,,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. . .
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)