Medicare Provider Enrollment: Opportunities to Enhance Program	 
Integrity Efforts (17-MAR-03, GAO-03-185).			 
                                                                 
Staffing companies that contract with physicians to staff	 
hospital departments--including emergency departments--are not	 
permitted to bill Medicare. In the Medicare, Medicaid, and SCHIP 
Benefits Improvement and Protection Act of 2000, Congress	 
directed GAO to assess the program integrity implications of	 
enrolling these companies and allowing them to bill Medicare. GAO
reviewed about 2.8 million emergency department claims for 2000  
from five states and assessed whether contractor physicians	 
retained by staffing companies billed Medicare comparably to	 
other emergency department physicians. GAO also evaluated how the
lack of information on staffing companies affects efforts to	 
assure Medicare program integrity.				 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-03-185 					        
    ACCNO:   A06354						        
  TITLE:     Medicare Provider Enrollment: Opportunities to Enhance   
Program Integrity Efforts					 
     DATE:   03/17/2003 
  SUBJECT:   Health care services				 
	     Health insurance					 
	     Hospitals						 
	     Managed health care				 
	     Physicians 					 
	     Comparative analysis				 
	     Program management 				 
	     Medicare Program					 

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GAO-03-185

Report to Congressional Committees

United States General Accounting Office

GAO

March 2003 MEDICARE PROVIDER ENROLLMENT

Opportunities to Enhance Program Integrity Efforts

GAO- 03- 185

Contractor physicians associated with staffing companies billed Medicare
for complex and costly, higher- level emergency department services at
rates similar to emergency department physicians with other affiliations,
such as

those practicing in partnerships, medical groups, or employee- based
staffing companies. In addition, the patients treated by contractor
physicians received diagnostic tests, were admitted to the hospital, and
used ambulance transport at rates similar to patients treated by other
emergency department physicians.

Staffing companies that retain contractor physicians remain largely
invisible to the oversight efforts of the Centers for Medicare & Medicaid
Services (CMS) because these companies are not enrolled in Medicare.
Although

CMS has information on the individual physicians, it has no information on
the companies themselves. This may hinder oversight because contractor
physicians provided a significant share of emergency care to Medicare
beneficiaries. For example, in four of the five states studied, 27 to 58

percent of the physicians with substantial emergency department practices
were contractor physicians retained by staffing companies. CMS does not
permit the enrollment of staffing companies that retain 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
scrutiny given to enrolled groups. Consequently, it cannot evaluate the

billing patterns of specific companies nor assess the aggregate impact of
these companies on Medicare program integrity.

Contractor Physicians Receive a Significant Share of Medicare Payments for
Emergency Department Services

Note: Percentages are based on payments to physicians with substantial
emergency department medical practices in 2000. This information is based
on GAO*s analysis of 2000 Medicare claims data. MEDICARE PROVIDER
ENROLLMENT

Opportunities to Enhance Program Integrity Efforts

www. gao. gov/ cgi- bin/ getrpt? GAO- 03- 185. 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. Highlights of
GAO- 03- 185, a report to the

Senate Committee on Finance, the House Committee on Energy and Commerce,
and the House Committee on Ways and Means

March 2003

Staffing companies that contract with physicians to staff hospital
departments-- including emergency departments-- are not permitted to bill
Medicare. In the Medicare,

Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000,
Congress directed GAO to assess the program integrity implications of
enrolling these companies and allowing them to

bill Medicare. GAO reviewed about 2.8 million emergency department claims
for 2000 from five states and

assessed whether contractor physicians retained by staffing companies
billed Medicare comparably to other emergency department physicians. GAO
also

evaluated how the lack of information on staffing companies affects
efforts to assure Medicare program integrity. GAO suggests Congress
consider permitting the reassignment of

benefits to staffing companies that retain contractor physicians and
requiring these companies to seek enrollment in Medicare. GAO also

recommends that CMS seek such legislative authority. CMS agreed that
legislation was needed.

Page i GAO- 03- 185 Medicare Provider Enrollment 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 Contents

Page ii 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

This is a work of the U. S. Government and is not subject to copyright
protection in the United States. It may be reproduced and distributed in
its entirety without further permission from GAO. It may contain
copyrighted graphics, images or other materials. Permission from the
copyright holder may be necessary should you wish to reproduce copyrighted
materials separately from GAO*s product.

Page 1 GAO- 03- 185 Medicare Provider Enrollment 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.

United States General Accounting Office Washington, DC 20548

Page 2 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 enroll 1 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 3 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, S: 413, 114 Sta. 2763, 2763A-
515.

Page 4 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 5 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

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
employeebased 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. Results in Brief

Page 6 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
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. S: 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. S: 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. S:S: 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. Background

Page 7 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 8 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
staffing companies to other affiliated physicians* such as those
practicing in partnerships, medical groups, and employee- based staffing
companies* showed that contractor physicians and those with other
affiliations both billed for higher- level E& M services at comparable
rates in four of the five states we reviewed and at a lower rate in the
fifth state we reviewed. Moreover, the rates at which other services* such
as ambulance 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.

Comparing the emergency department E& M billings of contractor 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, Contractor
Physicians

Billed Similarly to Their Counterparts for Emergency Department Services

Higher- Level E& M Services Billed at Similar Rates

Page 9 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 State

Contractor physicians associated with staffing

companies Other affiliated 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. Regardless of
whether emergency department patients were treated by contractor
physicians or other emergency department physicians, those

receiving higher- level E& M services received other services at similar
rates in the five states we reviewed. To determine the comparability of
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. Patients of Contractor

Physicians and Other Affiliated Physicians Received Similar Services

Page 10 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 physicians

Florida physicians

Pennsylvania physicians Texas

physicians West Virginia physicians

Service a Contractor Other affiliated Contractor Other

affiliated Contractor Other affiliated Contractor Other

affiliated Contractor Other 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 11 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
physicians providing emergency department care were contractor physicians
associated with staffing companies. These physicians also received a
significant share of Medicare payments for these services. However,
because the staffing companies are not subject to the enrollment
procedures that the carriers routinely conduct for physicians and medical
groups before they are allowed to bill Medicare, CMS does not collect
critical information that would enable it to identify claims that are
submitted by staffing companies on behalf of their contractor physicians.
Without such information, CMS cannot routinely link the claims that these
companies submit on behalf of their physicians to assess the billing
patterns of physicians contracting with specific staffing companies
compared to the billing patterns of other physicians.

Our five- state analysis of Medicare emergency department claims data and
physician payment information showed that contractor physicians with
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 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. Despite Representing

a Significant Share of Billings, Staffing Companies That Retain Contractor
Physicians Are Practically Invisible to Oversight

Contractor Physicians Account for Significant but Variable Share of
Medicare Billings

Page 12 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

State Number of

physicians with substantial emergency department

practices Percentage of contractor

physicians with substantial emergency department

practices Percentage of E& M

payments to contractor physicians

with substantial emergency department

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.

Despite the significant share of Medicare payments for emergency
department E& M services made to contractor physicians, the staffing
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. Program Safeguards

Hindered by Lack of Information

Page 13 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 14 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
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. Conclusions

Page 15 GAO- 03- 185 Medicare Provider Enrollment In order to enhance
Medicare*s program integrity, Congress may wish to amend the Social
Security Act to (1) permit the reassignment of benefits to

staffing companies that retain contractor physicians to treat Medicare
beneficiaries so that CMS may enroll these companies if they meet
appropriate criteria and (2) require these staffing companies to seek
enrollment in Medicare. To facilitate improvements in program integrity,
the CMS Administrator

should propose legislation permitting the reassignment of benefits to
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 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 Matters for

Congressional Consideration

Recommendation for Executive Action

Agency Comments

Appendix I: Scope and Methodology Page 16 GAO- 03- 185 Medicare Provider
Enrollment 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 Florida, Texas, and Pennsylvania because, according to 2000 U. S.
Census 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.
Appendix I: Scope and Methodology

State Selection Criteria

Appendix I: Scope and Methodology Page 17 GAO- 03- 185 Medicare Provider
Enrollment 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
staffing arrangement, based on Medicare claims data. Our analysis was
limited to physicians with substantial emergency department practices in
2000. We defined a *substantial practice* as one in which at least (1) 50
percent of the physician*s Medicare payments were for emergency department
E& M services and (2) $20,000 in Medicare payments were for

emergency department E& M services. For physicians meeting these criteria,
carriers provided summary data containing the physicians* names, provider
identification number (PIN), practice addresses, payment

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.
Method for Distinguishing

Contractor Physicians Associated with Staffing Companies from Physicians
with Other Affiliations

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

State Contractor physicians Other affiliated

physicians Total physicians with

substantial emergency 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 companies
bill Medicare for the higher- level services at rates comparable to other
emergency department physicians, we did the following. We asked the
carriers to provide us with frequency distributions of the E& M 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. Methods for

Comparing Billing Patterns

Appendix I: Scope and Methodology Page 19 GAO- 03- 185 Medicare Provider
Enrollment 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.

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

Appendix II: Comments from the Centers for Medicare & Medicaid Services
Page 21 GAO- 03- 185 Medicare Provider Enrollment

Appendix III: GAO Contact and Staff Acknowledgments

Page 22 GAO- 03- 185 Medicare Provider Enrollment Geraldine Redican-
Bigott, (312) 220- 7678 Enchelle D. Bolden, Shaunessye D. Curry, Richard
M. Lipinski, and Craig

Winslow made major contributions to this report. Appendix III: GAO Contact
and Staff

Acknowledgments GAO Contact Acknowledgments

Related GAO Products Page 23 GAO- 03- 185 Medicare Provider Enrollment
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. Related GAO Products

(290017)

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