oversight

Medicare Provider Enrollment: Opportunities to Enhance Program Integrity Efforts

Published by the Government Accountability Office on 2003-03-17.

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

             United States General Accounting Office

GAO          Report to Congressional Committees




March 2003
             MEDICARE
             PROVIDER
             ENROLLMENT
             Opportunities to
             Enhance Program
             Integrity Efforts




GAO-03-185
                                               March 2003


                                               MEDICARE PROVIDER ENROLLMENT

                                               Opportunities to Enhance Program
Highlights of GAO-03-185, a report to the      Integrity Efforts
Senate Committee on Finance, the House
Committee on Energy and Commerce,
and the House Committee on Ways and
Means




Staffing companies that contract               Contractor physicians associated with staffing companies billed Medicare
with physicians to staff hospital              for complex and costly, higher-level emergency department services at rates
departments--including emergency               similar to emergency department physicians with other affiliations, such as
departments--are not permitted to              those practicing in partnerships, medical groups, or employee-based staffing
bill Medicare. In the Medicare,                companies. In addition, the patients treated by contractor physicians
Medicaid, and SCHIP Benefits
                                               received diagnostic tests, were admitted to the hospital, and used ambulance
Improvement and Protection Act of
2000, Congress directed GAO to                 transport at rates similar to patients treated by other emergency department
assess the program integrity                   physicians.
implications of enrolling these
companies and allowing them to                 Staffing companies that retain contractor physicians remain largely invisible
bill Medicare. GAO reviewed about              to the oversight efforts of the Centers for Medicare & Medicaid Services
2.8 million emergency department               (CMS) because these companies are not enrolled in Medicare. Although
claims for 2000 from five states and           CMS has information on the individual physicians, it has no information on
assessed whether contractor                    the companies themselves. This may hinder oversight because contractor
physicians retained by staffing                physicians provided a significant share of emergency care to Medicare
companies billed Medicare                      beneficiaries. For example, in four of the five states studied, 27 to 58
comparably to other emergency                  percent of the physicians with substantial emergency department practices
department physicians. GAO also
evaluated how the lack of
                                               were contractor physicians retained by staffing companies.
information on staffing companies
affects efforts to assure Medicare             CMS does not permit the enrollment of staffing companies that retain
program integrity.                             contractor physicians because, under current law, these companies may not
                                               be reassigned Medicare benefits. This limits CMS's ability to monitor claims.
                                               CMS cannot identify claims submitted by these companies on behalf of their
                                               contractor physicians nor can it subject the claims to the same systematic
GAO suggests Congress consider                 scrutiny given to enrolled groups. Consequently, it cannot evaluate the
permitting the reassignment of                 billing patterns of specific companies nor assess the aggregate impact of
benefits to staffing companies that            these companies on Medicare program integrity.
retain contractor physicians and
requiring these companies to seek
enrollment in Medicare. GAO also               Contractor Physicians Receive a Significant Share of Medicare Payments for Emergency
                                               Department Services
recommends that CMS seek such
legislative authority. CMS agreed
that legislation was needed.




                                               Note: Percentages are based on payments to physicians with substantial emergency department
www.gao.gov/cgi-bin/getrpt?GAO-03-185.         medical practices in 2000. This information is based on GAO’s analysis of 2000 Medicare claims
                                               data.
To view the full report, including the scope
and methodology, click on the link above.
For more information, contact Leslie G.
Aronovitz (312) 220-7600.
Contents


Letter                                                                                             1
                       Results in Brief                                                            5
                       Background                                                                  6
                       Contractor Physicians Billed Similarly to Their Counterparts for
                         Emergency Department Services                                             8
                       Despite Representing a Significant Share of Billings, Staffing
                         Companies That Retain Contractor Physicians Are Practically
                         Invisible to Oversight                                                  11
                       Conclusions                                                               14
                       Matters for Congressional Consideration                                   15
                       Recommendation for Executive Action                                       15
                       Agency Comments                                                           15

Appendix I             Scope and Methodology                                                     16
                       State Selection Criteria                                                  16
                       Method for Distinguishing Contractor Physicians Associated with
                         Staffing Companies from Physicians with Other Affiliations              17
                       Methods for Comparing Billing Patterns                                    18

Appendix II            Comments from the Centers for Medicare &
                       Medicaid Services                                                         20



Appendix III           GAO Contact and Staff Acknowledgments                                     22
                       GAO Contact                                                               22
                       Acknowledgments                                                           22

Related GAO Products                                                                             23



Tables
                       Table 1: Percentage of Higher-Level E&M Services Billed by
                                Physician Type and State for Medicare Beneficiaries,
                                in 2000                                                            9
                       Table 2: Percentage of Medicare Beneficiaries Who Received
                                Higher-Level E&M Emergency Services and Who Also
                                Received Selected Services by State, in 2000                     10




                       Page i                                GAO-03-185 Medicare Provider Enrollment
         Table 3: Number of Emergency Department Physicians, Percentage
                  of Contractor Physicians, and Percentage of Related
                  Medicare E&M Payments, in 2000                                                   12
         Table 4: Use of Medicare Emergency Department E&M Service
                  Codes in Selected States, in 2000 (Percentage)                                   17
         Table 5: Emergency Department Physicians Billing Medicare by
                  Staffing Arrangement and State, in 2000                                          18


Figure
         Figure 1: Hypothetical Example of Variations in Contractor
                  Physician Billing                                                                13




         Abbreviations

         CMS               Centers for Medicare & Medicaid Services
         E&M               evaluation and management
         PIN               provider identification number



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         Page ii                                        GAO-03-185 Medicare Provider Enrollment
United States General Accounting Office
Washington, DC 20548




                                   March 17, 2003

                                   The Honorable Charles E. Grassley
                                   Chairman
                                   The Honorable Max Baucus
                                   Ranking Minority Member
                                   Committee on Finance
                                   United States Senate

                                   The Honorable W.J. “Billy” Tauzin
                                   Chairman
                                   The Honorable John D. Dingell
                                   Ranking Minority Member
                                   Committee on Energy and Commerce
                                   House of Representatives

                                   The Honorable William M. Thomas
                                   Chairman
                                   The Honorable Charles B. Rangel
                                   Ranking Minority Member
                                   Committee on Ways and Means
                                   House of Representatives

                                   In 2000, Medicare—the federal health insurance program that serves the
                                   nation’s elderly and disabled—paid for about 16 million visits to hospital
                                   emergency departments. Although hospitals may employ individual
                                   physicians to provide care, they can rely on other staffing arrangements to
                                   ensure adequate physician coverage in their emergency departments.
                                   Some hospitals rely on medical groups, such as physician partnerships, to
                                   ensure this coverage, while others utilize staffing companies to provide
                                   physician services. Staffing companies are businesses that recruit
                                   physicians, verify medical credentials, and provide physicians to staff
                                   hospital departments, including emergency departments. Some staffing
                                   companies are small and serve local or regional markets, while others are
                                   large and provide physicians to hospitals nationwide. Some staffing
                                   companies employ the physicians that they provide to hospitals and others
                                   retain physicians on a contractual basis.




                                   Page 1                                 GAO-03-185 Medicare Provider Enrollment
The Centers for Medicare & Medicaid Services (CMS), the agency
responsible for administering the Medicare program, determines,
consistent with Medicare law, when and under what arrangements
physicians can enroll1 in, and therefore directly bill, the program for
services. Medicare law generally allows individual physicians and
physician partnerships to file claims for payment. Medicare law also
permits physicians to “reassign” their right to payment to certain other
entities, such as the hospitals or other facilities where services were
performed, or to their employers. CMS’s interpretation of this provision
has had the effect, however, of prohibiting companies that retain
physicians on a contractual basis from receiving reassigned benefits. As a
consequence, such staffing companies have not been permitted to enroll
inand therefore submit claims directly to—Medicare. Claims for services
supplied by contractor physicians must be submitted to Medicare either by
the physicians themselves or the facilities where the services were
furnished. This determination applies to companies that retain contractor
physicians to staff hospital emergency departments, as well as those
providing physician services for other medical specialties, such as
radiology and anesthesiology.

Although staffing companies that retain contractor physicians cannot
directly bill Medicare, they nonetheless indirectly receive Medicare funds.
These staffing companies submit claims to Medicare on behalf of their
contractor physicians, who are entitled to direct payment for their services
to Medicare beneficiaries. The Medicare payments are deposited in the
contractor physicians’ individual bank accounts. However, the staffing
companies have typically made arrangements with these physicians to
transfer their payments for these Medicare claims to the staffing
companies. Depending upon the contract provisions, the companies and
contractor physicians then share these funds.

The fiscal integrity of the Medicare program is partially dependent on
CMS’s ability to effectively identify and investigate aberrant billing
patterns among providers to hold these providers accountable. Contractor
physicians are individually responsible for the billings submitted on their
behalf. Because staffing companies that use contractor physicians are not


1
 “Enrollment” is CMS’s term for its formal process of accepting medical providers,
including physicians, into the Medicare program. The enrollment process helps ensure that
only qualified and eligible individuals and entities can participate in the program and
receive payment for services furnished to beneficiaries. Providers that are not enrolled
cannot directly receive payment for Medicare services.




Page 2                                        GAO-03-185 Medicare Provider Enrollment
enrolled in Medicare, CMS typically has little information on these
companies and cannot readily associate the billings of individual
contractor physicians with specific staffing companies. If CMS is unable to
recoup overpayments from contractor physicians, it does not have the
recourse to recoup these funds from staffing companies. As a result, these
staffing companies may have less incentive than enrolled providers to
ensure that the program is billed properly.

Recent legislation required that we study the Medicare provider
enrollment process as it relates to contractor physicians with a particular
emphasis on hospital-based physicians, such as those retained by
emergency department staffing companies.2 Among other things, it
specifically directed us to assess the program integrity implications of
enrolling staffing companies that retain contractor physicians. As agreed
with the committees of jurisdiction, we examined emergency department
billings and focused this report on (1) whether staffing companies’
contractor physicians bill Medicare similarly to emergency department
physicians with other affiliations, such as those practicing in partnerships,
medical groups, or employee-based staffing companies, and (2) how CMS’s
ability to monitor Medicare billings has been affected by the lack of
information linking contractor physicians to their staffing companies.

To conduct our study, we examined Medicare emergency department
evaluation and management (E&M) services because they are an essential
component of care provided to Medicare beneficiaries by emergency
department physicians. E&M services involve a physician taking a patient’s
medical history, performing a physical examination, and making decisions
regarding diagnosis and treatment. Medicare payments for E&M services
vary based on several factors, including the patient’s status and presenting
diagnosis and the level of the physician’s medical decision making and
counseling exercised during the patient’s examination. We analyzed about
2.8 million claims for emergency department E&M services paid in 2000
for beneficiaries in Alabama, Florida, Pennsylvania, Texas, and West
Virginia—or about 20 percent of Medicare emergency department E&M
services paid in 2000 nationally.

To determine which physicians were contractors associated with—that is,
retained by—staffing companies, we identified physicians with common



2
 The Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000,
Pub. L. No. 106-554, App. F, § 413, 114 Sta. 2763, 2763A-515.




Page 3                                       GAO-03-185 Medicare Provider Enrollment
payment addresses who were not enrolled in Medicare as part of a medical
group. For purposes of comparison, we placed all other physicians,
including those who were members of partnerships, medical groups, or
employees of hospitals or staffing companies, in a separate category.3 To
determine if contractor physicians associated with emergency department
staffing companies billed Medicare for more complex services at higher
rates than physicians with other affiliations, we compared the proportions
of each group’s E&M billings that were billed at the two highest levels. We
also compared information from Medicare claims about other services that
patients served by each group received at the time of their emergency
department visits to assess whether the groups were caring for
comparable patients. It was not feasible to obtain patients’ medical
records that would allow a more complete comparison of the two groups’
patients. Our findings cannot be generalized or projected to staffing
companies that retain contractor physicians in other specialties, such as
radiology or anesthesiology, nor can our findings be projected to other
states.

In addition to our claims analysis, we interviewed CMS officials to discuss
Medicare enrollment policies and procedures as well as the program
integrity implications of enrolling staffing companies that retain contractor
physicians in Medicare. We also discussed these matters with
representatives from several of the claims administration contractors that
CMS relies on to help administer the program.4 We obtained the views of
officials from staffing companies that employ physicians, as well as those
that retain physicians on a contractual basis and several organizations
representing emergency department physicians. Included among those
officials interviewed at CMS and staffing companies were several
physicians who have experience working in hospital emergency
departments. Finally, we reviewed applicable laws, regulations, and other
guidance concerning Medicare enrollment and claims processing. We
performed our work from March 2001 through February 2003, in



3
 We excluded a small number of physicians from our analysis who appeared to practice
emergency medicine as solo practitioners. They did not appear to be members of
partnerships or medical groups or employees of hospitals or staffing companies and did not
have payment addresses in common with other physicians. Less than 1 percent of the
physicians who provided emergency services in the five states in 2000 were excluded.
4
 The claims administration contractors that process Part A claims—those covering
inpatient hospital, skilled nursing facility, hospice, and certain home health services—are
known as fiscal intermediaries. Contractors processing Part B claims—covering physician
services, diagnostic tests, and related services and supplies—are referred to as carriers.




Page 4                                         GAO-03-185 Medicare Provider Enrollment
                   accordance with generally accepted government auditing standards. (See
                   app. I for more information on our scope and methodology, including our
                   criteria for selecting the states examined.)


                   In four of the five states we studied, contractor physicians retained by
Results in Brief   staffing companies billed Medicare for the higher-level emergency
                   department E&M services similarly to other physicians. These staffing
                   company physicians billed the higher-level E&M services at rates
                   comparable to emergency department physicians with other affiliations,
                   such as those associated with partnerships, medical groups, or employee-
                   based staffing companies. In the fifth state, contractor physicians
                   associated with staffing companies billed the higher-level services
                   substantially less often than other physicians. Our analysis also indicated
                   that the patients each group served were generally similar, at least in
                   terms of receiving services typically associated with an emergency
                   department visit, such as ambulance transportation, hospital admission,
                   and diagnostic testing. Patients treated by contractor physicians received
                   slightly more of these services in four of the five states we examined. A
                   more comprehensive comparison of the similarities of patients of the two
                   groups of physicians was not feasible.

                   Contractor physicians associated with staffing companies provided a
                   substantial amount of emergency department care to Medicare
                   beneficiaries in four of the five states we reviewed. For example, in these
                   four states, contractor physicians received from 27 percent to 55 percent
                   of the emergency department E&M payments made by Medicare on behalf
                   of beneficiaries in these states. Despite their strong presence, the staffing
                   companies are practically invisible to CMS’s oversight. CMS does not have
                   information on which physicians may be contracting with different staffing
                   companies. Although CMS can identify the billings of individual physicians
                   or groups and assess whether their billings are markedly different from the
                   billings of their peers and hence merit more extensive review, it cannot
                   conduct such oversight of claims submitted by the contractor physicians
                   associated with a particular staffing company. In the aggregate, emergency
                   department contractor physicians billed similarly to other affiliated
                   physicians, but differences in the billing patterns of contractor physicians
                   retained by specific companies cannot be detected because the companies
                   cannot be identified. Given the share of Medicare payments associated
                   with these staffing companies in the states studied, it would be prudent if
                   CMS could improve its ability to screen claims by requiring such staffing
                   companies to enroll in Medicare and identify the physicians with which
                   they have contracted.


                   Page 5                                 GAO-03-185 Medicare Provider Enrollment
             To enhance program integrity, we suggest that Congress may wish to
             amend the Social Security Act to permit the reassignment of benefits to
             staffing companies that retain contractor physicians to treat Medicare
             beneficiaries, and require these staffing companies to seek enrollment in
             Medicare. We are also recommending that the CMS Administrator seek
             such legislative changes. CMS agreed that a legislative amendment was
             needed to permit the reassignment of benefits.


             Beneficiaries are generally the only parties under Medicare statute who
Background   are entitled to receive Medicare payments for physician services.5
             However, they can “assign” their rights to payment to physicians, other
             providers, and suppliers who directly deliver the care or service and then
             submit claims to Medicare. These physicians as well as other providers
             and suppliers must meet criteria for enrollment in the Medicare program.
             To bill Medicare, CMS requires that physicians, other providers, and
             suppliers use a standardized, five-digit coding system on the claim forms
             to identify the medical services and procedures that were provided.6 These
             billing codes describe the type of medical, surgical, and diagnostic service
             rendered. For E&M services, these codes also designate the level—or
             intensity—of care provided. Emergency department E&M codes range
             from 99281 to 99285.7 Typically, the higher the E&M code, the more
             complex the consultation, or level of care involved, and the higher the
             Medicare payment.




             5
              Section 1842(b)(6) of the Social Security Act provides that payments for Part B services,
             including payments for physicians’ services, generally may be made only to the individual
             who received the services. 42 U.S.C. § 1395u(b)(6) (2000). The law provides exceptions,
             however, permitting payment to a physician’s employer or to a facility, such as a hospital,
             in which the services were provided. Part A services paid under section 1814(a) of the
             Social Security Act include inpatient hospital, skilled nursing facility, hospice, and certain
             home health services, and generally may be made only to providers. 42 U.S.C. § 1395f(a)
             (2000).
             6
              The Health Insurance Portability and Accountability Act of 1996 required the Secretary of
             Health and Human Services to adopt standard code sets for describing health-related
             services in connection with financial and administrative transactions, such as filing claims
             for payment. Pub. L. No. 104-191, Title II, Stat. F, 110 Stat. 1936, 2021 (codified at 42 U.S.C.
             §§ 1320d-1320d-8 (2000)). For more information, see U.S. General Accounting Office,
             HIPAA Standards: Dual Code Sets Are Acceptable for Reporting Medical Procedures,
             GAO-02-796 (Washington, D.C.: Aug. 9, 2002).
             7
              There are about 8,000 codes that identify all types of medical services, such as anesthesia,
             laboratory, medicine, pathology, radiology, and surgery.




             Page 6                                            GAO-03-185 Medicare Provider Enrollment
CMS has delegated the authority for enrolling physicians and other entities
into the Medicare program to its claims administration contractors—the
fiscal intermediaries and carriers—that help it manage the Medicare
program. As carriers are responsible for the administration of Part B
services, they are therefore tasked with managing the enrollment of
physicians in Medicare. Before enrolling individual physicians and other
entities, the carriers determine whether applicants meet Medicare
eligibility criteria and assess, based on information provided, whether they
appear to pose a potential threat to program integrity. For example,
applicants are required to disclose their legal business names and
ownership, adverse legal actions, and outstanding Medicare debt from
previous enrollment along with copies of their medical licenses. The
carriers also have the authority to request additional documentation to
validate information included in the enrollment application, such as
articles of incorporation and partnership agreements. In addition to
verifying the required information, the carriers may access several national
databases to identify adverse reports on applicants that may affect their
ability to become enrolled in Medicare.8 Once physicians are enrolled, the
carriers assign each physician an individual provider identification number
(PIN), which serves as a unique identifier. Similarly, entities that are
eligible to enroll in Medicare and therefore directly bill the program—such
as physician partnerships or staffing companies that employ physicians—
obtain group PINs.

As specified by law, physicians can only “reassign” their payment rights to
certain other entities, such as the hospitals or other facilities where
services were performed or to their employers. Emergency department
staffing companies generally do not own the facilities where services are
performed and those that retain contractor physicians are not considered
the physicians’ employers. As a result, Medicare payments cannot be
reassigned to emergency department staffing companies that retain
contractor physicians, and these companies are not permitted to enroll in
and directly bill Medicare or be assigned group PINs. However, these


8
 Claims administration contractors compare the names of providers, managing directors,
and owners with at least 5 percent ownership interest to those listed on several databases,
specifically the (1) Department of Health and Human Services Office of Inspector General
list of excluded providers, (2) General Services Administration debarment list, (3)
Healthcare Integrity and Protection Data Bank, (4) Fraud Investigation Database, and
(5) ChoicePoint—a private research service that verifies medical providers’ personal and
business information. For related information see U.S. General Accounting Office,
Medicare: HCFA to Strengthen Medicare Provider Enrollment Significantly, but
Implementation Behind Schedule, GAO-01-114R (Washington D.C.: Nov. 2, 2000).




Page 7                                         GAO-03-185 Medicare Provider Enrollment
                            staffing companies may submit claims on behalf of their contractor
                            physicians, using the physicians’ individual PINs. Although the physicians
                            are ultimately responsible for the claims submitted on their behalf, they
                            may not be aware of how the staffing companies code the services billed
                            to Medicare.

                            Carriers may use an individual or a group PIN to facilitate their program
                            integrity activities. PINs allow carriers to link the individual physicians
                            who actually rendered the services and the entities with which they are
                            affiliated. Carriers are then able to monitor billing patterns and compare
                            billings of both individual physicians and groups. By analyzing the billing
                            patterns associated with both the PINs of individual physicians and these
                            entities, carriers can identify meaningful differences and detect potential
                            instances of improper payments or fraud. Because staffing companies that
                            retain contractor physicians may not be reassigned benefits and cannot
                            enroll in Medicare, they do not receive group PINs. Consequently, they are
                            not identified on Medicare claim forms and are not subjected to such
                            scrutiny.


                            Our comparison of the billings by contractor physicians retained by
Contractor Physicians       staffing companies to other affiliated physicians—such as those practicing
Billed Similarly to         in partnerships, medical groups, and employee-based staffing companies—
                            showed that contractor physicians and those with other affiliations both
Their Counterparts          billed for higher-level E&M services at comparable rates in four of the five
for Emergency               states we reviewed and at a lower rate in the fifth state we reviewed.
                            Moreover, the rates at which other services—such as ambulance
Department Services         transportation, hospital admission, and diagnostic testing—were rendered
                            in conjunction with the higher-level E&M services were similar for
                            contractor physicians and those with other affiliations, providing an
                            indication that the patients of both types of physicians were comparable.


Higher-Level E&M Services   Comparing the emergency department E&M billings of contractor
Billed at Similar Rates     physicians with other affiliated physicians showed that physicians
                            involved with the two types of staffing arrangements billed Medicare for
                            the higher-level services at similar rates in four of the five states we
                            reviewed. The payment amounts for the higher-level services—codes
                            99284 and 99285—are, on average, about three times greater than the
                            average payment amounts for lower-level services—codes 99281, 99282,




                            Page 8                                 GAO-03-185 Medicare Provider Enrollment
                            and 99283.9 As table 1 shows, contractor physicians in Alabama, Florida,
                            Pennsylvania, and Texas billed nearly the same proportion of higher-level
                            E&M services as their counterparts in those states. The largest difference
                            we identified was in West Virginia, where contractor physicians associated
                            with staffing companies billed the higher-level services 55 percent of the
                            time while other affiliated physicians billed for these services 74 percent
                            of the time. We were unable to determine the cause of this variation.

                            Table 1: Percentage of Higher-Level E&M Services Billed by Physician Type and
                            State for Medicare Beneficiaries, in 2000

                                                                     Contractor physicians
                                                                    associated with staffing                  Other affiliated
                                State                                           companies                        physicians
                                Alabama                                                   57                                57
                                Florida                                                   69                                64
                                Pennsylvania                                              57                                58
                                Texas                                                     66                                64
                                West Virginia                                             55                                74

                            Source: GAO.

                            Note: We calculated these rates by dividing the number of higher-level (codes 99284 and 99285)
                            billings by the total number of emergency department E&M services billed by physician type. This
                            information is based on our analysis of carrier data.




Patients of Contractor      Regardless of whether emergency department patients were treated by
Physicians and Other        contractor physicians or other emergency department physicians, those
Affiliated Physicians       receiving higher-level E&M services received other services at similar
                            rates in the five states we reviewed. To determine the comparability of
Received Similar Services   patients treated by both types of physicians, we examined the rates at
                            which patients had been transported by ambulance to the emergency
                            department, received diagnostic tests, or were admitted to the hospital
                            within 24 hours of the emergency department visit. As table 2 shows,
                            patients generally received ambulance, hospital admissions, and




                            9
                             During 2000, the national payment amounts for Medicare emergency department E&M
                            services were as follows: $20.14 for 99281, $31.49 for 99282, $64.07 for 99283, $98.49 for
                            99284, and $154.88 for 99285. Actual payment amounts are higher or lower, depending on
                            the labor cost adjustment for the geographic location.




                            Page 9                                              GAO-03-185 Medicare Provider Enrollment
                                       diagnostic testing services at similar rates when higher-level E&M services
                                       were billed, regardless of the physicians’ staffing arrangements.10

Table 2: Percentage of Medicare Beneficiaries Who Received Higher-Level E&M Emergency Services and Who Also Received
Selected Services by State, in 2000

                 Alabama                Florida            Pennsylvania              Texas             West Virginia
                physicians            physicians            physicians            physicians            physicians
                           Other                 Other                 Other                 Other                 Other
 Servicea   Contractor affiliated Contractor affiliated Contractor affiliated Contractor affiliated Contractor affiliated
 Ambulance          38         35         38         42         48         46         41         39         39         37
 Admission          59         53         64         65         75         66         63         61         63         53
 Diagnostic
 testing            92         91         89         91         96         95         95         93         90         86

Source: GAO.

                                       Note: This information is based on our analysis of carrier data.
                                       a
                                        We used beneficiary claims data to identify whether ambulance, hospital admission, and diagnostic
                                       services were delivered in conjunction with a higher-level E&M service (99284 and 99285). The most
                                       frequently ordered diagnostic tests were chest x-rays, echocardiograms, computerized axial
                                       tomography scans, and automated blood count tests. Contractor physicians and other affiliated
                                       physicians ordered such tests 37 percent and 40 percent of the time, respectively.


                                       Patients treated by contractor physicians in Alabama, Pennsylvania,
                                       Texas, and West Virginia had slightly higher ambulance, hospital
                                       admissions, and diagnostic testing rates than patients treated by other
                                       physicians. However, as noted earlier, these physicians did not bill for
                                       higher-level services at rates significantly greater than physicians with
                                       other affiliations in these four states. The opposite pattern occurred only
                                       in Florida. There, contractor physicians treated patients who received
                                       fewer other services, but billed higher-level E&M services slightly more
                                       often. In Florida, these physicians billed Medicare for higher-level services



                                       10
                                         Under both types of staffing arrangements, across all five states, from 1 to 6 percent of
                                       patients did not receive at least one of the three services. Although carrier officials told us
                                       that most patients who received higher-level E&M services were transported to the hospital
                                       by ambulance, admitted to the hospital, or received some diagnostic tests, our initial
                                       analysis showed that some patients who received higher-level E&M services did not receive
                                       any of these services. We therefore asked carriers to review the claims of a sample of these
                                       patients. Carrier analysis revealed that some claims contained data entry errors that
                                       prevented them from associating these services with a particular E&M service. They also
                                       identified other claims that were paid in 2001, after our survey period. However, for about a
                                       third of the patients in their sample, carrier officials could not explain why one of the three
                                       types of services had not been rendered. Consequently, carrier officials could not discount
                                       the possibility that the higher-level E&M codes were improperly billed.




                                       Page 10                                               GAO-03-185 Medicare Provider Enrollment
                              69 percent of the time as compared to 64 percent by other affiliated
                              physicians.


                              In four of the five states we examined, a substantial percentage of the
Despite Representing          physicians providing emergency department care were contractor
a Significant Share of        physicians associated with staffing companies. These physicians also
                              received a significant share of Medicare payments for these services.
Billings, Staffing            However, because the staffing companies are not subject to the enrollment
Companies That                procedures that the carriers routinely conduct for physicians and medical
                              groups before they are allowed to bill Medicare, CMS does not collect
Retain Contractor             critical information that would enable it to identify claims that are
Physicians Are                submitted by staffing companies on behalf of their contractor physicians.
Practically Invisible to      Without such information, CMS cannot routinely link the claims that these
                              companies submit on behalf of their physicians to assess the billing
Oversight                     patterns of physicians contracting with specific staffing companies
                              compared to the billing patterns of other physicians.


Contractor Physicians         Our five-state analysis of Medicare emergency department claims data and
Account for Significant but   physician payment information showed that contractor physicians with
Variable Share of Medicare    staffing company affiliations accounted for a significant share of billings
                              overall, but this varied by state. In four of the five states studied, from 27
Billings                      to 58 percent of the physicians with substantial emergency department
                              practices were contractor physicians associated with staffing companies.11
                              As table 3 shows, in Alabama, 58 percent of the 351 physicians we
                              identified as having substantial emergency department practices were
                              contractor physicians. Though the percentage of these physicians was
                              lower in Florida, Texas, and West Virginia, they still provided a significant
                              portion of emergency care for Medicare beneficiaries in those states and
                              received a proportionate share of Medicare E&M payments for their
                              services. In contrast, a considerably lower percentage of Pennsylvania
                              physicians were contractors associated with staffing companies. We were
                              unable to determine why contractor physicians had a relatively small
                              presence in this state.




                              11
                                We defined a substantial emergency department practice as one in which at least 50
                              percent of the physician’s practice involved emergency department E&M services and at
                              least $20,000 in Medicare payments for E&M services were paid to the physician in 2000.




                              Page 11                                       GAO-03-185 Medicare Provider Enrollment
                      Table 3: Number of Emergency Department Physicians, Percentage of Contractor
                      Physicians, and Percentage of Related Medicare E&M Payments, in 2000

                                                                            Percentage of
                                                     Number of                  contractor   Percentage of E&M
                                                physicians with            physicians with          payments to
                                                    substantial                substantial contractor physicians
                                                    emergency                  emergency         with substantial
                                                   department                 department emergency department
                       State                          practices                  practices              practices
                       Alabama                              351                         58                     55
                       Florida                            1,240                         27                     27
                       Pennsylvania                       1,122                          4                      5
                       Texas                              1,258                         29                     28
                       West Virginia                        253                         44                     43

                      Source: GAO.

                      Note: This information is based on our analysis of carrier data.




Program Safeguards    Despite the significant share of Medicare payments for emergency
Hindered by Lack of   department E&M services made to contractor physicians, the staffing
Information           companies that retain these physicians are not subject to the screening or
                      systematic scrutiny that carriers impose on other entities that are eligible
                      to enroll in Medicare. During the enrollment process, carriers obtain
                      substantial information about providers that can be used to identify
                      applicants who may be more likely to submit improper billings. Because
                      staffing companies that retain contractor physicians may not be
                      reassigned benefits and cannot enroll in the program, they are not
                      assigned PINs and such information about them is not collected. Medicare
                      cannot identify which physicians are associated with a specific company.

                      For entities that are enrolled in Medicare, carriers can track the billings of
                      specific providers associated with an entity over time, compare the billings
                      of similar provider types, and examine claims submitted by physicians
                      affiliated with different entities. These analyses allow the carriers to spot
                      billing patterns that are markedly different from the norm, which could
                      suggest potential improper billing. The carriers cannot perform this
                      analysis for staffing companies that retain contractor physicians because
                      these companies do not have group PINs that would enable carriers to link
                      physicians’ billings to the companies. As our hypothetical example
                      contained in figure 1 demonstrates, important differences in billing
                      practices across companies can be missed when the carriers cannot
                      identify company affiliation.



                      Page 12                                               GAO-03-185 Medicare Provider Enrollment
Figure 1: Hypothetical Example of Variations in Contractor Physician Billing




If a carrier determines that a medical group’s billings differ significantly
from other similar providers, the carrier may review the entity’s claims to
identify the reasons for the variance. If the review finds improper bills, the
carrier can take corrective action, including an assessment of amounts
paid in error that must be repaid to Medicare. For repeated billing abuses,
the carrier can take steps to further protect the Medicare program. For
example, it can delay payment of some or all claims, pending more intense
screening. When the group is enrolled in Medicare, the carrier may hold
accountable, not just the physicians responsible for the improper billings,
but the group, partnership, or entity employing those physicians as well.
For example, if the physician stops billing Medicare before the amount of
the overpayment can be withheld from subsequent payments or if the
physician is unable to return the amount of the overpayment, plus
applicable penalties and interest, the carrier may be able to recover the
funds from a partnership or staffing company that employed the physician.
Such steps cannot be taken against staffing companies that retain
contractor physicians. Because staffing companies that retain contractor
physicians may not be reassigned benefits and are not enrolled in
Medicare, CMS has no information on these companies and cannot


Page 13                                    GAO-03-185 Medicare Provider Enrollment
              associate the billings of individual contractor physicians with specific
              staffing companies.

              Under current law, CMS lacks the capability to readily identify contractor
              physicians and the staffing companies with which they associate. We
              engaged in a time-consuming and labor-intensive process that is not
              routinely performed by CMS or its carriers. We had to extract and match
              physician information from multiple sources, including Medicare
              emergency department claims data, Medicare cost reports, a staffing
              company database voluntarily provided by one staffing company, and
              hospitals we contacted in the five states we reviewed.

              CMS officials acknowledge the limitations in the current reassignment and
              enrollment policies and the lack of information on staffing companies that
              retain contractor physicians. They explained that although Medicare
              statute expressly provides for certain types of entities—such as medical
              groups and health care delivery systems—to enroll and have group PINs,
              that law does not have comparable provisions for staffing companies that
              retain contractor physicians. CMS officials, therefore, maintain that they
              lack the authority to change CMS policy to permit the enrollment of these
              staffing companies and assignment of group PINs to them.


              Across the five states, contractor physicians billed Medicare similarly to
Conclusions   other affiliated physicians. While these similarities were observed at an
              aggregate level, contractor physicians associated with specific companies
              may nonetheless have billing patterns that differ markedly from the norm.
              This, coupled with the significant share of Medicare payments that these
              staffing companies receive, albeit indirectly, for emergency services in
              four of the five states we studied, suggests that it is important for CMS to
              be able to monitor the billing practices of individual companies using
              contract physicians. However, the law prohibiting staffing companies from
              being reassigned Medicare paymentswith the result that they are not
              permitted to enroll in Medicare and receive group PINshas limited
              CMS’s ability to conduct oversight. CMS’s carriers cannot identify claims
              submitted by these staffing companies and, therefore, cannot subject them
              to same systematic scrutiny as those of other groups. Although our work
              did not include an analysis of billings by contractor physicians who
              specialize in the provision of other medical services, such as radiology or
              anesthesiology, these companies remain as invisible to CMS’s oversight as
              those providing emergency department care.




              Page 14                                 GAO-03-185 Medicare Provider Enrollment
                     In order to enhance Medicare’s program integrity, Congress may wish to
Matters for          amend the Social Security Act to (1) permit the reassignment of benefits to
Congressional        staffing companies that retain contractor physicians to treat Medicare
                     beneficiaries so that CMS may enroll these companies if they meet
Consideration        appropriate criteria and (2) require these staffing companies to seek
                     enrollment in Medicare.


                     To facilitate improvements in program integrity, the CMS Administrator
Recommendation for   should propose legislation permitting the reassignment of benefits to
Executive Action     staffing companies that retain contractor physicians to treat Medicare
                     beneficiaries and requiring that these companies seek enrollment in
                     Medicare.


                     In written comments on a draft of this report, CMS agreed that a legislative
Agency Comments      amendment is needed. CMS recommended that we revise the draft report
                     to reflect that, under current law, staffing companies that retain contractor
                     physicians are not enrolled in Medicare because they are generally not
                     eligible to be reassigned benefits. We have revised the report to fully
                     reflect this.

                     We have reprinted CMS’s letter in appendix II. CMS also provided us with
                     technical comments, which we have incorporated as appropriate.


                     We are sending copies of this report to the Administrator of CMS and
                     other interested parties. In addition, this report will be available at no
                     charge on GAO’s Web site at http://www.gao.gov. We will also make copies
                     available to others upon request.

                     If you or your staffs have any questions about this report, please call me at
                     (312) 220-7600. An additional GAO contact and other staff members who
                     prepared this report are listed in appendix III.




                     Leslie G. Aronovitz
                     Director, Health Care—Program
                     Administration and Integrity Issues




                     Page 15                                 GAO-03-185 Medicare Provider Enrollment
                  Appendix I: Scope and Methodology
Appendix I: Scope and Methodology


                  To study the billing patterns of emergency department staffing companies
                  that retain contractor physicians, we obtained Medicare claims data paid
                  in 2000 for beneficiaries in five states—Alabama, Florida, Pennsylvania,
                  Texas, and West Virginia. We analyzed all the emergency department
                  evaluation and management (E&M) claims—about 2.8 million—from the
                  five carriers and six fiscal intermediaries that processed Medicare claims
                  for these states during this period. These claims represented about 20
                  percent of all Medicare emergency department E&M services paid in 2000.
                  We interviewed representatives from the Centers for Medicare & Medicaid
                  Services (CMS), officials from the five Medicare carriers and several of the
                  fiscal intermediaries serving the five states we reviewed, and three
                  professional associations that represent emergency department
                  physicians—the American College of Emergency Physicians, the
                  Emergency Department Practice Management Association, and the
                  American Academy of Emergency Medicine. Several of the officials from
                  these organizations were also physicians who have experience working in
                  hospital emergency departments. We also contacted hospitals in the 5
                  states we reviewed.

                  To determine how the use of staffing companies that retain contractor
                  physicians has affected CMS’s ability to monitor emergency department
                  billings, we reviewed documentation related to the provider enrollment
                  process. This included criteria for qualifying for an individual or group PIN
                  and the processes for assessing their integrity. We reviewed applicable
                  laws, CMS regulations, and program guidance. We also reviewed
                  applicable laws and regulations on provider enrollment, Medicare cost
                  reports, as well as reports and other relevant materials from staffing
                  companies.


                  We selected the five states in our study based on several factors. We chose
State Selection   Florida, Texas, and Pennsylvania because, according to 2000 U.S. Census
Criteria          Bureau data, they were among the states with the largest number of
                  Medicare beneficiaries. Because carrier officials indicated that billing
                  improprieties might be more likely to occur in states that exceed the
                  national average for higher-level E&M services, we chose West Virginia as
                  one such state. As shown in table 4, Florida and Texas also exceeded the
                  national average in the use of higher-level codes. Finally, we selected
                  Alabama because the carrier serving beneficiaries in that state had
                  developed extensive experience identifying and addressing provider
                  enrollment problems. Our results cannot be generalized to other states.




                  Page 16                                 GAO-03-185 Medicare Provider Enrollment
                                       Appendix I: Scope and Methodology




Table 4: Use of Medicare Emergency Department E&M Service Codes in Selected States, in 2000 (Percentage)

 Service codes                             Alabama      Florida     Pennsylvania         Texas       West Virginia     United States
 99281                                            3           1                1              2                  3                 2
 99282                                           13           7                9              8                  9                10
 99283                                           32          28               34             30                 27                32
 99284                                           30          30               31             31                 29                32
 99285                                           23          34               24             29                 32                24
 Total allowed E&M services (number)        274,660     840,247          707,385        840,193           179,908        14,318,204

Source: CMS.

                                       Note: This information is from CMS’s Part B Extract and Summary System data for 2000.


                                       We developed a method for categorizing physicians by their type of
Method for                             staffing arrangement, based on Medicare claims data. Our analysis was
Distinguishing                         limited to physicians with substantial emergency department practices in
                                       2000. We defined a “substantial practice” as one in which at least (1) 50
Contractor Physicians                  percent of the physician’s Medicare payments were for emergency
Associated with                        department E&M services and (2) $20,000 in Medicare payments were for
                                       emergency department E&M services. For physicians meeting these
Staffing Companies                     criteria, carriers provided summary data containing the physicians’ names,
from Physicians with                   provider identification number (PIN), practice addresses, payment
Other Affiliations                     addresses, payments received, and Medicare group numbers, where
                                       applicable.

                                       Using individual PINs, group PINs, and payment addresses, we placed
                                       physicians in one of two categories—contractor physicians and other
                                       physicians.1 We used a multistep process that entailed extracting and
                                       matching information from various sources. First, we used information
                                       from Medicare claims data to place physicians whose individual PINs were
                                       associated with group PINs in the other physicians category. Second, we
                                       placed physicians who did not have group PINs into the contractor
                                       physician category if their Medicare payments were sent to addresses used
                                       by at least one other physician or if they practiced in rural areas. We used
                                       Medicare emergency department claims data, private databases, and
                                       public records to identify payment addresses and practice locations.
                                       According to CMS officials, physicians who do not have group PINs and
                                       whose payments are sent to addresses similar to another physician are
                                       likely to be contractors retained by staffing companies. Third, we


                                       1
                                        We examined the billing patterns of these physicians in the aggregate and did not analyze
                                       individual physicians, groups, or staffing companies.




                                       Page 17                                           GAO-03-185 Medicare Provider Enrollment
                    Appendix I: Scope and Methodology




                    excluded physicians who did not have group PINs, payment addresses in
                    common with another physician, or who practiced in rural locations.2 Less
                    than 1 percent of the physicians were excluded. Table 5 summarizes the
                    results of our analysis.

                    Table 5: Emergency Department Physicians Billing Medicare by Staffing
                    Arrangement and State, in 2000

                                                                                           Total physicians with
                                                  Contractor        Other affiliated      substantial emergency
                        State                     physicians           physicians           department practice
                        Alabama                          203                     148                         351
                        Florida                          331                     909                       1,240
                        Pennsylvania                      47                  1,075                        1,122
                        Texas                            362                     896                       1,258
                        West Virginia                    111                     142                         253

                    Source: GAO.

                    Note: Our method may slightly overestimate the number of physicians because they may work in
                    more than one emergency department or staffing arrangement and have a different PIN for each
                    practice location. This information is based on our analysis of CMS data.


                    To determine whether contractor physicians retained by staffing
Methods for         companies bill Medicare for the higher-level services at rates comparable
Comparing Billing   to other emergency department physicians, we did the following. We
                    asked the carriers to provide us with frequency distributions of the E&M
Patterns            services provided by physicians in our study. We combined the less costly
                    codes (99281, 99282, and 99283) to form a lower-level service category and
                    the more costly codes (99284 and 99285) to form a higher-level category.
                    Of the five procedural codes, 99284 and 99285 were claimed 56 percent of
                    the time. The carriers derived this information from Medicare claims data.




                    2
                     We relaxed the address-matching criterion for physicians in rural areas because we
                    recognized that our selection criteria—50 percent of practice and $20,000 in payments—
                    might not adequately capture physicians associated with staffing companies in those
                    locations. In rural areas where there are shortages of emergency department physicians,
                    practices are smaller, and physicians associated with a staffing company might not have
                    had sufficient Medicare payments to meet our selection criteria. As such, the carriers
                    would not have identified these physicians and their Medicare payment addresses would
                    not be available for matching with other physicians. To ensure adequate representation of
                    rural contractor physicians, we included physicians in rural areas without group numbers
                    in the contractor physician category. Twenty-two physicians were placed in this category
                    as a result of this decision.




                    Page 18                                           GAO-03-185 Medicare Provider Enrollment
Appendix I: Scope and Methodology




We also used Medicare claims data to determine whether patients treated
by contractor physicians and those treated by other affiliated physicians
received comparable services. We asked carriers to identify patients who
received higher-level E&M services from physicians in both arrangements
and the dates of the E&M services. We then compared this information
with all Medicare claims paid from January 1, 2000, through November 30,
2000.3 We did this to determine whether patients receiving higher-level
E&M services were also transported by ambulance, received at least one
diagnostic test, or were admitted to the hospital. Carrier officials provided
us with a list of service codes that when present on a claim, indicate one of
these three services. Our analysis included a search for such services
delivered on the same day, 1 day before, or 1 day after the higher-level
E&M service was received.

Because carrier officials told us that it would be unusual for a patient who
received a higher-level E&M code to not receive any of the three selected
services, we analyzed such instances. We randomly selected 15 patients in
each of the five states who received a higher-level E&M service without
also receiving a selected service. The carriers reviewed the patients’
Medicare claims information on services rendered within 1 week before
and 1 week after the date of the higher-level E&M service. We did not ask
that the carriers conduct medical reviews to determine whether claims
were properly coded.




3
 Because billing cycles and practices vary, it is possible that some services related to an
emergency department visit can be paid weeks or months after the E&M service. To reduce
the influence of delayed billing on our analysis, we excluded E&M services that were
performed on or after December 1, 2000. This restriction allowed us to detect admissions,
ambulance, and diagnostic services that were reimbursed up to 1 month after the E&M
service was rendered. There are some E&M services in our study that were paid in 2000,
but performed in 1999. If some of the related admissions, ambulance, and diagnostic
services were paid in 1999 and not in 2000, our cross-match would not have detected them.




Page 19                                        GAO-03-185 Medicare Provider Enrollment
              Appendix II: Comments from the Centers for Medicare & Medicaid Services
Appendix II: Comments from the Centers for
Medicare & Medicaid Services




              Page 20                                      GAO-03-185 Medicare Provider Enrollment
Appendix II: Comments from the Centers for Medicare & Medicaid Services




Page 21                                      GAO-03-185 Medicare Provider Enrollment
                  Appendix III: GAO Contact and Staff
Appendix III: GAO Contact and Staff
                  Acknowledgments



Acknowledgments

                  Geraldine Redican-Bigott, (312) 220-7678
GAO Contact
                  Enchelle D. Bolden, Shaunessye D. Curry, Richard M. Lipinski, and Craig
Acknowledgments   Winslow made major contributions to this report.




                  Page 22                               GAO-03-185 Medicare Provider Enrollment
             Related GAO Products
Related GAO Products


             HIPAA Standards: Dual Code Sets Are Acceptable for Reporting Medical
             Procedures. GAO-02-796. Washington, D.C.: August 9, 2002.

             Medicare Hospital and Physician Payments: Geographic Cost
             Adjustments Important to Preserve Beneficiary Access to Services.
             GAO-02-968T. Washington, D.C.: July 23, 2002.

             Medicare: Recent CMS Reforms Address Carrier Scrutiny of Physicians’
             Claims for Payment. GAO-02-693. Washington, D.C.: May 28, 2002.

             Medicare: HCFA to Strengthen Medicare Provider Enrollment
             Significantly, but Implementation Behind Schedule. GAO-01-114R.
             Washington, D.C.: November 2, 2000.




(290017)
             Page 23                              GAO-03-185 Medicare Provider Enrollment
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