such as dental care and
prescribed drugs, may be included in a State's Medicaid pro-
gram if the State so chooses.
      As of December 1970, 48 States and the District of Co-
lumbia, Guam, Puerto Rico, and the Virgin Islands had
adopted Medicaid programs. The Federal Government pays from
50 to 83 percent (depending on the per capita income of the
States) of the costs incurred by States in providing medical
services under their Medicaid programs. For fiscal year
1969, the States and jurisdictions  then having Medicaid pro-
grams reported expenditures of about $4.2 billion of which
about $2.2 billion  represented the Federal share. About
$505 million of the total Medicaid expenditures was for phy-
sician services.
      Medicaid expenditures in Kentucky for fiscal year 1969
were about $53 million,of  which the Federal share was about
$43 million.   We reviewed  the controls over Medicaid expen-
ditures for physician services in Kentucky because we noted
that expenditures for physician services represented 23 per-
cent of the State's total Medicaid expenditures compared to
a nationwide average of only 13 percent.    The scope of our
review is described on page 26.


                              4
    ADMINISTRATION OF MEDICAID PROGRAM

          At the Federal level,        the Secretary  of HB4 has dele-
    gated the responsibility        for administering   the Medicaid pro-
    gram to the Administrator         of the Social and Rehabilitation
    Service.    Authority    to approve grants for State Medicaid
    programs has been further         delegated to the Regional Commis-
    sioners of the Service who are responsible          for administering
    the field   activities     of the program through HEW's 10 re-
    gional offices.

            Under the Social Security       Act, the States have the pri-
    mary responsibility     for initiating       and administering     the
    Medicaid program.      The nature and scope of a State's           Medi-
    caid program are contained       in a State plan which, after ap-
    proval by a Regional Commissioner,           provides the basis for
    Federal grants to the State.          Also, the Regional Commission-
    ers are responsible     for determining       whether the State pro-
    grams are being administered         in accordance with Federal re-
    quirements    and the provisions       of the State's    approved plan.
    Supplement D of HEW's Handbook of Public Assistance               Adminis-
    tration    and the Service's   program regulations        provide States
    with Federal guidelines      and instructions        for administering
    the Medicaid program.

          At the time of our fieldwork,           the HI34 regional office
~   at Charlottesville,      Virginia,    provided general administra-
~   tive direction      for medical assistance       programs in the Dis-
~   trict  of Columbia, Kentucky, Maryland, North Carolina,
~   Puerto Rico, Virginia,        the Virgin    Islands,   and West Virginia.

            The HEW Audit Agency is responsible      for audits of the
    manner in which Federal responsibilities         relative     to State
    Medicaid programs are being discharged.          The Audit Agency
    has performed-- and is currently     performing--a       number of re-
    views of Medicaid activities.       The Audit Agency was review-
    ing certain    aspects of the Kentucky Medicaid program at
    about the same time we began our review.           The Audit Agency
    did not review the utilization      of pwsician       services under
    the program.     Also, State auditors    had made a review of the
    eligibility    of persons to receive Medicaid benefits          but had
    not examined into the services provided to recipients.




                                         5
       A listing of principal   HEW officials        having responsi-
bility   for the administration   of activities        discussed in
this report is included as appendix III.

PERSONSELIGIBLE FOR MEDICAID

        Persons receiving     public assistance      payments under
other titles1     of the Social Security       Act are entitled      to
benefits     under the Medicaid program.         Persons whose income
or other financial       resources exceed standards set by the
States to qualify      for public assistance       programs but are not
sufficient     to meet the costs of necessary medical care are,
at the option of the States,         also entitled     to benefits    under
the Medicaid program.         Those persons receiving      public assis-
tance payments are generally         referred    to as categorically
needy persons whereas other eligible           individuals    are gener-
ally referred     to as medically      needy persons.

MEDICAID PROGRAMIN KENTUCKY

       The Kentucky Medicaid program began in July 1966. The
State Department of Economic Security was designated               as the
single State agency responsible        for administering      the pro-
gram.     In addition    to furnishing   the basic services      required
by the act (see p. 41, the Kentucky Medicaid program pro-
vides prescribed      drugs, home health care services,         dental
services,    mental and tuberculosis       hospital services,      and
community mental health center services.

      In carrying    out its responsibilities,      the Department of
Economic Security     has entered into an agreement with the
State Department     of health to carry out the medical aspects
of the program.      The agreement provides    that'the   Department
of Health is to:

      --Develop     and maintain policies,     procedures,  and in-
         structions    for the operation     of the medical aspects
         of the program.


1Title                                title IV, aid to families    with
          I, old-age assistance;
 dependent children;     title    X, aid to the blind;   title   XIV,
 aid to the permanently        and totally  disabled;  and title   XVI,
 optional    combined plan for other titles.

                                     6
     --Administer    medical care activities.
     --Evaluate     the medical aspects of the program,
       Medicaid services in Kentucky are provided to both the
categorically     and the medically needy. According to a State
program official,     as of April 1970 about 210,000 categori-
cally needy persons and 110,000 medically needy persons were
eligible   for Medicaid benefits.
          REQUIREMENTS
                    FORUTILIZATION l&VIEW
                 The act establishing    the Medicaid program did not con-
          tain a requirement     that procedures be provided to safeguard
          against unnecessary utilization       of services.    Utilization
          refers   to the need, quality,     quantity,  or timeliness      of
          medical services    provided.     The Social Security    Amendments
          of 1967 required    that, effective     April 1, 1968; State Medi-
          caid plans must:
                ‘I*** provide such methods and procedures relating
                to the utilization      of, and the payment for, care
                and services available      under the plan as may be
                necessary to safeguard against unnecessary utili-
                zation of such care and services and to assure
                that payments (including      payments for any drugs
                provided under the plan) are not in excess of rea-
                sonable charges consistent      with efficiency,  economy,
                and quality     of care. ”

                 On February 9, 1970; the staff         of the Senate Committee
          on Finance issued to the Committee a report entitled               Wedi-
          care And Medicaid;        Problems, Issues, And Alternatives.”
          The report stated that the Medicaid program was in serious
          financial      trouble   due to heavy utilization      and that the pro-
          gram was adversely        affecting health care costs.        The report
          stated that, although there was a growing awareness among
          many physicians        of the need for the profession      to effec-
          tively    police and discipline      itself,    performance had been
          spotty and isolated.

        ~ HEWimplementation
illlb
                   To implement the 1967 amendments relating           to utiliza-
          tion of services,        the Social and Rehabilitation         Service is-
          sued an interim       regulation    on July 17, 1968, which,after
          minor modification,        was issued as a program regulation            on
          March 4, 1969.        The regulation    specifies     that each State
          plan must provide for a utilization            review for each type of
          service rendered under the State’s Medicaid program.                   The
          regulation      also requires    that the responsibility         for making
          utilization      reviews be placed in the medical assistance
          unit of the State agency responsible             for administration       of
          the program.        Kentucky has established        such a unit.
      The Service's regulation, however, does not specify the
      manner in which these utilization   reviews are to be made,
      nor does it establrsh minimum requirements as to what a
      utilization  review plan is to provide for.
              In an April 1969 draft of guidelines relating to uti-
      lization reviews, which was sent to the HEWregions for
      comment, the Social and Rehabilitation      Service stated that
      institutional    services should be reviewed for such things as
      necessity of admission and duration of stay and that nonin-
      stitutional    services should be subject to surveillance to
      ensure that services rendered are based on actual need and
      that frequency of care and service is appropriate to that
      need. Also the draft stated that a utilization        review
      should include (1) a method of reviewing the need for medi-
      cal services before the services ark provided and (2) a re-
      view to determine the propriety of individual      claims and to
      accumulate, analyze, and evaluate claims data to identify
      patterns and trends of normal and abnormal utilization       of
      services.
           At the close of our fieldwork in April 1970, the States
      had not been provided with any guidelines for implementing
      the March 1969 regulation.
      State implementation
            A utilization     review committee was formed in the Ken-
      tucky Department of Wealth in November 1968. At that time,
      the committee consisted of a physician (in charge) and a
      registered nurse. Subsequently, the committee was expanded
      to include a statistician      and three clerks; however, the
      physician left the committee in June 1969 and had not been
      replaced at the time we completed our fieldwork in April
      1970. This review committee was responsible for establish-
      ing utilization     criteria  and for making utilization reviews
      of all types of services provided under the State's Medi-
      caid program.

,            In its comments on a draft of this report, the HEWre-
      gional office informed the HEWcentral office that the Ad-
,,    visor-y Council for Medical Assistance (a professional orga-
 /I   nization) was actively assisting the State in the


1                                    9
establishment of an effective utilieltion review program
and that its recommendations providing for systematic sur-
veillance of program effectiveness were being implemented.
                                          auPTER2

                          CONTROr, H$lWD OVER EXCESSIVE USE

                                  OF PHYSICIAN SERVICES

                Our review revealed that HEW had not provided the State
       with guidelines       for use in implementing              the requirement       for
       utilization      reviews of physician            services nor had HEW ade-
       quately monitored Kentucky’s             utilization         review activities.
       Although Kentucky had established                  some procedures       for uti-
       lization     reviews of physician          services      and had identified
       instances      of overutilization        of physician          services,    the
       State had not taken effective             action to curb overutilization.
       Our review .showed instances           in which physicians             were paid
       under the Medicaid program for services                    that were not pro-
       vided and in which recipients             were provided with excessive
       medical services.          In addition,        the quality       of care being
       provided by some physicians            did not meet standards accept-
       able to the State’s          professional        staff   in the Department of
       Health.

             The followingsectionscontain      our comments on the (1)
       progress by Kentucky in developing      a system of utilization
       review,  (2) guidance and monitoring     provided by HEW, and (3)
       need for further     improvements in these areas.

       NEED FOREFFECTIVEPROCEDURES
       TO AVOID OVERUTILIZATION OF
       PHYSICIAN SERVICES

               During the first     6 months of its existence,   Kentucky’s
       utilization     review committee placed emphasis on reviewing
       the use of pharmacy services.          In January 1969 the committee
       began to obtain-- from the Department of Health’s         data proc-
       essing unit-- computer printouts         of payments to physicians.
       In analyzing      this imformation,    the committee looked for un-
       usual charges,       such as  charges  for (1) several or all members
       of a family at one visit,         (2) apparent excessive laboratory
       procedures,     or (3) more than one visit      involving the same
       recipient     in 1 day.

                  The committee identified 12 physicians             to whom exces-
           sive   payments appeared to have been made.              For example, the

                                               11


‘,.”
       /
committee advised one physician           that records of his billings
indicated      that he had been paid a total       of $80 for two of-
fice visits       made by each of eight recipients        on the same
date.      After    the  committee requested   an  explanation   of these
apparently       excessive charges, the physician       refunded half
of the money to the State.           In total  the State obtained re-
funds amounting to $5,500 from seven of the 12 physicians.
A detailed       review of the charges made by other physicians
indicated      that in some cases the questioned billings         were
justified.

        Also the committee's      review indicated     that duplicate
payments were a major problem.           In November 1969 the com-
mittee requested the Department of Health's              data processing
unit to supply it with another computer printout              which would
facilitate     the identification      of duplicate    payments.    Using
this printout,     the committee identified         about 900 physicians
who appeared to have received duplicate             payments, and, as of
April 1, 1970, the State had obtained refunds of about
$12,000 from about 200 of these physicians.

      HEW regulations    allow providers           of medical services      to '\
submit Medicaid bills     up to 2 years after the services               are
provided.     Kentucky adopted this 2-year period for its Med- :
icaid program.      This billing        period creates problems in mak-
ing timely and effective         utilization       reviews.   For example,
all duplicate    payments made during a 2-year period cannot
be identified    unless all bills          submitted during the period
are reviewed,      Also, billings         could  be so old as to be for-
gotten by the recipient        if he is requested to verify          billing
data.

        Regarding the necessity            of the Z-year billing       period,
the State director         of medical services          agreed with us that
effective    utilization       reviews could not be achieved under
such a billing        period and informed us that the State would
revise its program to correct               the situation.      By letter
dated September 8, 1970, the Commissioner,                   Department of
Economic Security,         advised HEW that effective           October 1,
1970, the State would require                all providers    of service to
submit their bills         within     6 months of the date of service.
In our opinion,        this should aid the State in making more
timely and meaningful          utilization       reviews of services pro-
vided under the Medicaid program.

                                       12
       The committee conducted field         investigations      of clr-
cumstances relating      to physicians'      services where it appeared
to the committee that (1) charges had been made for several
or all members of a family although only one or two members
of the family had actually         been treated     and (2) the physi-
cians had charged for seemingly unnecessary follow-up                 Visits
in cases of minor illness.          For example, the committee in-
vestigated    four physicians--     of the initial      12 identified      as
possibly   having received excessive payments--and             found that
three of them had billed         and received payment under the pro-
gram for recipients      to whom they had not rendered any ser-
vice.    These three physicians       were suspended by the State
from participation     in its Medicaid program.            One of these
physicians    subsequently     refunded $2,395 received through
erroneous billings     and he was reinstated         in the program.
The casesof the two other physicians           were referred       to the
Kentucky attorney     general.

      In the document suspending one of these physicians,
whose case was subsequently   referred    to the attorney     gen-
eral,   the Commissioner, Department   of   Economic  Security,
stated that available data indicated that the physician:
      "*w   has billed the program for physician's          ser-
      vices when an actual physician/patient          contact was
      not had; that he has prescribed drugs for individ-
      uals without medical examination of the person for
      whom the prescriptive     drug was intended;      and that
      the numerous prescriptions       written   for voluminous
      drugs for particular     individuals     was not war-
      ranted."
In June 1970 an indictment brought against 'this physician
was dismissed by the circuit court.      The order dismissing
the case stated that the State law under which the physician
was indicted did not state a public offense with which the
physician    could be charged and that the circuit    court had no
jurisdiction    under the circumstances of the case. The Com-
missioner, Department of Economic Security, informed us that
the State intended to continue the suspension of this physi-
cian from program participation.      Final disposition    of the
other case referred to the attorney general was pending at
the completion     of our fieldwork.




                                                                    pm.




                                                                          I
                                                   ‘.
        Subsequent to the referral     of these two cases to the
Kentucky attorney     general,  two additional    physicians   were
identified    by the State as having billed      and been paid un-
der the program for services       rendered to recipients     although
the physicians     had not rendered any services.        The State did
not suspend these physicians;        however, the State obtained
refunds totaling     about $3,000 from one of the physicians.
The Commissioner,     Department of Economic Security,       advised
us that he would defer action against these physicians            pend-
ing the disposition     of both cases referred     to the attorney
general.
GAO use of information   develotaed durinq
utilization  review of t&gmacY services

        At the time we began our fieldwork        in July 1969, Ken-
tucky had not developed recipient      ,profilesl      for reviewing
the use of physic+an services.       however,       in its utilization
review of pharmacy services,      the committee had assembled
certain    information   useful to us in evaluating        the utiliza-
tion of physician      services.

       In its review of pharmacy services,           the committee ob-
tained printouts     for the period December 1, 1968, through
September 30, 1969, listing          all recipients     (1) for whom 15
or more prescriptions        had been provided in any month or (2)
for whom the State had paid for 30'or more prescriptions                   in
any month.      The printouts    listed    the names of 1,563 recipi-
ents.    The committee selected 742 of these recipients                and
requested the prescribing        physicians     to comment on the pro-
priety   of the volume of medication          which had been prcvided
to these recipients.         The committee received responses for
122 of these cases.        The committee provided the Department
of Economic Security       with the names of recipients           who--ac-
cording to the prescribing         physicians,  --were   overutilizing
services    provided under the program.           The department in-
structed    its local welfare offices         to counsel the recipients
on the proper use of services under the program; however, in
February 1970 the Department of Health advised the Depart-
ment of Economic Security        that the counseling       was not effec-
tive in curbing overutilization           and that other controls
would be needed.

     For our review of the utilization       of physician     services,
we selected 100 cases--   consisting   of 56  of  the  122   cases   in
which the committee had received responses and 44 of the 620
cases in which the committee had not received responses from
the prescribing  physicians.      With the assistance     of


1
    A recipient   profile  is a historical record of payments for
    covered medical services to be used as a guide in evaluating
    the reasonableness    of the amounts of current  billings  by the
    providers   of such serviceb and the frequency   and appropriate-
    ness of the use of the program by the recipient.


                                      15
  professional employees of the Department of Health, we re-
  viewed the responses received by the committee for the 56
  cases and discussed 40 of the other 44 cases with the pre-
  scribing physicians.  We were unable to obtain phys,ician com-
  ments for four of the recipients because the physicians were
  not available to meet with us.
        In the 96 cases examined by us, the comments of the
  prescribing physicians indicated that the medical services
  received by 12 recipients were appropriate but that an ex-
  cessive number of prescriptions  and other physician services
  had been provided for 84 of the recipients.   These 84 recip-
  ients had been provided an average of 18 prescriptions   a
  month at an average monthly cost of $47.
        With respect to other physician services, we were able
  to obtain data for only 62 of the 84 recipients.      These 62
  recipients were, on the average, visiting   five different   phy-
  sicians each month at an average monthly cost of $33. Fol-
  lowing is an example of one recipient who, according to the
  ph;ysicians, was overutiliiing services under the program.
       The recipient obtained medical services from physicians
       170 times during a 14-month period, or about once every
       3 days. The recipient obtained these services from six
       different   physicians during this period,    He sometimes
       visited two pwsicians on the same day, and, during one
       3-month period, the State paid for 50 prescriptions     for
       this recipient.     State records contained the comment
       from the physician who treated this patient most'often
       that he had prescribed only 10 of the 50 prescriptions.
       In this case--and in 16 other cases invblving eight
  other physicians-- the physicians expressed their opinion
  that recipients found to be obtaining excessive amounts of
  drugs should be locked-in to one physician and one pharmacy.
        The February 1970 report of the staff of the Senate Com-
1 mittee on Finance entitled "Medicare And Medicaid; Problems,
/ Issues, And Alternatives"  recommended that States require
  the designation of a "primary ph;ysician“ in cases where
  overuse of physician services is detected.   In a letter to



                                 16
HEWdated September 8, 1970, the Commissioner, Kentucky De-
partment of Economic Security, stated that lock-in plans are
being considered in instances in which overutilization  ap-
pears to be evidenced.
      The following table (1) summarizes information pertain-
ing to p~sician    services provided to the 62 recipients for
whomwe were able to obtain sufficient     data and who, in the
opinion of the physicians, were overutilizing    services under
the program and (2) provides examples of individual c’ases of
overutilization.

              Summaryof information        vertaining   to all   62 recipients
                      Averam     number uer recipient      of             Average monthly
                 Months of                                               cost of physician
                 physician                                                  services and
  Nmberof         servicer      Visits a month Prescriptions               prescriptions
  ncioiants       review*d      to a physician    a month                  per recipient
      62             10.6              s                   18                    $80

                              Swuuiary of overutilization
                                of physician services
                            by mm of these 62 recipients
                  Number
                 of month6 Awrrage number    Average                  Average monthly
               of physician    of visits     number of               cost of physician
                 sexyices    a month to   prescription0                services and
  Recipient      reviewed    a physician     a month                   prelrcriptiona
                    15                                    21                  $113
                    12                                    18                    98
                    15                                    19                    90
                    14                                                          97
                     9                                    2':        .
                    13                                                         1::
                     9                                    2':
                    14                                    47                   1;;
                    15                                    12                    84



       Cur review showed that, although the State had supplied
manuals and explanatory materials to physicians and had es-
tablished an advisory committee of physicians to advise
State Medicaid officials   on matters concerning the quantity
and quality of medical care under the program, the physi-

                                                17
cians visited   by us generally   expressed the view that Rro-
viders and recipients    had not been adequately     informed by the
State about the purposes and uses of the Medicaid program.
We believe that better program monitoring        by HEWwould have
helped to identify    the need for person-to-person      communica-
tion between program officials     and participating     pkrysicians.

      As stated earlier     (see p. 61, the Kentucky Department
of Health is responsible       for evaluating      the medical aspects
of the State's   Medicaid program.         Our review prompted Depart-
ment of health professional        personnel to visit         31 participat-
ing physicians   for this purpose.         On the basis of these vis-
its, the Department of Health professional               staff concluded
that (1) one pkrysician appeared too senile to practice                  medi-
cine, (2) the quality     of care provided by another physician
was questionable    because the physician's          office    was dirty
and not properly    equipped,     and  (3)  the  quality      of care pro-
vided by another physician        was questionable        because he fre-
quently prescribed    drugs that affected        the central      nervous
system for his Medicaid patients          whom he did not always ex-
amine but for whom he billed        the State for office         visits.

       The first physician  advised the State that he was re-
tiring   from the practice  of medicine,    the second pbsician
was advised by the State to correct      the inadequacies   which
were observed,   and, the third physician      was suspended by the
State from program participation.
State   use of recir>ient     profiles

        In October 1969 Kentucky began to routinely                 develop re-
cipient      profiles--   information      relating  to phIysician services
and drugs provided to each Nedicaid recipient.                    In January
1970 the State forwarded to each recipient--and                   to the appro-
priate     local welfareoffice--         acomputer printout       showing the
medical services paid for on the recipient's                 behalf by the
State during the preceding 3 months.                Recipients     were re-
quested tb contact ttiir            local welfare office       if the infor-
mation on the printout           was not consistent      with their recol-
lection      of the services provided to them.            The local welfare
offic.es were told to report any inconsistencies                  brought to
their     attention     by recipients.

      As of April 1, 1970,. the State          office had received no
feedback from either  the recipients           or the welfare offices.

                                         18
  The State's      program records,      however,      contained   evidence of
  overutilizati.on      of services under the          program and indicated
  to us that the local welfare offices                and/or recipients     prob-
  ably were not properly        instructed    on      how to interpret    the
  printouts.

         A State official       visited       a county welfare office         in
  April 1970 to ascertain          the reason for the lack of feedback.
  Several social workers advised the State official                     that,
  although the Department of Economic Security                    was relying      on
  them to assist      in program monitoring,           they had not been in-
  structed      on how to use the information            on the printout        nor
  had they been provided with any guidelines                    on how to identify
  overutilization.         In our opinion,        such recipient      profiles
  should either      be evaluated by professional              medical personnel
  or, if social workers are responsible                for reviewing       profiles,
  they should be furnished           with explicit       criteria    as to what
  constitutes      questionable      utilization      and, iii those cases,
  the action to be taken.

         We were informed by HEW that certain        other States had
  established   quantity    and/or frequency limits      (parameters)       for
  use in evaluating      the reasonableness   of physician      services.
  When these parameters are exceeded, the computer prints                out
  a "physician   exception     report"  which contains    detailed     infor-
  mation concerning      a physician   and/or recipient.      This report
  is analyzed by the program physician        who determines whether
  services under the program are being overutilized.

           For example, under one State's          Medicaid program, when-
~ ever a provider's         total   monthly billings      exceed $400, the
  computer &stem will printout,             for review by management of-
  ficials,     a report containing        detailed   information   relating
  to these' services.          Similarly,   various other parameters have
  been established        for providers     and recipients.      Whenever any
  of these parameters are exceeded, the computer system pro-
  vides a report       for review by management officials.

         We believe that the development and use of parameters
  similar   to those used in other States--giving        recognition     to
  local geographic    and socioeconomic   factors--would      be benefi-
  cial in controlling    utilization   of services under the Ken-
  tucky Medicaid program.


                                           19

                                                                           _.,,.   I
NEED FOR IMPROVED MONITORING OF
UTILIZATION REVIEW ACTIVITIES

       HEW needs to improve its monitoring    of utilization        re-
view activities     of State agencies to ascertain      whether they
are effective.      We believe that better monitoring,       including
follow-up    of problems noted, of Kentucky's    utilization      re-
view activities     would have shown a need for the State to

       --establish  parameters         for medical services           provided
          for use in reviewing         program utilization,

       --reduce   the time allowed for            providers     to submit     bills
          for services provided,   and

       --take   action to control   further           program participation
           in cases in which overutilization              was identified.

        Although the State of Kentucky had established                proce-
dures for utilization      review of physician        services      and had
identified      instances of overutilization        of physician        ser-
vices, we found that the State had not taken effective                    ac-
tion to curb overutilization.          We   believe   that   the    overuti-
lization     of services could have been detected and corrected
timely had HEX effectively       monitored the State's          utiliza-
tion review activities.

        The regional       Social and Rehabilitation             Service staff
for medical services was responsible                    for Federal adminis-
tration    of the Medicaid program in Kentucky--as                    well as
four other States,           the District      of Columbia, Puerto Rico,
and the Virgin        lslands-- at the time of our fieldwork.                    The
professional       staff consisted         of an Associate Regional Com-
missioner      and two medical care specialists.                  The staff's
responsibilities          included     (1) the promotion and general
oversight      of the provision          of Medicaid services          and (2) the
provision      of guidance to State and local agencies in the
administration        and evaluation        of Medicaid programs.             Effec-
tive July 1, 1970, the regional                offices      were assigned the
primary responsibility            for evaluation          of State Medicaid
programs.        Evaluation      of the States'         programs had previously
been made chiefly           by officials      of the HEW central         office
with assistance         from the regional          offices.



                                         20
          We reviewed the records of the regional medical ser-
    vices staff relating to utilization     review activities    and
    found only one report-- dated   April  1969--relating    to a
    visit to Kentucky. Also, representatives        of the HEWre-
    gional office at Charlottesville,     Virginia,   assisted the
    HEWcentral office in a program review and evaluation in
    Kentucky during the period February 5 to 9, 1968.
            The April 1969 report was the result of a review re-
    quested by the Commissioner, Kentucky Department of Eco-
    nomic Security.        In the report to the State, regional of-
    ficials     stated that (1) parameters had not been established
    that would help program officials         distinguish between nor-
    mal and abnormal patterns of medical practice and (2) sys-
    tematic documented procedures had not been developed for
    resolving questions of abuses under the program in cases
    where overutilization       was indicated.      Although the report
    showed that HEWregional representatives were aware of some
    of the weaknesses in the Kentucky utilization           review pro-
    gram, they did not require the State to implement effective
    utilization      review procedures. HEWregional officials        ad-
    vised us that staffing limitations         prevented them from ade-
    quately monitoring the Medicaid program in the entire re-
    gion, including following up to see that problem areas are
    corrected.
          The program review and evaluation report issued as a
    result of the February 1968 examination discussed some of
    the same types of program weaknesses as are discussed in
    this report.    For example, the report indicated a need for
    more detailed study and planning by the State concerning
    the adoption of utilization   control techniques such as the
    establishment of parameters for medical services provided.
           Also an HEN task force's November 1969 interim report
    on Medicaid and related programs indicated a need for sub-
    stantial improvement in HEW's monitoring of the States' ad-
    ministration     of the Medicaid program. The task force re-
    ported that the Federal role had been primarily one of pas-
/   sive monitoring and that such a role was detrimental to ef-
,   ficient    and economical management of the program. The task
,   force noted that it had not found any State having an ef-
    fective system of utilization     review and concluded that a
    strong,    specific,  and comprehensive Federal policy needed

                                     21
to be developed to assist States in establishing            and main-
taining effective Medicaid programs,

       Following    a reorganization     of the Medical Services Ad-
ministration,     Social and Rehabilitation        Service,   in March
1970, HEW provided for a total          increase of about 125 staff
positions     in the Administration’s       Washington and field    of-
fices,      The reorganization     and employment of the additional
personnel     should enable HRW to provide more effective          moni-
toring     of Medicaid program       and greater   assistance   to State
agencies in the administration          of their Medicaid programs.
CONCLUSIONS

        The Social Security      Amendments of 1967 required          that,
effective    April 1, 1968, States having Medicaid programs
must provide safeguards against unnecessary program utili-
zation.     Although utilization         review activities     conducted
by Kentucky have identified           instances   of overutilization        of
physician     services,     the State    had  not established      an effec-
tive utilization        review system for physician        services.

        We believe that the problems experienced                 in establish-
ing and implementing          utilization      review procedures are at-
tributable     principally        to HEW's not having defined the type
of reviews needed for the various                services and not having
provided adequate assistance              to the States in developing
effective    utilization        review systems.         Existing   HEW regula-
tions only direct         that such systems be implemented but do
not provide guidelines            to the States as to how a system
should be developed.            Although a draft of guidelines           relat-
ing to utilization          review was forwarded for comments to HEW
regions in April 1969, such guidelines                  had not been final-
ized and issued at the close of our fieldwork                    1 year later.

        We believe that HEW needs to furnish              States with infor-
mation on methods for reviewing            and controlling         the utiliza-
tion of the various medical services provided.                     Such direc-
tion might include model systems for reviewing                   the major
categories     of services provided and the manner in which pro-
fessional    medical groups can be used to assist                the States in
controlling      utilization.    On the basis of our review in
Kentucky, we believe that HEW should assist the States in
establishing      parameters for medical services             provided to
help identify        potential overutilization         of services.         We be-
lieve also that the effectiveness             of utilization         review
activities     would be increased if HEW reduced the 2-year
period now allowed for submitting             bills    for services pro-
vided under Medicaid.

RECOMMENDATIONSTO THE SECRETARY
9F HEALTH, EDUCATION, AND WELFARE

       We recommend, therefore,       that HEW, through the Social
and Rehabilitation      Service,   (1) provide the States with
guidelines    to assist   in effectively    reviewing  the use of

                                        23
physician   services,  including  limits    as to the quantify     end/
or frequency of medical services,        (2) increase its'monit&+
ing of the States'    evaluations   of physician     services,   and
(3) reduce the 2-year period during which providers            may bill
for services.

AGENCY COMMENTSAND ACTIONS

         In a letter    dated October 8, 1970, the Assistant          Secre-
tary, Comptroller,        HEW, furnished    us with HEW's comments on
our findings       and recommendations,      including    its evaluation
of comments obtained from officials             of the Kentucky Depart-
ment of Economic Security.            (See apps. I and II.>       HEW
stated that our report presented a factual              picture   of the
situation     in Kentucky regarding       opportunities      to improve the
utilization       review of physician     services and advised us that
the State officials         agreed,in   general,    with our findings.

       Regarding our recommendation that utilization             review
guidelines    be established,      HEW replied   that such guidelines
had been prepared in draft form and it was hoped that such
would be issued in the near future.            In addition,    HEW in-
formed us that contracts         had been awarded to four States--
Colorado,   Oklahoma, Rhode Island,        and West Virginia--for        the
implementation     of a pilot     medical surveillance      and utiliza-
tion review program.       HEW hopes that the results         thus ob-
tained will strengthen        the ability    of States to monitor,
plan,   and  administer   the    Medicaid  program.
       In his letter       to HEW commenting on a draft of this re-
port I   the    Commissioner,      Kentucky Department of Economic
Security,       stated that efforts        to improve the control      of
overutilization        of physician      services--and    other phases of
the program --were continuing            and personnel to be utilized         in
this effort        were being added as rapidly         as qualified    persons
could be attracted         to the staff.         The Commissioner added that,
during calendar year 1970, there had been special emphasis
placed on recipient          profiies    from the standpoint       of both
physician      visits   and drug utilization         in an effort    to iden-
tify heavy users.          He stated that field workers are assigned
to examine, by personal contact,               thecauses of what appear to
be excessive use of the program services and that the field
workers'      reports   are reviewed by appropriate          professional
teams and recommended action is followed.

                                      24
        HEU agreed with our recommendation that action be taken
to provide for increased monitoring                of the States'        utiliza-
tion reviews of physician             services.     HEW   stated    that     it
planned to shortly          institute     a closer monitoring         and liaisorl
program with each individual              State agency by each of its re-
gional offices       along with the cooperation            of the Washington
central    office.      Under this new program, HEW plans to have
a closer relationship            with the State agencies along with
more frequent      visits      and detailed     reviews of State operations.
HEW stated that it would continue to evaluate the adequacy
of its guidelines         in the light       of information      brought to its
attention     through its continuous monitoring               of State pro-
grams and would make any needed adjustments.

      HEW agreed also with our recommendation that it revise
its regulations     to reduce the 2-year period.during   which
providers   may bill    for services provided under Medicaid.
HEW advised us that it was in the process of amending its
regulations    to reduce the 2-year limitation    period to a
6-month period for all services.        Kentucky put such a limita-
tion into effect      on October 1, 1970.
                                                           rd


     We believe that the actions promised by HEN, if prop-
erly implemented,   will help to improve the effectiveness  of
the utilization   review of physician  services provided under
the Medicaid program.
                         CHAPTER3                         .'

                      SCOPEOFREVIKW
      Our review was directed toward an evaluation of the
controls exercised by HEWand by Kentucky over the utiliza-
tion of physician services paid for under the Kentucky Medi-
caid program. We reviewed this aspect of the Medicaid pro-
gram at State offices in Frankfort, Kentucky; at the HEWre-
gional office at Charlottesville,  Virginia; and at the HEW
headquarters in Washington, D.C.
       We examined pertinent legislation    and Federal regula-
tions, Social and Rehabilitation     Service program policies
and directives relating to the review and control of the uti-
lization of physician services, and records and related
data concerning the utilization     of physician services by
Kentucky Medicaid recipients.     We interviewed personnel with
responsibilities    for the program at all the above-mentioned
locations. I,,
       We also interviewed, at their offices located through-
but the State, 31 physicians who participated      in the Ken-
tucky Medicaid program. We were accompanied by professional
personnel of the Kentucky Department of Health who provided
us with their determinations regarding apparently excess and
unneeded medical care.
APPENDIXES




             .




 27
.
                                                                                                  APP,ENDIXI
                                                                                                      Page 1


                                  DEPARTMENT   OF HEALTH,     EDUCATION.          AND   WELFARE
                                                WASHINGTON,        D.C.   20201



    OIFICE   Of THE SECRRARY




                                                OCT 8 1970




                     Mr. John D. Heller
                     Aesie tant Director
                     Civil Division
                     U.S. General Accounting Office
                     Warhington, D.C. 20548
                     Dear Mr. Heller:

                     The Secretary has asked that I reply to the draft report of the
                     General Accounting Office on its review of “Opportunity   for
                     Improvement in the Utilization  Review of Physician Services
                     Provided Under the Medicaid Program in Kentucky.”

                     Enclosed are the Department comnents on the findings and
                     recommendations in your report.   The conrnents of the State
                     of Kentucky are included as an attachment.

                     We appreciate the opportunity to review and comment on your
                     draft report and welcomed your suggestion that the appropriate
                     State official be afforded the same opportunity.

                                                                      Sincerely     yours,




                                                                     Assistant      Secretary,     Comptroller
,
                     Enclosures




                                                              29
    APPENDIXI
       Page 2

              COMMENTSON GENERALACCOUNTINGOFFICE DRAFT REPORT
              -w-p                                                            *’ 1,
          OPPORTUNITYFOR IMPROVEMENTIN --THE UTILIZATION REVIEW OF

      PHYSICIAN SERVICES PROVIDED YDER THE MEDICAID PROGRAMIN XENTUCKY


            The draft report of the General Accounting Office preaanta a
     factual picture of the situation      in Kentucky with regards for oppor-
     tunities   to improve the utilization    review of physician services, and
     is consistent with the findings of the SRS Regional Office on these
     points.

           Conments obtained by us from an official         of the State of Kentucky
     generally agreed with the findings reported. The State pointed out that
     during the current calendar year there has been special emphasfa placed
     on recipient      profiles    bgth from the standpoint of physician visits  and
     drug utilization.          A copy of the State’s comments is attached.

             The first    recommendation ‘[p. s3 of this report] provides that HXW
     establish     guidelines    for utilization    reviews of physician services in-
     cluding provision        for the establishment     of medical. services utilization
     parameters to enable the identification            of potential  program over-
     utilization.

            Utilization      review guidelines   as noted in the report have been in
     draft form for quite some time.           The guidelines have been held from final
     publication      while under consideration     by the McNerney Task Force on
     Medicaid and Related Programs. The final report on the Task Force, which
     was issued on June 29, 1970, stated that a strong, specific,             and compre-
     hensive Federal policy should be developed which would require the States
     to establish       medical program effectiveness      systems designed to control
     program utilization.          We hope to issue utilization    review guidelines   in
     the near future.

              In addition to these guidelines,   we have executpd contracts for the
     implementation      of a pilot medical surveillance   and utilization   review
     program with four States;       Colorado, Oklahoma, Rhode Island, and West
     Virginia.      It Is hoped that the results thus obtained will strengthen the
     ability     of States to monitor, plan, and administer the title      XIX program.
     Further, the model uystem developed through this pflot project will be
     made available      for adoption by all participating   States.

,            The second recou&nendation [p. 24 of ‘this report1 ‘suggests that HEW
/    take appropriate     measures to provide’for  more effective  monitoring of
1    utilization    review of physician services performed by the States.




                                             30
                                                                                        APPENDIXI
                                                                                           Page 3

        We plan to shortly         institute       R closer      monitoring        and liaison
program      with each individual            State agency by each of the SRS/MSA
Regional      Offices    along with the cooperation               of the Washington             Central
Office.        Under this     new program,        we plan to have a closer               relationship
with the State agencies            along with more frequent               visits      and detailed
reviews      of State operations.             We will    continue      to evaluate         the adequacy
of these guidelines           in light      of information        brought       to our attention
through      our continuous      monitoring        of State programs            and make any needed
adjustments.

        The third        recommendation         [p. 24 of this           report]      provides       that      HEW
should      revise     the regulation          (D-5810 of the           Public     Assistance        Handbook
Supplement         D) to reduce       the 240month          period      permitted       vendors      for
billing      purposes.        We are in the process                of   amending      the regulations
to reduce        the 24-month       limitation         period      to   a 6-month       period     for all
services.          Reimbursement        policy      for retroactive           adjustment        of payments
providing        for reasonable         costs     for inpatient          hospital       services,        skilled
nursing      home services,        home health          services,        and clinic        services       will
remain     at the 24-month          period      due to obvious           delays     required       in making
final     settlements.
XWENDIX II
     Page 1




                                     COMMONWCALTH         Or    KCNTUCKY

                              DECARTMLNT       OF ECONOMIC              SECURIW
                                                FRANWONT                          Mtmn~rr   S. Dem. JR.
                                                                                      COW*lOOlOORO
                                           S8ptenlber      8,    1970




      WE. Virginia  Y. Smyth
      Regional commissioner, S&S
      Department of Uealth, Education,                  f Welfare
      Regional office IV
      50 Seventh Street,  N. 8.
      Atlanta,  Georgia 30323

       Dear   Nrs.   Smythx

                    The   drdft of the report relating   to Physician Services
      provided under       the Kentucky Nedlcal Assistance Program prepared by
      representative       of the Controller  General of the United States has
      b&m received        and reviewed.

                     In general, it is believed that the report undertakes to
      present      an objective       review of that segment of Kentucky's Kedical
      Asalstance       Program   dealing with provided Physician's            services.      It
      is felt,      however, that the emphasis placed upon the proqram's
      deficiencies        tend to overshadow         Kentucky'r  effort    to develop, for
      the most part utilizing             its own talent , a plan for making available
      to a desperately         needy segnmnt        of the Connnonwealth's citizens        a
      form of assistance         which had too long been neglected.              Moreover,
      it appears doubtful           that full consideration        could have been accorded
      many geographic as well as socio-economic                 problems that w??re en-
      countered in the formulation               of d plan of this magnitude.         It is
      not the purpose of this reply to minimize the desirability                      of   constaM
      efforts      to improve the program through the use of adequate controls.
      Rather the purpose of this reply 1s to point out that                    there     has been
      a constant       and continuing        effort   to develop a means of extending a
      needed service to the largest number of people needing the service at
       the same time that         the means of accomplishing          this tank was being
      developed and controlled.




                                                    32
                                                                                                  APPENDIXII
                                                                                                      Page 2

P8ge - 2
Nrs.     Virginia         M. Smyth
September        6, 1970

                 Relatlvely        wrly       in the program        the problem        of WntZVlZfng
over-utlllt8tion               inthe mountainous           section of the Commonwealth                   became
apparent      . Strang6        though       it may seem, family            sizes,     difficulty         of
tran6portation          and scarcity            of physicians       contribute        to the difficulty
of control.        Kven 60, effective                steps to control abuses were initiated
and the salutary           affect       of the measures          undertaken       is believed          to be
substantial.         Effort6         to improve       control     of over-utilization             of physicians'
servicea       and other      phases        of the program,         are continuing            and personnel
to be utilleed         in this        effort      are being added as rapidly                  as qualified
persons      can be attracted             to the staff.

                 During      th6 current    calendar      year, there has been special
emphasis      placed       on recipient     profiles     both from the standpoint        of phy-
6iCia.n    visits       and drug utilf6ation.           These profiles      are being utiiizatd
to idmtify          heavy user6 and field            workers are assigned      to examine,
by personal         contact,     the causes of what may appear            to be excessive
we of the program 8ervices.                   The field     workers'   reports   are reviewed
by appropriate            professional      teams and recommsnded action                  is followed.

               As reported,     Xentucky's program adopted the                       24 month plan for
6ubmlssfon of providers'          statements        for services      but          to make possible
a better      u6e of recipient      utlll6atlon        print-outs,      the          period within
which provider       statements     must      ba submitted       has been          reduced  to 6 months
and will become effective           October 1, 1970. A shorter                       period was con-
aidered     but because     of difficulties         which can develop                as a result of
eligibility      delays,    the 6 month period was considered                        more feasible.

                 The feed-back        from the print-out            of recipients'         use of
prop-m      services          is
                               b6ing    utilized     a6 a basis       for identifying       cases
requiring      personal      interviews        and other appropriate         action.      Lock-in
plans, within the franwwo rk of the approved provisions,                             are presently
baing     oonsidered       in instances        where over-utilization          appears    to be
evidenced.         Reference      has been made in the report to States where
successful        controls     are in operation        but personal contact with persons
responsible        for the control          function in at least one of the named
States appears to indicate a system                      less effective         from a control,
point of view than Kentucky's plan.
                 None of the ooxnents           oontalned herein is intended to be
other     than      explanatory      of what    Kentucky is doing and is planning to
do in its        effort        to be constantly     alert to the need to searoh for
means and methods      to upgrade   the program   both as to service and control.
Kentucky     would be pleased    to receive   suggestions for improvements
particularly      such suggestions    as may be provided by the guidelines
manual referred               to in the remrt.

                                               Very truly        yours.


                                               NXRRITT S. DEITZ, JR.
APPENDIXIII

                PRINCIPAL OFFICIALS OF THE
        DEPARTMENT
                OF HEALTH, EDUCATION,ANDWELFARE
                 HAVINGRESPONSIBILITYFOR
              THE ADMINISTRATION
                               OF ACTIVITIES
                 DISCUSSEDIN THIS REPORT

                                      Tenure of office
                                      From           To
SECRETARY OF HEALTH, EDUCATION,
 AND/WELFARE:
   Elliot L. Richardson            June   1970   Present
   Robert H. Finch                 Jan.   1969   June 1970
   Wilbur J. Cohen                 Mar.   1968   Jan. 1969
   John W. Gardner                 Aug.   1965   Mar. 1968

ADMINISTRAIQR,SOCIALAND REHA-
  BILITATION SERVICE:
    John D. Twiname                Mar.   1970   Present
    Mary E. Switzer                Aug.   1967   Mar. 1970

COMMISSIONER, MEDICALSERVICES
 ADMINISTRATION:
   Howard N. Newman                Feb. 1970     Present
   Thomas Laughlin, Jr. (acting)   Sept. 1969    Feb. 1970
   Dr. Francis L. Land             Nov. 1966     Sept. 1969
                                         .




                                                 U.S.   GAO   Wmh.,   D.C.
.
.