Medicare: Lessons Learned From HCFA's Implementation of Changes to
Benefits (Letter Report, 01/25/2000, GAO/HEHS-00-31).
Pursuant to a congressional request, GAO provided information on the
Health Care Financing Administration's (HCFA) efforts to implement
changes to the Medicare program, focusing on HCFA's implementation of
the: (1) expansion of the partial hospitalization benefit; and (2) more
recent changes under the Balanced Budget Act of 1997 (BBA) to determine
whether HCFA is acting upon lessons learned from the partial
hospitalization program.
GAO noted that: (1) HCFA has a difficult task in overseeing the
implementation of changes to Medicare, yet this oversight is essential
to counteract the opportunities that sometimes arise for dishonest
providers to abuse the program; (2) in the early 1990s, when HCFA
implemented the expansion of the partial hospitalization benefit to
include community mental health centers (CMHC), HCFA did not
systematically evaluate the implications of the benefit's expansion; (3)
as a result, Medicare paid claims that should not have been paid; (4)
moreover, HCFA did not provide its contractors with timely and adequate
guidance on the partial hospitalization benefit, and neither HCFA nor
its contractors systematically monitored claims for the new benefit
until it had been in effect for several years; (5) finally, although
individual Medicare contractors detected some improper payments in the
early years of the partial hospitalization program, HCFA did not take
prompt action to investigate these problems or share this information
with its other contractors; (6) taking advantage of its experience with
CMHC, HCFA has done better in implementing the benefit changes required
by the BBA, but more needs to be done to determine whether corrective
actions are needed; (7) for example, HCFA created several internal
groups to evaluate its implementation of certain changes under the BBA
and to identify the potential for vulnerability to fraud and abuse that
might result from these changes; (8) in addition, HCFA has provided more
timely explanation of the benefit changes to its contractors and
providers, but it still needs to provide contractors with more specific
instructions on how to review claims and detect inappropriate billing;
(9) although HCFA has recognized the need to develop baseline data for
use in identifying questionable claims, it has not yet begun to do so;
(10) finally, HCFA has made limited progress in addressing the
recommendations of the groups that it charged with evaluating its
implementation of several BBA benefit changes; and (11) for example,
HCFA was advised to conduct a baseline study to determine the volume and
type of services billed by nonphysician providers, but HCFA officials
told GAO it had not yet done so largely because its resources were
focused on year-2000 concerns.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: HEHS-00-31
TITLE: Medicare: Lessons Learned From HCFA's Implementation of
Changes to Benefits
DATE: 01/25/2000
SUBJECT: Health insurance
Medical expense claims
Health insurance cost control
Mental care facilities
Claims processing
Hospital care services
Medical information systems
Internal controls
Fraud
Program abuses
IDENTIFIER: HHS Community Mental Health Center Program
Medicare Program
Medicare Partial Hospitalization Program
******************************************************************
** This file contains an ASCII representation of the text of a **
** GAO report. Delineations within the text indicating chapter **
** titles, headings, and bullets are preserved. Major **
** divisions and subdivisions of the text, such as Chapters, **
** Sections, and Appendixes, are identified by double and **
** single lines. The numbers on the right end of these lines **
** indicate the position of each of the subsections in the **
** document outline. These numbers do NOT correspond with the **
** page numbers of the printed product. **
** **
** No attempt has been made to display graphic images, although **
** figure captions are reproduced. Tables are included, but **
** may not resemble those in the printed version. **
** **
** Please see the PDF (Portable Document Format) file, when **
** available, for a complete electronic file of the printed **
** document's contents. **
** **
** A printed copy of this report may be obtained from the GAO **
** Document Distribution Center. For further details, please **
** send an e-mail message to: **
** **
** **
** **
** with the message 'info' in the body. **
******************************************************************
Cover
================================================================ COVER
Report to Congressional Requesters
January 2000
MEDICARE - LESSONS LEARNED FROM
HCFA'S IMPLEMENTATION OF CHANGES
TO BENEFITS
GAO/HEHS-00-31
Medicare Benefit Changes
(101787)
Abbreviations
=============================================================== ABBREV
BBA - Balanced Budget Act of 1997
BPR - budget and performance requirements
CMHC - community mental health center
HCFA - Health Care Financing Administration
HHS - Department of Health and Human Services
OBRA - Omnibus Budget Reconciliation Act of 1990
OIG - Office of the Inspector General
Letter
=============================================================== LETTER
B-283963
January 25, 2000
The Honorable John D. Dingell
Ranking Minority Member
Committee on Commerce
House of Representatives
The Honorable Ron Klink
Ranking Minority Member
Subcommittee on Oversight and Investigations
Committee on Commerce
House of Representatives
Medicare, the federal health insurance program serving over 39
million elderly and disabled Americans, has undergone numerous
changes as the Congress has expanded and modernized the program. The
Health Care Financing Administration's (HCFA) implementation of these
changes has sometimes created program vulnerabilities. As a result,
dishonest or unknowing providers have submitted claims for
inappropriate services, unknowledgeable contractors have processed
these claims, and HCFA has sometimes paid more than it should have.
For example, before 1991, Medicare covered partial hospitalization
mental health services only when they were provided by hospitals.
Partial hospitalization is an intermediate level of outpatient
treatment for beneficiaries with acute mental illness that is less
intensive than inpatient care and more comprehensive than outpatient
therapy. In 1991, legislation expanded Medicare's coverage of
partial hospitalization services to include services provided by
community mental health centers (CMHC). In 1998, the Department of
Health and Human Services' (HHS) Office of the Inspector General
(OIG) reported that, for five states in fiscal year 1997, over 90
percent of the partial hospitalization mental health benefit payments
should not have been made.
The Balanced Budget Act of 1997 (BBA) set in motion additional
significant changes to Medicare that were intended to modernize the
program, expand benefits, and extend the life of the Medicare trust
fund. For example, as a result of the BBA, the Medicare+Choice
program now offers beneficiaries a wider array of health plan
choices, comparable to options available from insurers through
employers. Concerned that HCFA implement BBA changes to Medicare in
a way that ensures beneficiaries' access to covered services without
compromising the fiscal integrity of the program, you asked that we
compare (1) HCFA's implementation of the expansion of the partial
hospitalization benefit and (2) HCFA's implementation of the more
recent changes under the BBA to determine whether HCFA is acting upon
lessons learned from the partial hospitalization program.
To do this work, we reviewed the BBA as well as HCFA documents on the
partial hospitalization benefit, spoke with officials of HHS' OIG and
HCFA, and met with representatives of three contractors that
processed and paid almost two-thirds of total Medicare payments to
CMHCs in 1997. We performed our work between November 1998 and
November 1999 in accordance with generally accepted government
auditing standards. For more detailed information on our study scope
and methodology, see appendix I.
RESULTS IN BRIEF
------------------------------------------------------------ Letter :1
HCFA has a difficult task in overseeing the implementation of changes
to Medicare, yet this oversight is essential to counteract the
opportunities that sometimes arise for dishonest providers to abuse
the program. In the early 1990s, when HCFA implemented the expansion
of the partial hospitalization benefit to include CMHCs, HCFA did not
systematically evaluate the implications of the benefit's expansion.
As a result, Medicare paid claims that should not have been paid.
Moreover, HCFA did not provide its contractors with timely and
adequate guidance on the partial hospitalization benefit, and neither
HCFA nor its contractors systematically monitored claims for the new
benefit until it had been in effect for several years. Finally,
although individual Medicare contractors detected some improper
payments in the early years of the partial hospitalization program,
HCFA did not take prompt action to investigate these problems or
share this information with its other contractors.
Taking advantage of its experience with CMHCs, HCFA has done better
in implementing the benefit changes required by the BBA, but more
needs to be done to determine whether corrective actions are needed.
For example, HCFA created several internal groups to evaluate its
implementation of certain changes under the BBA and to identify the
potential for vulnerability to fraud and abuse that might result from
these changes. In addition, HCFA has provided more timely
explanation of the benefit changes to its contractors and providers,
but it still needs to provide contractors with more specific
instructions on how to review claims and detect inappropriate
billing. Further, although HCFA has recognized the need to develop
baseline data for use in identifying questionable claims, it has not
yet begun to do so. Finally, HCFA has made limited progress in
addressing the recommendations of the groups that it charged with
evaluating its implementation of several BBA benefit changes. For
example, HCFA was advised to conduct a baseline study to determine
the volume and type of services billed by nonphysician providers, but
HCFA officials told us it had not yet done so largely because its
resources were focused on year-2000 concerns. This report makes a
recommendation to the HCFA Administrator to improve implementation of
adjustments to Medicare's benefits.
BACKGROUND
------------------------------------------------------------ Letter :2
Established by the Social Security Act Amendments of 1965, Medicare
provides two basic types of health insurance for the disabled and the
elderly: part A, hospital insurance, covers inpatient hospital,
skilled nursing facility, hospice, and certain home health services;
part B, supplemental medical insurance, covers physician and
outpatient hospital services, diagnostic tests, and other medical
services and supplies. Under the Medicare fee-for-service program,
physicians, hospitals, and other providers submit claims and receive
payment for services they have provided to beneficiaries. HCFA
contracts with a network of about 60 claims administration
contractors to process and pay Medicare claims. Contractors that
process part A claims are referred to as intermediaries, and those
that process part B claims are called carriers.
In addition to processing claims, these contractors are responsible
for carrying out program safeguard activities, such as claims
reviews, audits, and fraud and abuse investigations. HCFA's Program
Integrity Group serves as monitor and facilitator for these and other
payment safeguard activities within HCFA. The group works to achieve
program integrity through planning and implementing fraud and abuse
detection activities for contractors, providers, and beneficiaries as
well as for HCFA's program and staff offices.
COMMUNITY MENTAL HEALTH
CENTERS AND MEDICARE'S
PARTIAL HOSPITALIZATION
BENEFIT
---------------------------------------------------------- Letter :2.1
Before the passage of the Omnibus Budget Reconciliation Act of 1990
(OBRA '90), Medicare had covered only those partial hospitalization
services that were provided by hospitals. OBRA '90 authorized
Medicare to include CMHCs as covered providers of partial
hospitalization services.\1 According to the Social Security Act, to
participate as Medicare providers of partial hospitalization
services, CMHCs are required to meet applicable state licensing or
certification requirements and provide the following services:
-- outpatient services, including specialized services for
children, the elderly, the chronically mentally ill, and those
who have been discharged from inpatient treatment at a mental
health facility;
-- 24-hour emergency care services;
-- day treatment, other partial hospitalization services, or
psychological rehabilitation services; and
-- screening for patients being considered for admission to state
mental health facilities.
Specific services covered by Medicare partial hospitalization include
individual or group therapy, diagnostic services, and occupational
therapy. In addition to providing such services directly, a CMHC may
also enter into a contractual arrangement with another provider to
perform a particular service. Admitting a patient to a partial
hospitalization program requires a physician's certification that
without the partial hospitalization treatment, the patient would
require inpatient hospitalization. CMHCs submit their claims for
partial hospitalization services to HCFA's part A intermediaries.
--------------------
\1 The Community Mental Health Centers Act of 1963 provided funding
to help states construct CMHCs. HHS supported states' efforts to
establish CMHCs, which would provide comprehensive mental health
services in the community.
CHANGES UNDER THE BBA
---------------------------------------------------------- Letter :2.2
The BBA embodies some of the most significant changes to Medicare
since its inception more than 30 years ago. One provision of the
BBA--the establishment of the new Medicare+Choice program--has
considerably broadened the coverage options available to Medicare
beneficiaries. Other provisions involve more narrowly focused
changes aimed at improving coverage and making it more uniform.
These changes include expanding benefits for diabetes
self-management, standardizing coverage for bone mass measurements,
and expanding authority for nurse practitioners and clinical nurse
specialists to bill Medicare for services they perform.
HCFA'S IMPLEMENTATION OF THE
PARTIAL HOSPITALIZATION BENEFIT
WAS NOT ADEQUATE
------------------------------------------------------------ Letter :3
Introducing changes into the Medicare program, such as expanding or
revising a benefit, has the potential for creating opportunities for
dishonest providers to take advantage of the program. HCFA
implemented the partial hospitalization program without adequately
considering the problems that could occur as a result of enrolling a
new group of providers. Moreover, HCFA did not provide its
contractors with timely and adequate guidance on the partial
hospitalization benefit--its scope, the type of patients it covers,
the types and duration of services it covers, and the services CMHCs
are required to provide. In addition, neither HCFA nor its
contractors monitored the claims received for the new benefit, and,
when improper payments were discovered, HCFA did not respond
effectively.
HCFA DID NOT IDENTIFY THE
RISKS OF ADDING CMHCS TO THE
PROGRAM
---------------------------------------------------------- Letter :3.1
HCFA did not systematically evaluate the potential risks to Medicare
that could result from extending the partial hospitalization program
to CMHCs. According to HCFA officials, the agency expected that the
nonprofit CMHCs that were originally established with federal
assistance would be providing the partial hospitalization services.
However, many other organizations entered the program, and it rapidly
went out of control. HCFA's enrollment procedure relied solely on
CMHCs' statements that they were providing all of the required
services as the basis for making them eligible to bill Medicare. In
signing these statements, CMHCs certified, under penalty of law, that
they were not fraudulently trying to become eligible to participate
in Medicare. HCFA did not recognize that under OBRA '90 dishonest
individuals, particularly in states with no CMHC licensure
requirements, could establish CMHCs and improperly bill Medicare for
partial hospitalization services.
HCFA's limited evaluation of the risks and its lack of verification
of CMHCs' qualifications resulted in rapid growth both in the number
of participating CMHCs and in Medicare payments. The number of CMHCs
participating in the partial hospitalization program more than
doubled between 1993 and 1997--from 296 to 769--according to an HHS
OIG report (see fig. 1).\2 HCFA had expected that the benefit would
be narrowly applied and that it would cost, by one estimate, about
$15 million to $20 million per year. Instead, Medicare payments to
CMHCs for partial hospitalization services grew rapidly, from $60
million in 1993 to $349 million in 1997, an increase of 482 percent.
Average payments per patient increased 530 percent over this same
period, from $1,642 to $10,352. Another HHS OIG report estimated
that over 90 percent of payments to CMHCs in five states during
fiscal year 1997 were for claims that should not have been paid.\3
Preliminary data show a slight decrease in the number of CMHCs and
total payments made to them in 1998. We did not identify with
certainty the specific reasons for this decline in benefit payments.
However, by 1998, some Medicare contractors had begun to increase
their review of CMHC claims. Also by that time, contractors were
conducting more site visits to assess CMHC operations and to verify
information provided by new CMHC applicants, particularly in the
southern states.
Figure 1: National Growth in
the Number of CMHCs
Participating in the Medicare
Partial Hospitalization Program
and Amount of Payments, 1993-98
(See figure in printed
edition.)
Note: Data for 1998 are estimated.
Sources: HHS' OIG and HCFA's Office of Information Services.
--------------------
\2 HHS, OIG, Review of Partial Hospitalization Services Provided
Through Community Mental Health Centers (A-04-98-02146) (Washington,
D.C.: HHS, Oct. 5, 1998).
\3 HHS, OIG, Five-State Review of Partial Hospitalization Programs at
Community Mental Centers (A-04-98-02145) (Washington, D.C.: HHS,
Oct. 5, 1998). The study examined claims from CMHCs in Alabama,
Colorado, Florida, Pennsylvania, and Texas.
LACK OF TIMELY, APPROPRIATE
GUIDANCE HINDERED CONTRACTOR
EFFORTS
---------------------------------------------------------- Letter :3.2
At first, CMHC partial hospitalization services were expected to
serve a limited group of beneficiaries, and HCFA initially gave its
contractors little guidance on, or explanation of, the program beyond
the implementing language of OBRA '90. As a result, contractors
struggled to understand the parameters of the partial hospitalization
benefit in the first years it was in effect. Our discussions with
contractors and correspondence between contractors and HCFA regional
offices show that contractors raised concerns over such issues as
-- whether partial hospitalization could cover organic conditions
such as Alzheimer's, which are unlikely to improve;
-- whether the benefit was available to only those patients with
previous psychiatric treatment, or even further limited to only
those who had previously been psychiatric inpatients;
-- which specific services could be billed to Medicare as partial
hospitalization services;
-- how frequently services had to be delivered for Medicare to
consider a beneficiary's treatment program as partial
hospitalization; and
-- the level of physician involvement required for services
provided to the patient.
A February 1994 interim final rule for partial hospitalization
services provided by CMHCs addressed the degree of physician
supervision required, the services covered by partial
hospitalization, and other matters. In June 1995, more than 3 years
after the benefit was instituted, HCFA issued a program memorandum
that gave contractors and providers clearer guidance regarding the
scope and limits of the benefit, patient eligibility requirements,
and the requirement that a physician certify that a patient warrants
partial hospitalization.
HCFA has recently taken additional actions to augment its guidance to
contractors that process CMHC claims. In June 1999, HCFA conducted a
training seminar for intermediary claims review staff that covered
the partial hospitalization program benefit at CMHCs. This was the
first time HCFA had provided direct training to contractor staff on
this issue. The training addressed the background of the partial
hospitalization benefit, services and beneficiaries that Medicare
covers under this benefit, problems found by the HHS OIG audits, and
requirements for medical review of CMHC claims. In September 1999,
HCFA issued two additional program memorandums, one setting forth the
process for intermediaries to use when conducting medical reviews of
partial hospitalization claims from CMHCs and the other instructing
intermediaries to deactivate the Medicare provider numbers of CMHCs
that have not submitted a claim in 12 months. Figure 2 shows the
timing of HCFA guidance to address potential vulnerabilities of the
partial hospitalization benefit, as well as the dates of related
events.
Figure 2: Key Activities and
Actions Related to the Partial
Hospitalization Benefit
(See figure in printed
edition.)
LACK OF MONITORING FOCUSED
ON THE NEW BENEFIT SLOWED
RECOGNITION OF PROBLEMS
---------------------------------------------------------- Letter :3.3
Consistent with its expectation that partial hospitalization would be
a small and stable benefit provided by existing CMHCs, HCFA initially
paid little additional attention to contractors' oversight of the
program. Instead, HCFA relied on its contractors' ongoing safeguard
activities, such as their focused medical review efforts, under which
contractors analyzed their paid claims data to identify which
benefits and providers warranted more detailed review. However, it
can take some time to identify emerging problems through medical
review. For example, a representative of the primary Medicare
contractor for Florida--which has processed the largest amount of
payments to CMHCs of any contractor since the benefit began--told us
it had previously been aware of problems with individual CMHCs.
However, it was not until focused medical review revealed the
disproportionate level of CMHC activity in the state, relative to the
rest of the country, that the contractor realized CMHCs posed a major
problem. Thus, it was not until 1997, or 2 years after Medicare
payments to CMHCs in Florida had begun to grow significantly, that
the contractor realized the scope of the problem. Similarly, a
representative of the Medicare contractor for Texas, which also has a
large number of CMHCs, told us that it began focusing on CMHC claims
at the end of 1995--4 years after the CMHC partial hospitalization
benefit was initiated. These examples illustrate that without a
specific effort to monitor CMHC claims in the initial years of the
benefit, contractors and HCFA dealt with irregularities involving
CMHCs as isolated incidents, without recognizing that there was a
programwide problem until payments and losses became large.
HCFA'S FAILURE TO RESPOND TO
EMERGING PARTIAL
HOSPITALIZATION PROBLEMS
ALLOWED IMPROPER PAYMENTS TO
GROW UNCHECKED
---------------------------------------------------------- Letter :3.4
Despite the lack of a targeted monitoring program, some
intermediaries did uncover instances of unnecessary and inappropriate
services being provided by CMHCs and billed to Medicare in the early
years of the partial hospitalization program. For example, in 1993,
a CMHC in Washington came to the attention of its intermediary
because of claims in excess of $10,000 per beneficiary per month.
The CMHC operated residential board and care facilities with live-in
aides who assisted residents with everyday needs, such as cooking,
cleaning, and transportation. The CMHC was billing Medicare up to
$100 per hour, per patient, for these uncovered services. Around the
same time, CMHCs in Montana were also misinterpreting the partial
hospitalization benefit guidelines to mean that all CMHC services
were covered by Medicare and were submitting claims for noncovered
services such as day care. Additional problems reported by other
intermediaries in late 1993 included the following:
-- Day care and geriatric care programs were being billed to
Medicare as partial hospitalization.
-- Arts and craft activities were being billed as occupational
therapy or patient education.
-- Family counseling services were being billed when there was no
evidence of family member participation.
-- Long-term psychiatric patients with controlled symptoms were
being monitored in partial hospitalization programs for years.
One HCFA regional office reported its concern about many CMHCs'
misinterpretation of the partial hospitalization benefit in a January
1994 memorandum to HCFA headquarters. However, at that time HCFA
neither attempted to determine how widespread these
misinterpretations were nor directed its contractors to increase
their oversight of CMHC claims.
In addition to these early indicators of misinterpretation or misuse
of the benefit, officials in HCFA's Atlanta regional office became
concerned about the rapid increase in applications received from new
CMHCs. In late 1995, the regional office began telephoning and
visiting selected CMHCs that were already participating in the
program, as well as some new applicants. Many of the telephone calls
reached disconnected numbers, private residences, and nonmedical
businesses. Site visits to previously enrolled CMHCs found that many
were not located at the addresses they had provided to HCFA, and that
prospective providers were applying for CMHC provider numbers without
having viable facilities. In 1996, HCFA's Atlanta regional office
began requiring its contractors to visit new CMHC applicants before
they were issued a Medicare provider number.
Despite these early indications of problems, HCFA did not address the
partial hospitalization benefit or CMHCs as a whole until the HHS OIG
and HCFA together reviewed several CMHCs as part of Operation Restore
Trust in calendar year 1997.\4 This focus on CMHCs culminated in the
two reports issued by the HHS OIG in October 1998. In that same
year, HCFA conducted site visits at about 700 CMHCs in the southern
states, where CMHCs are concentrated. It was also not until 1998
that HCFA developed a comprehensive national approach--its 10-point
plan for CMHCs--to ensure that Medicare beneficiaries with acute
mental illness get quality treatment in CMHCs and that Medicare pays
appropriately for these services. Further, HCFA's yearly budget and
performance requirements (BPR), which are the agency's primary means
for communicating annual performance goals to its contractors, did
not identify CMHCs as a high-risk area until fiscal year 1999.\5 In
1999, HCFA provided intermediaries with its first specific
instructions for conducting medical reviews of partial
hospitalization claims from CMHCs, and for the first time HCFA set a
quantitative goal for the percentage of CMHC claims that are to be
medically reviewed.\6
--------------------
\4 Operation Restore Trust, initiated in fiscal year 1995, involved
the joint efforts of HHS, the HHS OIG, the Administration on Aging,
the Department of Justice, and state agencies to identify and
investigate fraud and abuse in the Medicare and Medicaid programs.
\5 HCFA's BPR for that year cited CMHCs as one of five high-risk
areas that should be targeted for prepayment medical reviews. HCFA
also directed that each intermediary conduct prepayment medical
review on the first CMHC claim it received for a new beneficiary, but
HCFA dropped this requirement because it could not be practically
implemented using the intermediaries' claims processing systems. The
BPR for fiscal year 2000 also identifies CMHCs as a concern but does
not set specific targets for the number or percentage of CMHC claims
to be reviewed.
\6 A September 1999 program memorandum directed contractors
processing claims for the states of Florida, Texas, Colorado,
Pennsylvania, and Alabama to review a minimum of 30 percent of the
claims for each CMHC provider for a period of 90 days. The
memorandum specified increasing or decreasing levels of review after
the initial 90 days, depending on the claims denial rate experienced.
IMPLEMENTATION OF BBA CHANGES
INDICATES SOME LESSONS LEARNED
------------------------------------------------------------ Letter :4
With the changes made to the Medicare program as a result of the BBA,
HCFA has done more to systematically identify areas that are
potentially susceptible to fraud and abuse, although HCFA's actions
to mitigate problems are not yet complete. HCFA has also provided
contractors with more timely guidance for selected BBA benefit
changes, although some identified vulnerabilities remain unaddressed.
In addition, HCFA has recognized the need to develop baseline data to
monitor claims, but much work remains to be done. Finally, the
groups that HCFA charged with both evaluating the potential effects
of several BBA changes on Medicare's integrity and assessing HCFA's
implementation of these changes have recommended actions that could
help determine whether potential vulnerabilities represent real
weaknesses. As of November 1999, however, HCFA had made only limited
progress in carrying out these recommendations.
HCFA HAS IDENTIFIED SOME
PROGRAM VULNERABILITIES
RELATED TO BBA CHANGES
---------------------------------------------------------- Letter :4.1
HCFA has made a more intensive effort to identify vulnerabilities
that might result from implementing changes required by the BBA than
it did for the partial hospitalization benefit change. HCFA formed
groups to assess how certain changes, including changes in
nonphysician provider reimbursement\7 and bone mass measurement
coverage, would affect Medicare. However, HCFA has only begun to
implement the recommendations of the groups.
The HCFA group evaluating the changes to nonphysician provider
reimbursement under the BBA identified a potential vulnerability
regarding services provided by nurse practitioners and clinical nurse
specialists. The BBA authorizes Medicare to reimburse these
nonphysician providers for services that they are allowed to perform
under their state laws. But state laws vary in both the services
that nurse practitioners and clinical nurse specialists are allowed
to provide and the settings in which they can provide services. HCFA
currently does not have information on what the laws of each state
allow. Without this information, Medicare is vulnerable to
reimbursing providers who submit claims for services that are not
within their allowed scope of practice. The group recommended that
HCFA (1) survey the states to establish a national database of
allowable practices for possible use in forming policies and (2) work
with national accreditation bodies to establish standard minimum
scopes of practice. In November 1999, HCFA officials informed us
that they had not yet begun to collect data on services that nurse
practitioners and clinical nurse specialists may provide. HCFA is
currently trying to identify the best way to gather these data.
The bone mass measurement group discovered that, as a result of the
BBA, bone mass measurements are no longer subject to a provision that
limits the amount Medicare will pay physicians for services provided
by outside suppliers. Prior to passage of the BBA, bone mass
measurements were covered as general diagnostic tests, which are
subject to payment limits when they are performed by outside
suppliers and billed by the beneficiary's physician. The bone mass
measurement group recommended that HCFA examine the Medicare claims
history to determine the extent to which these payment limits had
affected payments for bone mass measurements before the BBA change.
However, as of November 1999, HCFA had not begun this work.
--------------------
\7 Nonphysician providers include nurse practitioners, clinical nurse
specialists, and physician assistants.
GUIDANCE ON BBA CHANGES HAS
BEEN MORE TIMELY, BUT SOME
IDENTIFIED VULNERABILITIES
REMAIN TO BE ADDRESSED
---------------------------------------------------------- Letter :4.2
For the BBA benefit changes we reviewed, HCFA has provided its
contractors with more timely guidance, in the form of program
memorandums and interim rules, than it did for the partial
hospitalization changes. For the bone mass measurement and diabetes
self-management benefit changes that became effective in 1998, HCFA
issued initial program memorandums or interim rules either before or
during the month the benefit change took effect. However, in one
instance, this guidance was not implemented as HCFA had expected.
Moreover, HCFA has not addressed some of the guidance concerns
identified by one of the groups that assessed the vulnerabilities
that might result from these benefit changes.
Before the BBA changes, bone mass measurements were covered under
general Medicare provisions for diagnostic tests. Most Medicare
contractors paid for the medically necessary use of these measures,
although a few did not. The BBA established bone mass measurement as
a specific benefit in an attempt to provide for uniform coverage and
directed HCFA to establish a standard for how frequently a
beneficiary could be eligible for this procedure. HCFA published an
interim rule when the benefit went into effect in June 1998,
establishing the conditions under which bone mass measurements were
to be considered medically necessary and how frequently they could be
provided. The HCFA group that reviewed the implementation of the new
benefit found that many contractors had not standardized coverage
provisions. Instead, contractors may have simply added the new BBA
criteria to their existing coverage criteria. The group recommended
that HCFA convene a committee of experts to develop an all-inclusive
list of covered diagnoses, publish this list for use among its claims
processing contractors, and monitor contractors' implementation of
the defined coverage. HCFA officials told us that a list of the
diagnoses for which bone mass measurements should be covered was
developed and made available to contractors at the end of August
1999. Moreover, HCFA asked contractors to review their local medical
review policies for consistency with the benefit as defined by the
BBA.
The BBA also provided coverage of diabetes self-management training
that is furnished by certified providers to individuals with
diabetes. HCFA established the standard of up to 10 hours of
training for a patient within a 12-month period, with 1 hour of
follow-up training annually. The group that assessed this benefit
change concluded that the following vulnerabilities might occur:
Medicare might be billed for more than the 10 hours of training, for
training that was not actually provided, or for multiple claims for
the same beneficiary. The group recommended that HCFA create system
edits that allow a beneficiary only 10 hours of training in a
12-month period, even if training is received at multiple training
locations. In November 1999, HCFA officials informed us that they
plan to implement this edit, but the agency's need to address
year-2000 system concerns has resulted in a backlog of proposed
system changes, so that the edit will not be implemented until next
spring. Also, the group recommended that follow-up letters be sent
to beneficiaries to confirm that they have received the training that
was billed. HCFA has yet to formally instruct contractors to
implement this recommendation.
BASELINE DATA NEEDED TO
MONITOR CLAIMS UNDER THE BBA
CHANGES
---------------------------------------------------------- Letter :4.3
HCFA has recognized the value of developing baseline claims data for
changes to Medicare resulting from the BBA. The group evaluating the
bone mass measurement benefit noted that suppliers of this test could
abuse this benefit in nursing homes, for example, by providing
medically unnecessary tests that were not interpreted or used in the
treatment of the patient. This group recommended that HCFA review
the Medicare claims history to identify the extent to which these
tests are being performed and billed without an interpretation of the
results being performed and billed.
In addition, the group reviewing the changes for nonphysician
providers recommended that HCFA conduct a baseline study to determine
the volume and type of services billed by nurse practitioners and
clinical nurse specialists. These types of baseline data can support
analysis of claims submitted after the changes to reveal payment
trends or patterns of claims that warrant investigation. As of
November 1999, HCFA had not begun work on any of these analyses,
largely because staff resources were focused on year-2000 concerns.
HCFA officials told us that HCFA is considering contracting out this
work, but the agency has not yet instructed contractors to conduct
any medical review or other monitoring of claims for these new
benefits. Neither has HCFA itself begun reviewing the claims paid on
the new BBA benefits to determine if the claims activity is
consistent with expectations or if potential problems are emerging.
Officials we spoke with in HCFA's Program Integrity Group noted that
because the BBA changes took effect only in 1998, data would
currently be available for only a year, or less--a period of time
that is probably insufficient to reveal any trends.
HCFA HAS NOT YET DETERMINED
THAT CORRECTIVE ACTIONS ARE
NEEDED FOR THE BBA CHANGES
---------------------------------------------------------- Letter :4.4
Earlier this year, HCFA's groups that evaluated the potential effects
of changes regarding nonphysician providers, bone mass measurement,
and diabetes self-management made several recommendations for HCFA
actions that could help determine whether potential vulnerabilities
represent real weaknesses requiring corrective action. As of
November 1999, HCFA had made only limited progress in carrying out
these recommendations. Until HCFA and its contractors take these
steps, they are not able to determine with any certainty what
corrective actions are actually needed. Further, if indications of
improper payments associated with these changes are detected, HCFA
must be in a position to respond quickly.
CONCLUSIONS
------------------------------------------------------------ Letter :5
The partial hospitalization program was more easily misused because
HCFA did not assess the potential for problems with the expanded
benefit and did not take appropriate action to ensure its integrity.
Our review of HCFA's implementation of three changes to Medicare
required by the BBA indicates that HCFA has now made a systematic
effort to identify potential vulnerabilities with these changes and
has done a better job of providing contractors with timely guidance
on the changes than it did when it introduced the partial
hospitalization benefit for CMHCs. However, HCFA made little
progress in implementing recommendations intended to address
potential vulnerabilities largely because it had been using its
resources to address year-2000 concerns, according to HCFA officials.
RECOMMENDATION
------------------------------------------------------------ Letter :6
We recommend that the Administrator of HCFA establish a process for
implementing legislated Medicare changes that will ensure careful
assessment of the potential effects of such changes on the program;
sufficient explanation of the changes to enable contractors to review
and correctly pay claims; adequate claims monitoring to detect
irregularities, patterns of abuse, or other potential problems; and
timely corrective action should problems with the changes arise.
AGENCY COMMENTS
------------------------------------------------------------ Letter :7
We provided HCFA officials an opportunity to review a draft of this
report. HCFA concurred with our recommendation and highlighted the
more proactive approach it is now taking to identify and eliminate
abuse. HCFA noted that it has issued its first Comprehensive Plan
for Program Integrity, which outlines the agency's overall national
program integrity strategy as well as 10 initiatives HCFA is
implementing to further safeguard Medicare program dollars. HCFA
said that it is also conducting ongoing analysis of program benefits
at the contractor level to identify problem areas. Finally, HCFA
cited plans to implement regulatory and legislative recommendations
made by internal work groups on changes made as a result of the BBA.
HCFA officials also provided technical comments, which we have
incorporated as appropriate. The text of HCFA's comments is
presented in appendix II.
---------------------------------------------------------- Letter :7.1
As agreed with your offices, unless you publicly announce its
contents earlier, we plan no further distribution of this report
until 14 days from the date of this report. At that time, we will
send copies of this report to the Honorable Donna E. Shalala,
Secretary of Health and Human Services; the Honorable Nancy-Ann Min
DeParle, Administrator of HCFA; appropriate congressional committees;
and other interested parties. We will also make copies available to
others upon request.
If you have any questions about the information presented in this
report, please call me at (312) 220-7600. Other staff who made key
contributions to this report include Paul D. Alcocer, Shaunessye D.
Curry, and Donald Kittler.
Leslie G. Aronovitz
Associate Director, Health Financing
and Public Health Issues
SCOPE AND METHODOLOGY
=========================================================== Appendix I
To compare the Health Care Financing Administration's (HCFA)
implementation of Medicare's partial hospitalization benefit for
community mental health centers (CMHC) with its implementation of the
changes to benefits required by the Balanced Budget Act of 1997
(BBA), we reviewed HCFA program documents for the partial
hospitalization benefit--including the Department of Health and Human
Services' (HHS) Office of Inspector General (OIG) reports, program
memorandums, contractor manuals, local medical review policies, and
correspondence--to examine how HCFA's review and monitoring of claims
fell short of identifying inappropriate Medicare reimbursements. We
spoke with officials of HHS' OIG to discuss their involvement in
auditing the partial hospitalization benefit. We also met with
representatives of three intermediaries--Blue Cross/Blue Shield of
Florida, Blue Cross/Blue Shield of Texas, and Mutual of Omaha--to
discuss their experiences with the partial hospitalization benefit.
Although these intermediaries are not representative of all
intermediaries and providers, they processed almost two-thirds of
total Medicare payments to CMHCs in 1997. In addition, we reviewed
the BBA to determine how the legislation changed other benefits. We
also met with headquarters and regional HCFA officials who work
directly with the partial hospitalization benefit and BBA benefit
changes to determine how HCFA reviews the programs and oversees
contractors' activities.
To determine how HCFA has incorporated lessons learned from past
problems into its implementation of the BBA changes, we gathered
information on the factors HCFA considered when it introduced or
expanded other Medicare benefits. We also reviewed program
memorandums and internal reports to determine the steps that HCFA
took to implement Medicare-related BBA changes to nonphysician
provider reimbursement and the bone mass measurement and diabetes
self-management benefits. We also interviewed officials from the
groups HCFA charged with identifying potential vulnerabilities
associated with Medicare benefit changes and reviewed their
recommendations for preventing fraudulent activities. Finally, we
identified the guidance HCFA provided to contractors for performing
medical review of claims submitted under the benefit changes.
(See figure in printed edition.)Appendix II
COMMENTS FROM THE HEALTH CARE
FINANCING ADMINISTRATION
=========================================================== Appendix I
(See figure in printed edition.)
*** End of document. ***