Department of Health and Human Services 

OFFICE OF 

 
INSPECTOR GENERAL 

 
 
 
 
 
 
Q B
U ESTIONABLE  ILLING BY 

 
C M H
OM MUNITY  ENTAL  EALTH 

 
C  
ENTERS 

 
 
Daniel R. Levinson 
  
Inspector General
  
 
August 2012 

OEI-04-11-00100 
  
   
EXECUTIVE SUMMARY:  QUESTIONABLE BILLING BY COMMUNITY 
MENTAL HEALTH CENTERS  
OEI-04-11-00100 
 
 
WHY WE DID THIS STUDY 
 
During 2010, 206 community mental health centers (CMHC) received an estimated 
$218.6 million for providing partial hospitalization program (PHP) services to 
approximately 25,000 Medicare beneficiaries with mental disorders.  Past Office of 
Inspector General (OIG) studies have found vulnerabilities in Medicare payments to 
CMHCs for PHPs.  Additionally, in 2011, four CMHC owners and managers in Miami-
Dade County, Florida, were convicted of fraudulently billing Medicare approximately 
$200 million for medically unnecessary PHP services from 2002 to 2010.   
 
HOW WE DID THIS STUDY  
 
We developed nine questionable billing characteristics based on past OIG work and input 
from Centers for Medicare & Medicaid Services (CMS) staff.  We used 2009 and 2010 
Medicare claims from CMSs National Claims History File to identify CMHCs that had 
unusually high billing for at least one of nine OIG questionable billing characteristics in 
2010 and the metropolitan areas where these CMHCs were located.  We also determined 
whether the percentage of CMHCs with questionable billing varied according to whether 
States had licensure or certification requirements.  
    
WHAT WE FOUND 
 
In 2010, approximately half of CMHCs met or exceeded thresholds that indicated 
unusually high billing for at least one of nine questionable billing characteristics.  
Approximately one-third of these CMHCs had at least two of the characteristics.  
Additionally, approximately two-thirds of CMHCs with questionable billing were 
located in eight metropolitan areas.  Finally, 90 percent of CMHCs with questionable 
billing were located in States that do not require CMHCs to be licensed or certified.   
 
WHAT WE RECOMMEND 
 
We recommend that CMS (1) increase its monitoring of CMHCs Medicare billing and 
fraud prevention controls, (2) enforce the requirement that certifying physicians be listed 
on the PHP claims submitted by CMHCs, (3) finalize and implement the proposed 
conditions of participation for CMHCs, and (4) review and take appropriate action 
against CMHCs with questionable billing that we identified.  CMS concurred with all 
four recommendations. 
   
   
TABLE OF CONTENTS 
 
Objectives ....................................................................................................1 

Background..................................................................................................1 

Methodology................................................................................................6 

Findings......................................................................................................13 

In 2010, approximately half of CMHCs had questionable       
billing .............................................................................................13 

Approximately two-thirds of CMHCs with questionable billing 

were located in eight metropolitan areas .......................................16 

Ninety percent of CMHCs with questionable billing were in   

States that do not require CMHCs to be licensed or certified ........17 

Conclusion and Recommendations ............................................................19 

Agency Comments and Office of Inspector General Response .....21 

Appendixes ................................................................................................22 

A: Number of Community Mental Health Centers and Medicare 

Payments in Each State, 2010 ........................................................22 

B:  Healthcare Common Procedure Coding System Codes Used   

on Partial Hospitalization Program Claims ....................................23 

C: Number of Beneficiaries With Cognitive Disorders Who 

Participated in Partial Hospitalization Programs, 2010 .................24 

D: Percentage of Community Mental Health Centers With 

Questionable Billing by Metropolitan Area and Characteristic, 

2010................................................................................................25 

E: Agency Comments ....................................................................26 

            Acknowledgments ..........................................................................30 

 
 
 
 
 
 
   
   
OBJECTIVES 
1. 	  To identify questionable billing by community mental health 
centers (CMHC) in 2010. 
2. 	  To determine the extent to which questionable billing by CMHCs 
varied by geographic location and the existence of State licensure 
or certification requirements. 
BACKGROUND 
The Omnibus Budget Reconciliation Act of 1990 authorized Medicare 
Part B to reimburse CMHCs for providing partial hospitalization programs  
(PHP).1  PHPs are intense, structured, outpatient mental health treatment 
programs.2   A CMHC provides PHPs for individuals with mental illness 
who reside in or near the community where the CMHC is located.3   
During 2010, 206 CMHCs received an estimated $218.6 million for 
providing PHP services to approximately 25,000 Medicare beneficiaries. 
Past Office of Inspector General (OIG) studies found vulnerabilities in 
Medicare payments to CMHCs, such as billing for medically unnecessary 
or undocumented PHP services.4   Additionally, four CMHC owners and 
managers in Miami-Dade County, Florida, were convicted of Medicare 
fraud in 2011.  These individuals manipulated patients charts, diagnoses, 
and lengths of stay to fraudulently bill Medicare approximately            
$200 million for medically unnecessary PHP services from 2002 to 2010.5   
This fraud scheme involved doctors, other providers, and marketers who 
referred Medicare beneficiaries to these CMHCs and received financial 
kickbacks. 
 
1 
The Omnibus Budget Reconciliation Act of 1990, P.L. 101-508,  4162. 
2  Social Security Act,  1861(ff)(3)(A), 42 U.S.C.  1395x(ff)(3)(A). 
3 
Social Security Act,  1861(ff)(3)(B)(i)(I); Public Health Service Act,  1913(c)(1); Centers 
for Medicare & Medicaid Services (CMS), Medicare State Operations Manual, Pub. No. 100-
07, ch. 2,  2252I; CMS, Medicare Program Integrity Manual, Pub. No. 100-08, ch. 15,         
 15.4.1.1.A. 
4  OIG, Five-State Review of Partial Hospitalization Programs at Community Mental Health 
Centers, OAS-04-98-02145, October 1998; OIG, Review of Partial Hospitalization Services 
Provided Through Community Mental Health Centers, OAS-04-98-02146, October 1998.   
5  Department of Justice (DOJ), Owner of Miami-area mental health care corporation 
convicted on all counts for orchestrating $205 million Medicare fraud scheme. Accessed at 
http://www.justice.gov/opa/pr/2011/August/ on August 23, 2011.  
Questionable Billing by Community Mental Health Centers (OEI-04-11-00100)   1 
   
   
PHP Services and Requirements 
Beneficiaries who participate in PHPs must have mental disorders that 
severely interfere with multiple areas of their daily lives, including social,  
vocational, and/or educational functioning.6  PHPs provide outpatient 
services to beneficiaries who have been discharged from inpatient 
psychiatric care. Beneficiaries can thus participate in PHPs in a 
community setting in lieu of continued inpatient care.  PHPs also provide 
outpatient services to beneficiaries with mental disorders whose 
physicians certify that they would relapse or require hospitalization in the 
absence of PHPs.7, 8   Additionally, Medicare beneficiaries may participate 
in PHPs only if services 
 	  are reasonable and necessary for the diagnosis or active treatment 
of the individuals conditions and 
 	  are reasonably expected to improve or maintain the individuals  
conditions.9  
PHPs must offer a combination of individual, group, family, occupational, 
and activity therapies. Educational and diagnostic  services may also be 
provided.10   There are no specific limits on the length of time that 
Medicare covers PHPs.11  However, participating beneficiaries must 
receive a minimum of 20 hours of services weekly.12   Additionally, PHP  
beneficiaries must be able to cognitively participate in these services.13   
PHPs are not medically reasonable or necessary for beneficiaries who 
cannot actively participate because of a cognitive disorder, such as 
Alzheimers disease or severe dementia.14    
Physicians must develop an individualized treatment plan for each PHP  
beneficiary, which includes treatment goals and describes the coordinated 
 
6  CMS,  Medicare Benefit Policy Manual, Pub. No. 100-02, ch. 6,  70.3.  
7
 42 CFR  410.43(a)(3), 42 CFR  424.24(e), CMS, Medicare Benefit Policy Manual, Pub. 

No. 100-02, ch. 6,  70.3.B.1 and 70.3B.5. 

8  The national provider identifier for the certifiying physician is required on PHP claims.  

CMS,  Medicare Claims Processing Manual, Pub. No. 100-04, ch. 25,  75.5. 

9  Social Security Act,  1861(ff)(2), 42 U.S.C.  1395x(ff)(2). 

10  Social Security Act,  1861(ff)(2), 42 U.S.C.  1395x(ff)(2); 42 CFR  410.43(a)(4); CMS, 

Medicare Benefit Policy Manual, Pub. No. 100-02, ch. 6,  70.3.B.2. 

11
 CMS,  Medicare Benefit Policy Manual, Pub. No. 100-02, ch. 6,  70.1.C.3. 

12
 CMS,  Medicare Benefit Policy Manual, Pub. No. 100-02, ch. 6,  70.3. 
 
13
 Ibid.  
14
 42 CFR  410.43(c)(7); CMS, Medicare Benefit Policy Manual, Pub. No. 100-02,             
ch. 6,  70.3.B.1. 
Questionable Billing by Community Mental Health Centers (OEI-04-11-00100)   2 
   
   
services that will be provided.15   The plan must include the type, amount, 
duration, and frequency of services.16   The plan should also document 
continued efforts to restore the beneficiary to a higher level of functioning 
to permit discharge from the PHP.   The plan must also demonstrate the 
continued need for PHP services to maintain the individuals condition and 
prevent relapse or hospitalization.17    
Additionally, physicians must supervise PHP services and periodically 
evaluate beneficiaries to ensure that their treatment goals are being met.  
Physicians are required to recertify beneficiaries need for PHP services  
18 days after their admissions and at least every 30 days thereafter.18      
Oversight of Medicare Participation and Billing by CMHCs 
The Medicare program has limited ability to oversee the quality, health, 
and safety of care provided in CMHCs because these providers do not 
have conditions of participation (CoP).  CoPs are standards that help 
ensure the quality and safety of Medicare and Medicaid providers care.19   
However, in 2011, CMS proposed a rule to establish CoPs for CMHCs and 
noted that there are currently only limited circumstances in which CMS 
can terminate a facility based on the result of a complaint investigation.  
Without CoPs in place, CMS oversight of CMHCs is severely limited.20 
Additionally, CMHCs are not required to be accredited by an accreditation 
agency or licensed or certified by their States.21   This is unlike CMSs 
oversight of other providers, such as hospitals and long-term-care 
facilities.  
CMS Oversight of CMHCs. CMS regional offices are responsible for 
approving or denying CMHCs for Medicare participation.  A regional 
office conducts one site visit to a CMHC when notified by a Medicare 
Administrative Contractor (MAC) that a CMHC has applied for Medicare 
enrollment and has been in operation for an entire business quarter.22   
 
15  42 CFR  424.24(e)(2);  CMS, Medicare Benefit Policy Manual, Pub. No. 100-02,    
         
ch. 6,  70.3.B.5.c. 

16
 42 CFR  424.24(e)(2). 
 
17  CMS,  Medicare Benefit Policy Manual, Pub. No. 100-02, ch. 6,  70.3.B.5.c. 
18  CMS,  Medicare Benefit Policy Manual, Pub. No. 100-02, ch. 6,  70.3.B.5.b. 
19  CMS has developed CoPs for 19 provider types, including home health agencies, 
psychiatric hospitals, and long-term-care facilities.  CMS, Conditions for Coverage and 
Conditions of Participation. Accessed at http://www.cms.gov/CFCsAndCoPs/ on June 17, 
2011. 
20  76 Fed. Reg. 35684 (June 17, 2011). 
21
 Government Accountability Office (GAO), Medicare: Lessons Learned From HCFAs 
Implementation of Changes to Benefits, GAO-HEHS-0031, January 2000. 
22  CMS,  Medicare  State Operations Manual, Pub. No. 100-07, ch. 2,  2250G and 2252. 
Questionable Billing by Community Mental Health Centers (OEI-04-11-00100)   3 
   
   
However, in the proposed rule to establish CoPs, CMS noted that many 
CMHCs have never had an onsite survey visit by CMS after initial 
certification.23, 24    
CMS contracts with MACs and Zone Program Integrity Contractors 
(ZPIC) to help ensure the financial integrity of Medicare payments, 
including those to CMHCs. MACs are responsible for ensuring correct, 
reliable, and timely payment of claims.25  They implement claims  
processing edits to prevent improper payments, educate providers that 
make improper claims, and collect overpayments.   
ZPICs ensure that Medicare funds are appropriately paid and that any 
improper payments are identified.  They proactively identify potential 
fraud; investigate allegations of fraud; initiate administrative actions to 
deny or suspend payments where there is evidence of fraud; refer cases to 
OIG for criminal and civil investigation; and refer cases to CMS for 
administrative actions, including provider revocations.26  
Additionally, CMS ensures the financial integrity of Medicare payments 
through its predictive analytics system.  In June 2011, CMS implemented 
a predictive analytics system that analyzes all Medicare Parts A and B 
claims to identify potential fraud.27   This system builds profiles of 
Medicare providers (e.g., CMHCs) that enable CMS to create risk 
scores.28   These risk scores estimate the likelihood of fraud and identify 
potentially fraudulent claims and billing patterns.    
State Oversight of CMHCs.  CMHCs must meet applicable State licensing  
or certification requirements to participate in Medicare; however, not all 
States have such requirements.29   The goal of State licensure or 
certification is to ensure that health care providers meet minimum State 
standards of quality and safety.  States that require CMHCs to be licensed 
 
23
  76 Fed. Reg. 35685 (June 17, 2011).   

24  We did not verify whether CMS conducted onsite survey visits prior to CMHCs Medicare 

enrollment.  Currently, OIG is conducting a study on CMSs and contractors CMHC  

oversight activities.  OEI-04-11-00101, in progress. 
 
25  CMS,  Part A and Part B MAC Statement of Work Jurisdiction F, October 2010. 

26  CMS,  Medicare Program Integrity Manual, Pub. No. 100-08, ch. 4,  4.2.2. 
 
27  CMS,  Predictive Modeling Analysis of Medicare Claims, MLN Network, November 2011.  

Accessed at https://www.cms.gov/MLNMattersArticles/Downloads/SE1133.pdf on February 
27, 2012. 

28  The predictive analytics system also builds profiles on networks, billing patterns, and 

beneficiary utilization. 

29
 42 CFR  410.2. 
Questionable Billing by Community Mental Health Centers (OEI-04-11-00100)   4 
   
   
or certified conduct regular site visits to ensure CMHCs compliance with 
State requirements.30    
Medicare Conditions of Participation and Accreditation. CMS can 
implement quality standards, such as CoPs, that providers must meet to 
participate in Medicare.31  CMHCs do not currently have CoPs, but CMS 
proposed six CoPs for CMHCs in June 2011, which are expected to be 
implemented in 2014.32 Implementation of these CoPs will authorize CMS 
to conduct regular CMHC site visits to verify compliance.33    
Upon implementation of CoPs, CMS may also verify compliance with 
CoPs by using State survey and certification agencies or by granting 
deeming authority to accreditation organizations.34   A provider seeking 
accreditation must submit an application to an accrediting organization 
and is subject to unannounced site visits.  Using the application and site 
visit results, the accrediting organization determines whether to accredit 
the provider.35   Accreditation is required for certain Medicare providers, 
such as durable medical equipment suppliers.36  However, CMS currently 
does not have the statutory authority to grant deeming authority to 
accreditation organizations for CMHCs.  Therefore, these providers are 
not subject to accreditation requirements.37    
Related OIG Work  
In 1998, OIG found that in a 12-month period, Medicare paid $229 million 
for unallowable and highly questionable PHP  services provided by          
 
30  The frequency  of site visits varies by State.  Site visits may be required yearly, biennially, 
every 3 years, etc. 
31  42 CFR part 485.  
32
 The six proposed CoPs are personnel qualifications; client rights; admission, initial 
evaluation, comprehensive assessment, and discharge or transfer of the client; treatment team,  
client-centered active treatment plan, and coordination of services; quality assessment and 
performance improvement; and organization, governance, administration of services, and 
partial hospitalization services. 76 Fed. Reg. 3568435711 (June 17, 2011). 
33
 Ibid.  
34  Having deeming authority means being able to officially determine whether a facility is in 
compliance with Medicare and Medicaid requirements.  Social Security Act 1865(a)(1), 42 
CFR 488.6, 76 Fed. Reg. 35685 (June 17, 2011).  
35
 CMS,  DMEPOS Accreditation Presentation. Accessed at 
http://www.cms.gov/MedicareProviderSupEnroll/downloads/DMEPOSAccreditationPresentat 
ion.pdf on March 20, 2012. 
36  The Medicare Improvements for Patients and Providers Act of 2008, P.L. 110-275             
 154(b)(1), required all durable medical equipment, prosthetics, orthotics, and suppliers to 
meet quality standards for Medicare accreditation by October 1, 2009.    
37 
A statutory change is required to use accreditation organizations to verify CMHCs 
compliance with CoPs.  
Questionable Billing by Community Mental Health Centers (OEI-04-11-00100)   5 
   
   
14 CMHCs in 5 States.  Through medical record review, OIG found that 
91 percent (4,959 of 5,431) of the PHP  services reviewed did not meet 
Medicare requirements for reimbursement because:  (1) the beneficiaries 
were ineligible for services, (2) services were not medically reasonable or 
necessary for the beneficiaries condition, (3) services were not properly 
authorized by or furnished under the supervision of physicians, or           
(4) services were not adequately documented.38   Additionally, OIG found 
that 60 percent of all States do not require CMHCs to be licensed or 
certified.39   This creates a vulnerability whereby dishonest individuals 
have an opportunity to establish CMHCs and improperly bill Medicare for 
PHP services.  
In 1999, OIG assessed the appropriateness of Medicare payments for 
mental health services provided in practitioners offices, CMHCs, 
beneficiaries homes, and custodial care facilities.40  Of the 303 medical 
records reviewed, 22 percent revealed that beneficiaries received mental 
health services beyond what was medically reasonable and necessary.  
Further, these excessive mental health services were often provided in 
beneficiaries homes or by CMHCs.41   
OIG is conducting a study on the extent to which CMS and its contractors 
performed oversight activities to detect and deter fraudulent CMHC 
billing.42  
METHODOLOGY 
We analyzed Medicare PHP claims submitted by all 206 CMHCs in 
2010.43   We also analyzed claims from CMSs National Claims History 
Carrier (i.e., physician) and Inpatient Standard Analytical Files (i.e., 
inpatient) from 2009 and 2010.44  We used the beneficiaries Health 
Insurance Claim Numbers to associate their 2009 and 2010 physician and 
 
38  OIG, Five-State Review of Partial Hospitalization Programs at Community Mental Health 
Centers, OAS-04-98-02145, October 1998; OIG, Review of Partial Hospitalization Services 
Provided Through Community Mental Health Centers, OAS-04-98-02146, October 1998.   
39  Ibid.  
40  Mental health services include PHP services such as group, individual, and family therapy.
   
Medicare pays CMHCs only for PHP services. 
 
41  OIG, Medicare Part B Payments for Mental Health Services, OEI-03-99-00130, May 2001. 

42  OEI-04-11-00101, in progress. 

43 
We identified Medicare PHP claims submitted by CMHCs in CMSs National Claims 
 
History Outpatient file with bill type 76, indicating that the claim was for PHP services.  We  
excluded three CMHCs with a Medicare reimbursement amount of $0 in 2010. 
44 
We identified these claims in the Medicare physician National Claims History  file with 
place of service code 53, indicating the service was provided at a CMHC.   
Questionable Billing by Community Mental Health Centers (OEI-04-11-00100)   6 
   
   
inpatient claims with their 2010 PHP claims.  These claims were used to 
identify diagnoses and gather information about the types of services 
beneficiaries received that were not on the PHP claims.  
We matched National Provider Identifiers in the National Plan and 
Provider Enumeration System and on the PHP claims to obtain addresses 
for each CMHC.   Only 25 States have CMHCs that receive Medicare 
payments.45  See Appendix A for the amount of Medicare payments made 
to CMHCs in each of those States.  Additionally, we used CMSs 2010 
Enrollment Database to obtain addresses for each beneficiary who 
received PHP services at a CMHC in 2010.  
Finally, we reviewed State health facility licensing and mental health 
department Web sites and contacted State officials in these departments to  
determine which States require CMHCs to be licensed or certified.   
Identification of CMHCs With Questionable Billing   
We first identified all Medicare PHP claims submitted by CMHCs with 
dates of service ending in 2010. We  identified 273,561 claims billed by 
206 CMHCs.   We also identified all Medicare physician and inpatient 
claims with dates of service ending in 2009 and 2010.  We identified      
5.3 million physician claims and 71,602 inpatient claims submitted for the 
24,703 beneficiaries who participated in PHPs at CMHCs. 
Based on past OIG work and input from CMS staff familiar with 
fraudulent PHP billing by CMHCs, we developed nine CMHC 
questionable billing characteristics.   
To ensure reliability of the analysis of each characteristic, we focused our 
analysis of questionable billing on CMHCs that had at least five 
beneficiaries and were paid at least $10,000 for PHP services in 2010.  
Eleven of the 206 CMHCs did not meet these criteria.  In total, 195 
CMHCs were included in this analysis.   We calculated the percentage of 
beneficiaries at each CMHC with each questionable billing characteristic.  
We considered a CMHCs billing to be unusually high, or questionable, on 
a characteristic if the percentage of beneficiaries was greater than the 75th  
percentile plus 1.5 times the interquartile range.46   The nine characteristics 
are described below: 
1. 	  Beneficiaries who received only group psychotherapy during their 
PHP participation.  PHPs must offer a combination of services to treat 
 
45 
CMHCs were located in 24 States and 1 U.S. territory (Puerto Rico).  Hereinafter we refer 
to the 24 States and Puerto Rico collectively as States.  
46  This is a standard exploratory  method for identifying members of a population with 
unusually high values on a given statistic compared to the rest of the population when no 
benchmarks exist.  See J.W. Tukey,  Exploratory Data Analysis, Addison-Wesley, 1977.    
Questionable Billing by Community Mental Health Centers (OEI-04-11-00100)   7 
   
   
beneficiaries mental health conditions.  Past OIG studies found that 
beneficiaries in CMHCs were likely to receive more group 
psychotherapy sessions than necessary.47  Further, CMHCs that 
provide exclusively group psychotherapy to beneficiaries may be 
billing for services that are not medically necessary or therapeutic.  We  
identified CMHCs with questionable billing based on the percentage 
of beneficiaries in each CMHC that had claims indicating only group 
psychotherapy, Healthcare Common Procedure Coding System 
(HCPCS) codes G0410 and G0411.  See Appendix B for a list of 
services and the accompanying HCPCS codes used on PHP claims.   
2. 	  Beneficiaries who were not referred to PHPs by health care facilities.   
Beneficiaries admitted to PHPs must be under the care of  physicians 
who certify the need for PHP services.48  Beneficiaries who present 
themselves (i.e., are not referred by health care facilities) to the 
CMHCs with orders from the physicians raise questions about whether 
they were evaluated by physicians and eligible for PHP services.    
Additionally, past OIG studies have found that some beneficiaries 
were not certified by physicians to participate in PHPs.49   We  
identified CMHCs with questionable billing based on the percentage 
of beneficiaries in each CMHC with referral code 1 on their PHP  
claims, indicating that the beneficiaries presented themselves to 
CMHCs, rather than being transferred from health care facilities.   
3. 	  Beneficiaries who were not evaluated by physicians during their PHP  
participation. Physicians must develop an individualized treatment 
plan for each beneficiary receiving PHP services, which includes 
treatment goals and describes the coordinated services that will be 
provided through the PHP.  Physicians must also supervise the delivery 
of PHP services and periodically evaluate beneficiaries to ensure that  
their treatment goals are being met.  Past OIG studies have found that 
the medical records of PHP beneficiaries lacked physician evaluations, 
signed plans of care, orders for services, and/or physician progress 
notes.50   We identified CMHCs with questionable billing based on the 
percentage of beneficiaries in each CMHC that did not have PHP or 
 
47 OIG, Medicare Part B Payments for Mental Health Services, OEI-03-99-00130, May 2001.  
48 
42 CFR  410.43(a)(3), 42 CFR  424.24(e), CMS, Medicare Benefit Policy Manual, Pub. 
No. 100-02, ch. 6,  70.3.B.1 and 70.3B.5. 
49  OIG, Five-State Review of Partial Hospitalization Programs at Community Mental Health 
Centers, OAS-04-98-02145, October 1998; OIG, Review of Partial Hospitalization Services 
Provided Through Community Mental Health Centers, OAS-04-98-02146, October 1998.   
50  Ibid.  
Questionable Billing by Community Mental Health Centers (OEI-04-11-00100)   8 
   
   
physician claims indicating professional services by a physician during 
their PHP participation in 2010.51    
4. 	  Beneficiaries with no mental health diagnoses a year prior to 
participating in PHPs.  Beneficiaries must have mental health 
disorders that severely interfere with  multiple areas of their daily lives, 
including social, vocational, and/or educational functioning.  Past OIG 
studies have found, and  recent convictions of CMHC owners and 
managers have illustrated, that beneficiaries with no prior histories of 
mental disorders often received PHP  services that were not medically 
reasonable or necessary.52, 53  The absence of records of prior inpatient 
treatment or physician visits for mental disorders raises concerns about 
whether PHP services were medically reasonable or necessary.  We  
used 2009 and 2010 physician and inpatient claims data to determine 
whether each beneficiary receiving PHP services at a CMHC had a 
mental health diagnosis on other Medicare claims prior to receiving 
PHP services in 2010.  We identified CMHCs with questionable billing 
based on the percentage of beneficiaries in each that did not have a 
mental health diagnosis between January 1, 2009, and their first date 
of PHP service in 2010. 
5. 	  Beneficiaries who participated in PHPs at CMHCs outside their 
communities. Past OIG work identified concerns regarding PHP  
services provided to Medicare beneficiaries outside their communities.  
Beneficiaries who participate in PHPs outside their communities raise 
concerns about CMHCs obtaining beneficiary Medicare numbers and 
billing for services that were not provided or providing PHP services 
that were not medically reasonable or necessary.  We determined the 
threshold for excessive distances from the CMHC to be 102 miles.54   
We then identified CMHCs with questionable billing based on the 
percentage of beneficiaries who resided more than 102 miles away. 
 
51 
We used physician claims because the professional services of physicians, such as 
psychological assessments and medication management, are not paid as PHP services.  Claims  
for professional services are submitted and paid separately. 
52 
OIG, Five-State Review of Partial Hospitalization Programs at Community Mental Health 
Centers, OAS-04-98-02145, October 1998; OIG, Review of Partial Hospitalization Services  
 
Provided Through Community Mental Health Centers, OAS-04-98-02146, October 1998. 
53 DOJ, op.  cit.  
54  We determined this distance by using a standard exploratory  method for identifying 
members of a population with unusually high values on a given statistic compared to the rest  
of the population when no benchmarks exist.  See J.W. Tukey,  Exploratory Data Analysis, 
Addison-Wesley, 1977.   
Questionable Billing by Community Mental Health Centers (OEI-04-11-00100)   9 
   
   
6. 	  Beneficiaries who participated in PHPs at more than one CMHC.   
OIG data analysis indicates that the majority (86 percent) of PHP  
beneficiaries receive services at one CMHC.55   Therefore, a high 
percentage of beneficiaries who participated in PHPs at more than one 
CMHC may indicate that providers have worked together to share 
beneficiaries. Sharing beneficiaries is a common fraud scheme and 
may involve cooperation between managers, physicians, and marketers 
to solicit beneficiaries or  beneficiary Medicare numbers.56   
Beneficiaries who participate in PHPs at more than one CMHC also 
raise concerns about whether the PHP services were provided and 
were medically reasonable and necessary.   We identified CMHCs with 
questionable billing based on the percentage of beneficiaries in each 
CMHC that participated in PHPs at more than one CMHC. 
7. 	  Beneficiaries with cognitive disorders who participated in PHPs.   
PHPs are not medically reasonable or necessary for beneficiaries who 
cannot actively participate because of cognitive disorders, such as 
Alzheimers disease or severe dementia.  Past OIG studies and recent 
convictions of CMHC owners and managers have shown that 
beneficiaries with Alzheimers disease or severe dementia were 
receiving PHP services at some CMHCs.57, 58  Using 2010 physician 
and inpatient claims, we identified beneficiaries with cognitive 
disorders who participated in PHPs. See Appendix C for the the 
diagnosis codes and associated descriptions.  We identified CMHCs 
with questionable billing based on the percentage of beneficiaries in 
each CMHC with these diagnosis codes. 
8.	   Beneficiaries with long durations of PHP participation. There are no 
specific limits on the length of time that Medicare covers PHPs.  
CMHC owners and managers have been convicted of Medicare fraud 
for abusing the ability to bill for PHPs for long periods of time.  These 
individuals manipulated the length of beneficiaries stays to maximize 
the number of days Medicare would pay for PHP.   We determined the 
 
55 
OIG 2010 Medicare PHP claims  data.  
56 
CMHC owners and managers, physicians, marketers, and other providers have been 
convicted of Medicare fraud for working together to solicit beneficiaries to attend CMHCs. 
DOJ, op. cit.  
57
OIG, Five-State Review of Partial Hospitalization Programs at Community Mental Health 
Centers, OAS-04-98-02145, October 1998; OIG, Review of Partial Hospitalization Services  
Provided Through Community Mental Health Centers, OAS-04-98-02146, October 1998.     
58  DOJ, op.  cit. 
Questionable Billing by Community Mental Health Centers (OEI-04-11-00100)   10 
   
   
threshold for a long duration of PHP participation to be 147 days.59    
We then identified CMHCs with questionable billing based on the 
percentage of beneficiaries who received over 147 days of PHP  
services from the CMHCs. 
9. 	  Beneficiaries who were readmitted to inpatient treatment. Medicare 
beneficiaries are eligible for participation in PHPs only if services will 
prevent relapse or hospitalization. The relapse of a severely mentally 
ill beneficiary might be unavoidable, but a high percentage of  
beneficiaries readmitted to inpatient treatment after receiving PHP  
services at a CMHC raises concerns because PHPs are intended to 
prevent relapse and hospitalization.  Additionally, as shown by past 
OIG work, CMHCs may discharge beneficiaries to inpatient treatment 
and then readmit them to avoid questions about lengths of stay.  Using 
2010 PHP and inpatient claims, we identified beneficiaries who were 
readmitted to inpatient treatment after PHP services and then returned 
to the CMHCs.60   We identified CMHCs with questionable billing 
based on the percentage of beneficiaries who were readmitted to 
inpatient treatment and then returned to the CMHCs.   
Geographic Analysis of CMHCs With Questionable Billing  
We determined whether CMHCs with questionable billing were 
concentrated in certain metropolitan areas.61   To do this, using each 
CMHCs address, we first identified each CMHCs Core Based Statistical  
Area (CBSA). A CBSA is a region around an urban center that has at least 
10,000 people.62  CBSAs may be categorized as metropolitan or  
micropolitan.   We determined the total number of CMHCs in each 
metropolitan area and the number of CMHCs that had questionable 
 
59  We established this duration of stay by using a standard exploratory method for identifying 
members of a population with unusually high values on a given statistic compared to the rest  
of the population when no benchmarks exist.  See J.W. Tukey,  Exploratory Data Analysis, 
Addison-Wesley, 1977.   
60  We identified beneficiaries who were in inpatient stays with mental health diagnoses, were 
discharged to CMHCs within 2 days, and were then readmitted to inpatient treatment with 
mental health diagnoses within 2 days of discharge from the CMHCs.  We also identified 
beneficiaries who were receiving PHP services and were admitted to inpatient treatment with  
mental health diagnoses within 2 days of discharge from CMHCs, then readmitted to the 
CMHCs within 2 days of discharge from inpatient treatment. 
61  We used census data and each CMHCs address to identify the metropolitan area of each.  
A metropolitan area is defined as a core urban area with a population of 50,000 people or 
more. A micropolitan area is defined as a core urban area with a population of at least 
10,000, but fewer than 50,000 people.  U.S. Census Bureau, Metropolitan and Micropolitan 
Definition Files. Accessed at http://www.census.gov/population/metro/data/def.html on 
January 10, 2012. 
62 
 Ibid.  
Questionable Billing by Community Mental Health Centers (OEI-04-11-00100)   11 
   
   
billing.63   We then calculated the percentage of CMHCs that had 
questionable billing in each metropolitan area.   
State Licensure or Certification Analysis of CMHCs With 
Questionable Billing 
We reviewed State health facility licensing and mental health department 
Web sites and contacted State officials in these departments to determine 
whether their States require CMHCs to be licensed or certified.  We  
determined whether questionable billing by CMHCs varied according to  
whether States had licensure or certification requirements for CMHCs.  
We analyzed the total number of CMHCs and the number of CMHCs that 
had questionable billing based on license or certification requirements.   
Limitations 
The findings in this report are based on our analysis of PHP claims  
submitted during 2010 and cannot be generalized to any other period.   
The nine questionable billing characteristics included in our analysis are 
not intended to be a comprehensive set of characteristics for identifying 
Medicare CMHC questionable billing.  Additionally, while the presence of  
these characteristics raises questions about the appropriateness of the PHP  
claims submitted by CMHCs, we did not conduct a medical record review 
to determine whether the services billed by CMHCs were inappropriate or 
fraudulent. 
Standards 
This study was conducted in accordance with the Quality Standards for 
Inspection and Evaluation issued by the Council of the Inspectors General 
on Integrity and Efficiency. 
 
63  CMHCs were located in 54 metropolitan areas.  To ensure reliability of the geographic 
analysis, we excluded all micropolitan areas and metropolitan areas that did not have at least 
three CMHCs. 
Questionable Billing by Community Mental Health Centers (OEI-04-11-00100)   12 
   
   
FINDINGS 
In 2010, approximately  half of CMHCs had 
questionable billing 
In 2010, 102 of 195 (52 percent) CMHCs met or exceeded the threshold 
that indicated unusually high billing for at least 1 of 9 questionable billing 
characteristics. 
Approximately one-third of the CMHCs with questionable billing met or 
exceeded the thresholds for multiple characteristics we developed.  
Specifically, 33 CMHCs met or exceeded the thresholds for 2 or more 
characteristics, and 2 CMHCs met or exceeded the thresholds for              
4 characteristics.  None of the CMHCs met or exceeded the thresholds on 
more than four characteristics. See Table 1 for the number and percentage 
of CMHCs by the number of questionable billing characteristics.   
 
Table 1: Number and Percentage of Questionable Billing Characteristics 
for Which CMHCs Met or Exceeded Unusually High Billing Thresholds, 
2010  
Number of Questionable  Number of    
Billing Characteristics   CMHCs   Percentage of CMHCs  
0  93  48%  
1  69    35%  
2  25  13%  
3  6  3%  
4  2  1% 
   Total   195  100%  
         Source:  OIG analysis of 2010 Medicare PHP, physician, and inpatient claims. 
For each questionable billing characteristic, Table 2 shows the median 
among all CMHCs, the range of unusually high billing, and the number of 
CMHCs with unusually high billing.   Additionally,  Table 2 includes the 
threshold for each characteristic that indicated questionable billing.64  
 
 
 
 
 
 
 
 
64  We determined these thresholds by using a standard exploratory method for identifying 
members of a population with unusually high values on a given statistic compared to the rest  
of the population when no benchmarks exist.  See J.W. Tukey,  Exploratory Data Analysis, 
Addison-Wesley, 1977.    
Questionable Billing by Community Mental Health Centers (OEI-04-11-00100)   13 
   
   
 
 
Table 2: CMHCs With Unusually High Billing by Questionable Billing Characteristic, 2010  
    CMHCs With Unusually  High Billing**  
  Median    Number 
  Among All       of 
Questionable Billing Characteristic    CMHCs*   Threshold   Range of  Billing  CMHCs 
Beneficiaries who received only group         
psychotherapy during their PHP participation   0 percent   6 percent   6 to 100 percent   43 
Beneficiaries who were not referred to PHPs by           
health care facilities   0 percent   9 percent   10 to 100 percent  35 
Beneficiaries who were not evaluated by  physicians         
during their PHP participation  2 percent   13 percent   15 to 72 percent   21 
Beneficiaries with no mental health diagnoses prior          
to participating in PHPs  1 percent   10 percent   10 to 24 percent   16 
Beneficiaries who participated in PHPs at CMHCs          
outside their communities  2 percent   15 percent   15 to 72 percent   15 
Beneficiaries who participated in PHPs at more than         
one CMHC   16 percent   66 percent   66 to 97 percent   5 
Beneficiaries with cognitive disorders who         
participated in PHPs  12 percent   40 percent   40 to 50 percent   4 
Beneficiaries with long durations of PHP participation  1 percent   44 percent   46 to 50 percent   3 
Beneficiaries who were readmitted to inpatient         
treatment   10 percent   29 percent   30 to 55 percent   3 
Total***  102 
* The median (i.e., the 50th percentile) indicates that half of all CMHCs were equal to or fell below this value.
  
** We considered a CMHCs billing to be unusually high if it was greater than the 75th percentile plus 1.5 times the interquartile 

range. 
 
*** The columns do not sum to the totals because some CMHCs met  or exceeded the threshold for more than one characteristic. 
 
Source:  OIG analysis of 2009 and 2010 Medicare PHP, physician, and inpatient claims. 

     
In 2010, 43 CMHCs had unusually high percentages of 
beneficiaries who received only group psychotherapy during 
their PHP participation  
CMHCs that provide only group psychotherapy raise concern because 
PHPs must offer a combination of services.  Further, the CMHCs may be  
billing for group psychotherapy that is not medically necessary or 
therapeutic. The percentages of beneficiaries who received only group 
psychotherapy during their PHP participation at these 43 CMHCs ranged 
from 6 to 100 percent.  At over one-third  of these CMHCs (15 of 43), 
more than 50 percent of beneficiaries received only group psychotherapy.     
In 2010, 35 CMHCs had unusually high percentages of 
beneficiaries who were not referred to PHP by health care 
facilities 
Beneficiaries must have been under the care of physicians who certified 
the need for PHPs before they can receive such services.  However,  
beneficiaries who present themselves (i.e., were not referred by health care 
facilities) to the CMHCs may have no record of PHP certification.  A high 
percentage of beneficiaries who present themselves to the CMHCs with 
orders from physicians raises questions about whether they were evaluated 
by physicians and eligible for PHP services.  The percentages of such 
Questionable Billing by Community Mental Health Centers (OEI-04-11-00100)   14 
   
   
beneficiaries at these CMHCs ranged from 10 to 100 percent.  At over half 
of these CMHCs (19 of 35), 100 percent of beneficiaries were not referred 
to PHPs by health care facilities.   
In 2010, 21 CMHCs had unusually high percentages of 
beneficiaries who were not evaluated by physicians during 
their PHP participation 
Beneficiaries at these 21 CMHCs did not have claims with  HCPCS codes  
indicating that physician services occurred during their PHP participation 
for the entire year we reviewed. A  high percentage of beneficiaries who 
were not evaluated by physicians raises concerns about whether services 
were medically reasonable and necessary.   The percentages of such 
beneficiaries at these 21 CMHCs ranged from 15 to 72 percent.  Out of the 
282 beneficiaries receiving PHP services at 1 CMHC in Miami-Dade 
County, Florida, 203 were not evaluated by physicians during their PHP  
participation.    
In 2010, 16 CMHCs had unusually high percentages of 
beneficiaries with no mental health diagnoses prior to 
participating in PHPs 
Beneficiaries must have mental disorders that severely interfere with 
multiple areas of their daily lives, including social, vocational, and/or  
educational functioning. The absence of prior inpatient treatment or 
physician visits for a mental disorder raises concerns about whether PHP  
services were medically reasonable and necessary.  The percentages of 
such beneficiaries at these 16 CMHCs ranged from 10 to 24 percent.   
In 2010, 15 CMHCs had unusually high percentages of 
beneficiaries who participated in PHPs at CMHCs outside their  
communities 
A high percentage of beneficiaries that participated in PHPs at CMHCs 
outside their communities are a concern because the CMHCs may be 
offering financial kickbacks, obtaining beneficiary Medicare numbers and 
billing for services that were not provided, or providing PHP services that 
are not reasonable or necessary.  The percentages of such beneficiaries at 
these 15 CMHCs ranged from 15 to 72 percent.  One of these CMHCs, in 
Broward County, Florida, billed for a beneficiary who resided in Maui 
County, Hawaiiover 4,000 miles away.  The other 77 beneficiaries at this 
CMHC resided an average of nearly 550 miles away.   
In 2010, 15 CMHCs met or exceeded thresholds that indicated 
questionable billing for other characteristics 
Fifteen CMHCs met or exceeded thresholds that indicated questionable 
billing for at least one of the other four characteristics we developed.  
Questionable Billing by Community Mental Health Centers (OEI-04-11-00100)   15 
   
   
These characteristics were the percentages of beneficiaries who (1) 
participated in PHPs at other CMHCs, (2) had inappropriate diagnoses for 
participation in PHPs, (3) had long durations of PHP participation, and (4) 
were readmitted to inpatient treatment. 
Participation in PHPs at Other CMHCs. Five CMHCs had unusually 
high percentages of beneficiaries who participated in PHPs at more than 
one CMHC. This may indicate that CMHCs have shared beneficiaries.  
Additionally, this raises concerns about whether the PHP services were 
medically reasonable and necessary and whether the services were 
provided. Three of these five CMHCs had beneficiaries who participated 
in PHPs at five different CMHCs during 2010.   
Cognitive Disorders During PHP Participation. Four CMHCs had 
unusually high percentages of beneficiaries with cognitive disorders (e.g., 
Alzheimers disease or severe dementia) who participated in PHPs.  This 
may indicate that these CMHCs inappropriately billed for services that are 
not medically reasonable or necessary.  Of the 140 beneficiaries served by  
these 4 CMHCs, 61 percent (85 beneficiaries) had dementia and              
31 percent (43 beneficiaries) had Alzheimers disease diagnoses.  
Long Durations of PHP Participation.   Three CMHCs had unusually high 
percentages of beneficiaries who had long durations (i.e., over 147 days) 
of PHP participation.  This may indicate that the CMHCs are providing 
PHP services that are not medically reasonable or necessary.  One of these 
CMHCs had three beneficiaries who received PHP services for almost the 
entire year (362 days). 
Readmission to Inpatient Treatment. Three CMHCs had unusually high 
percentages of beneficiaries who were readmitted to inpatient treatment 
after PHP participation.  This may indicate that the CMHCs are providing 
PHP services that are not preventing relapse and hospitalization, as 
intended. The percentages of beneficiaries who were readmitted to 
inpatient treatment and then returned to these three CMHCs ranged from  
30 to 55 percent. 
Approximately two-thirds of CMHCs with 
questionable billing were located in eight
metropolitan areas  
In 2010, 8 of 11 metropolitan areas with at least 3 CMHCs had higher 
percentages of CMHCs with questionable billing than the national 
Questionable Billing by Community Mental Health Centers (OEI-04-11-00100)   16 
   
   
percentage.65  The percentages in these metropolitan areas ranged from     
61 to 100 percent, compared to the national percentage of 52 percent.  
These metropolitan areas made up 69 percent (70 of 102) of all CMHCs 
with questionable billing. All were located in Florida, Louisiana, and 
Texas. Table 3 shows the number and percentage of CMHCs in these 
eight areas. The remaining 26 CMHCs with questionable billing were 
dispersed among 22 other metropolitan areas.   
 
Table 3: Metropolitan Areas With a Higher Percentage of CMHCs With 
Questionable Billing Than the National Percentage, 2010  
  Number of CMHCs    Percentage of CMHCs 
  With Questionable  Total Number of   With Questionable 
Metropolitan Area  Billing   CMHCs   Billing  
Jacksonville, FL   3  3  100% 
Houston, TX   13  16  81%  
Tampa, FL   5  7  71%  
Lafayette, LA   2  3  67%  
San Antonio, TX   2  3  67%  
Houma, LA*   2  3  67%  
Miami, FL  32  52  62%  
Baton Rouge, LA   11  18  61% 
   Total   70  102  69% 
   National   102  195  52%  
*Indicates Houma-Bayou Cane-Thibodaux metropolitan area.
  
Source: OIG analysis of 2009 and 2010 Medicare PHP, physician, and inpatient claims. 

 
The Miami metropolitan area had a higher percentage of CMHCs with 
questionable billing than the national percentage for six of the nine 
characteristics. The Baton Rouge metropolitan area had a higher 
percentage of CMHCs with questionable billing than the national 
percentage for five of the nine characteristics.  See Appendix D for 
additional information about these eight metropolitan areas by 
characteristic.66    
Ninety percent of CMHCs with questionable billing 
were in States that do not require CMHCs to be 
licensed or certified 
In 2010, approximately half (13 of 24) of States with CMHCs did not 
require CMHCs to be licensed or certified.  Most (167 of 195) of the 
CMHCs and the majority (92 of 102) of CMHCs with questionable billing 
were located in these States.   
 
65  Of the 102 CMHCs with questionable billing, 96 were located in 31 metropolitan areas, 4 
were located in micropolitan areas (a core urban area with between 10,000 and 50,000 
people), and 2 were located in rural areas.  However, this analysis focused on the 11  
metropolitan areas that had at least 3 CMHCs.  
66  The other three metropolitan areas included in this analysis were New Orleans, Boston, and 
Shreveport.  
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Approximately half (92 of 167) of CMHCs in States that did not require 
CMHCs to be licensed or certified had questionable billing, and 
approximately one-third (10 of 28) of CMHCs in other States had 
questionable billing. Further, States that require CMHCs to be licensed or 
certified had no CMHCs with questionable billing for five of the nine 
questionable billing characteristics. Table 4 compares CMHCs with 
questionable billing in States with and without licensure and certification 
requirements by characteristic.   
Table 4: CMHCs With Questionable Billing Characteristics by  State Licensure or 
Certification Requirements, 2010  
  States With Licensure/Certification   States Without Licensure/Certification  
  Total CMHCs  Percentage of   Total CMHCs   Percentage of  
  With   CMHCs With   With   CMHCs With  
  Questionable   Questionable   Questionable   Questionable  
Questionable Billing Characteristic   Billing   Billing (N=28)   Billing   Billing (N=167) 
Beneficiaries who received only group         
psychotherapy during their PHP         
participation  7  25%   36  22%  
Beneficiaries who were not referred to         
PHPs by health care facilities   5  18%   30  `18%  
Beneficiaries who were not evaluated         
by physicians during their PHP         
participation  1  4%   20  12%  
Beneficiaries with no mental health          
diagnoses prior to participating in PHP  0  0%   16  10%  
Beneficiaries who participated in PHPs         
at CMHCs outside their communities  0  0%   15  9%  
Beneficiaries who participated in PHPs         
at more than one CMHC   0  0%   5  3%  
Beneficiaries with cognitive disorders         
who participated in PHPs  1  4%   3  2%  
Beneficiaries with long durations of         
PHP participation  0  0%   3  2%  
Beneficiaries who were readmitted to         
inpatient treatment  0  0%   3  2% 
   Total*  10  36%   92  55%  
*The columns do not sum to the totals because some CMHCs met or exceeded the threshold for more than one 

characteristic. 

Sources: OIG analysis of 2009 and 2010 Medicare PHP, physician, and inpatient claims and State Web sites. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Questionable Billing by Community Mental Health Centers (OEI-04-11-00100)   18 
   
   
CONCLUSION AND RECOMMENDATIONS 
In 2010, Medicare paid approximately $218.6 million to 206 CMHCs for 
PHP services.  Past OIG studies have found vulnerabilities in Medicare 
payments to CMHCs for PHPs.  Additionally, in 2011, four CMHC 
owners and managers in Miami-Dade County, Florida, were convicted of 
fraudulently billing Medicare approximately $200 million for medically 
unnecessary PHP services from 2002 to 2010. 
Approximately half of CMHCs had questionable billing for at least one of 
the nine OIG characteristics we reviewed.  Approximately one-third of the 
CMHCs with questionable billing met or exceeded the threshold for at 
least two of the nine characteristics.  The presence of these characteristics 
raises questions about the appropriateness of the PHP claims submitted by 
these CMHCs. However, we did not conduct a medical record review to 
determine whether the services billed by CMHCs were fraudulent. 
Additionally, 8 of 11 metropolitan areas with at least 3 CMHCs had higher 
percentages of CMHCs with questionable billing than the national 
percentage. Finally, 90 percent of the CMHCs with questionable billing 
were located in States that do not require CMHCs to be licensed or 
certified. All eight metropolitan areas  with a higher percentage of CMHCs  
with questionable billing than the national percentage were located in 
these States.  
Collectively, these findings identify specific vulnerabilities in Medicare 
payments to CMHCs for PHPs that should be addressed to safeguard the 
Medicare program.   
We recommend that CMS: 
Increase its monitoring of CMHCs Medicare Billing and Fraud 
Prevention Controls 
When using its predictive analytics system to identify CMHCs with high 
fraud risk scores, CMS should consider, at a minimum, including the OIG 
questionable billing characteristics used in this evaluation.  Further, to 
increase fraud prevention controls, CMS should instruct MACs to develop 
and implement national claims  processing edits based on these 
characteristics, as appropriate.  For example, edits can be developed or 
expanded to check for beneficiaries with cognitive disorders.   
Additionally, CMS should instruct ZPICs in the identified eight 
metropolitan areas to monitor CMHCs billing for PHPs using, at a 
minimum, these characteristics.  
Questionable Billing by Community Mental Health Centers (OEI-04-11-00100)   19 
   
   
Enforce the Requirement That Certifying Physicians Be Listed 
on the PHP Claims Submitted by CMHCs   
Beneficiaries admitted to PHPs must be under the care of physicians who 
certify the need for PHP services.  CMS should enforce the Medicare  
Claims Processing Manual requirement that the certifying physician be 
listed on the PHP claim submitted by CMHCs.  This provides additional 
information for CMS to use to verify whether the PHP services billed by 
CMHCs were medically reasonable and necessary.  
Finalize and Implement the Proposed CoPs for CMHCs 
CMS should finalize its proposed CoPs for CMHCs and implement them  
as soon as possible. Without them, the Medicare program has limited 
ability to oversee the quality, health, and safety of care provided in 
CMHCs. In States that oversee CMHCs through licensure or certification 
requirements, CMHCs had lower rates of questionable billing compared to 
rates in States with no licensure or certification requirements.  Similarly,  
CoPs can help to ensure that all CMHCs are subject to a consistent level of 
oversight. 
Furthermore, after finalizing the CoPs for CMHCs, CMS should establish 
an appropriate minimum survey cycle to verify CMHCs compliance with  
the CoPs. In doing so, CMS should consider seeking statutory authority, if 
necessary, to grant deeming authority to accreditation organizations.  This 
can assist CMS in ensuring that CMHCs are surveyed according to the 
established survey cycle.  
Review and Take Appropriate Action Against CMHCs With 
Questionable Billing 
In a separate memorandum, we will refer the CMHCs with questionable 
billing that we identified to CMS for appropriate action.  CMS could 
determine whether the services billed by these CMHCs were inappropriate 
or fraudulent by conducting medical record reviews; conducting site visits, 
particularly in States that do not require CMHCs to be licensed or 
certified; implementing prepay reviews; or referring CMHCs to law 
enforcement for investigation.  
 
 
 
 
 
 
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AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL  
RESPONSE 
CMS concurred with all four of our recommendations and provided 
information about its efforts to address vulnerabilities in Medicare 
payments to CMHCs for PHPs.  Specifically, CMS will provide ZPICs 
with a copy of this report to incorporate OIGs questionable billing 
characteristics into their business and investigative processes as 
appropriate. CMS will also consider incorporating these characteristics 
into its Fraud Prevention System models.  Finally, these characteristics 
will be considered in the development of a pilot project focused on 
CMHCs in the three highest risk States of Florida, Texas, and Louisiana.   
With regard to the second recommendation, CMS will develop an edit in 
the claims processing system to ensure that the certifying physicians are 
listed on the PHP claims submitted by CMHCs.   
With regard to the third recommendation, CMS expects to publish the 
final rule for CMHC CoPs in the spring of 2013.  CMS plans to establish a 
5-year survey cycle to verify a CMHCs compliance with CoPs.  
Additionally, CMS will consider seeking statutory authority to grant 
deeming status to accreditation organizations.    
With regard to our fourth recommendation, CMS will share the CMHCs 
with questionable billing identified in this report with MACs to consider 
when prioritizing their work. CMS will also share information about these 
CMHCs with Recovery Audit Contractors to consider as they decide 
which claims processed by MACs to review. 
We support CMSs efforts to address these issues and encourage it to 
continue making progress.  For the full text of CMSs comments, see 
Appendix E. 
 
 
 
 
 
 
 
 
Questionable Billing by Community Mental Health Centers (OEI-04-11-00100)   21 
   
   
APPENDIX A 

 
Number of Community Mental Health Centers and  
Medicare Payments in Each State, 2010  
 
  Total    
  Number   
  of   
State  CMHCs   Total Medicare Payment 
Florida  72   $82,389,314  
Louisiana  57   $60,725,138  
Texas  23   $50,403,363  
Mississippi  4  $6,728,693  
Tennessee  4  $4,007,575  
Massachusetts  10   $3,192,482  
Georgia  3  $2,153,531  
North Carolina   1  $2,135,432  
South Carolina   1  $1,630,377  
California  4  $1,614,811  
Alabama  6  $841,167  
Michigan  1  $748,687  
Arizona  1  $541,137  
West Virginia   1  $270,169  
Connecticut  2  $259,370  
Maryland  1  $250,238  
New York   1  $177,722  
Minnesota  3  $121,685  
Illinois  2  $113,998  
Nebraska  1  $102,492  
Pennsylvania  4  $67,346  
Utah  1  $55,915  
Iowa  1  $49,584  
Missouri  1  $16, 815  
Puerto Rico   1  $1,078 
   Total   206  $218.6 million 
      Source: Office of Inspector General analysis of 2010 Medicare Partial  
                            Hospitalization Program claims data. 
 
 
 
 
Questionable Billing by Community Mental Health Centers (OEI-04-11-00100)   22 
   
   
APPENDIX B 

Healthcare Common Procedure Coding System Codes Used on Partial 
Hospitalization Program Claims  
Code  Description  
90801 or 90802  Behavioral Health Treatments/Services  
90801, 90802, 90899   Psychiatric General Services  
90816, 90817, 90818,  
90819, 90821, 90822,  
90823, 90824, 90826,  
90827, 90828, 90829,  
90845, 90865, 90880   Individual Psychotherapy 
90846 or 90847  Family Psychotherapy 
96101, 96102, 96116,  
96118, 96119, or 96120   Psychiatric Testing  
G0129  Occupational Therapy 
G0176  Activity  Therapy 
G0410 or G0411   Group Psychotherapy 
G0177  Education Training  
Source: Centers for Medicare & Medicaid Services, Medicare Claims Processing Manual, Pub. No.          
100-04, ch. 4,  260.1.1.  
Questionable Billing by Community Mental Health Centers (OEI-04-11-00100)   23 
   
   
APPENDIX C 

Number of Beneficiaries With Cognitive Disorders Who Participated in Partial Hospitalization Programs, 
2010 
Diagnosis  
Code   Description   Number of Beneficiaries*  
3310  Alzheimer's disease   1,254  
Dementia in conditions classified elsewhere without behavioral 
29410   disturbance  683  
Dementia in conditions classified elsewhere with behavioral  
29411   disturbance  423  
317   Mild intellectual disabilities   404  
2900   Senile dementia, uncomplicated   361  
319   Unspecified intellectual disabilities   353  
29040   Vascular dementia, uncomplicated   205  
33183   Mild cognitive impairment, so stated   168  
29043   Vascular dementia, with depressed mood   119  
29021   Senile dementia  with depressive features   115  
29020   Senile dementia  with delusional features   109  
Unspecified nonpsychotic mental disorder following organic  
3109  brain damage   105  
33182  Dementia with Lewy  bodies   100  
29010   Presenile dementia, uncomplicated   95  
29013   Presenile dementia with depressive features   77  
3180   Moderate intellectual disabilities  73  
2903   Senile dementia  with delirium   51  
29041   Vascular dementia, with delirium  50  
29042   Vascular dementia, with delusions   43  
29012   Presenile dementia with delusional features   25  
29011   Presenile dementia with delirium  18  
2908   Other specified senile  psychotic conditions   18  
2909   Unspecified senile psychotic conditions   17  
3181   Severe intellectual disabilities   10  
33119  Other frontotemporal dementia   10  
3182   Profound intellectual disabilities  4 
*Some beneficiaries had more than one cognitive disorder during partial hospitalization program (PHP) participation. 
Sources: Centers for Medicare & Medicaid Services, Version 28 Full and Abbreviated Diagnosis Code Titles, Office of 
Inspector General analysis of 2010 Medicare PHP, physician, and inpatient claims.  
 
 
 
Questionable Billing by Community Mental Health Centers (OEI-04-11-00100)   24 
   
   
APPENDIX D 

Percentage of Community Mental Health Centers With Questionable Billing by  Metropolitan  Area and 
Characteristic, 2010  
Questionable     San  Baton 
Billing  National  Jacksonville  Houston   Tampa   Lafayette  Antonio  Rouge   Houma   Miami 
Characteristic   (N=102)   (N=3)  (N=13)   (N=5)  (N=2)  (N=2)  (N=11)   (N=2)  (N=32)  
Beneficiaries who                   
received only                    
group                   
psychotherapy                    
during their partial                   
hospitalization                   
program (PHP)                    
participation   42%   33%   54%  20%   0%   100%   0%   0%   53% 
Beneficiaries who             
were not referred                   
to PHPs by health                   
care facilities  34%   100%   85%  80%  0%   0%   0%   0%   22%  
Beneficiaries who                   
were not                   
evaluated by                    
physicians during                   
their PHP                   
participation   21%   33%  0%   0%   0%   0%   55%  0%   25% 
Beneficiaries with               
no mental health                   
diagnoses a year                   
prior to                   
participating in                   
PHPs  16%   0%   0%   0%   0%   0%   27%  100%   19% 
Beneficiaries who                   
participated in                    
PHPs at                   
community                    
mental health   15%   67%  8%   0%   0%   50%  18%  0%   16% 
centers (CMHC) 
outside their 
communities  
Beneficiaries who                   
participated in                    
PHPs at more                   
than one CMHC    5%   0%   8%   0%   0%   0%   9%   0%   9%  
Beneficiaries with                   
cognitive                   
disorders who                   
participated in                    
PHPs  4%   0%   0%   0%   0%   0%   0%   0%   6%  
Beneficiaries with                   
long durations of                   
PHP participation   3%   0%   8%   0%   0%   0%   9%   0%   0%  
Beneficiaries who                   
were readmitted                   
to inpatient                   
treatment   3%   0%   0%   0%   100%   0%   0%   0%   0%  
Note: Bold type indicates that the percentage was greater than  the national percentage. 

Source:  Office of  Inspector General analysis of 2009 and 2010 Medicare PHP, physician, and inpatient  claims. 

 
 
 
 
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APPENDIX E 
     
Agency Comments 
 
 
Questionable Billing by Community Mental Health Centers (OEI-04-11-00100)   26 
   
   
 
 
 
 
 
 
 
 
 
 
Questionable Billing by Community Mental Health Centers (OEI-04-11-00100)   27 
   
   
 
 
 
 
 
 
 
 
 
 
Questionable Billing by Community Mental Health Centers (OEI-04-11-00100)   28 
   
   
 
 
 
 
 
 
 
 
Questionable Billing by Community Mental Health Centers (OEI-04-11-00100)   29 
   
   
ACKNOWLEDGMENTS 
This report was prepared under the direction of Dwayne Grant, Regional 
Inspector General for Evaluation and Inspections in the Atlanta regional 
office, and Jaime Durley, Deputy Regional Inspector General.   
Latrice Rollins served as the lead analyst for this study.  Other principal 
Office of Evaluation and Inspections staff from the Atlanta regional office 
who contributed to the report include Evan Godfrey and Holly Williams; 
central office staff who contributed include Kevin Farber, Scott Horning, 
Sandy Khoury, Berivan Demir Neubert, and Debra Roush.  
 
 
 
 
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Office of Inspector General 

http://oig.hhs.gov  
 
The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, as amended, is  
to protect the integrity of the Department of Health and Human Services (HHS) programs, as well as the 
health and welfare of beneficiaries served by those programs.  This statutory mission is carried out through 
a nationwide network of audits, investigations, and inspections conducted by the following operating 
components: 
Office of Audit Services 
The Office of Audit Services (OAS) provides auditing services for HHS, either by conducting audits with 
its own audit resources or by overseeing audit work done by others.  Audits examine the performance of  
HHS programs and/or its grantees and contractors in  carrying out their respective responsibilities and are  
intended to provide independent assessments of HHS programs and operations.  These assessments help 
reduce waste, abuse, and mismanagement and promote economy and efficiency throughout HHS. 
Office of Evaluation and Inspections  
The Office of Evaluation and Inspections (OEI) conducts national evaluations to provide HHS, Congress, 
and the public with timely, useful, and reliable information on significant issues.  These evaluations focus 
on preventing fraud, waste, or abuse and promoting economy, efficiency, and effectiveness of  
departmental programs.  To promote impact, OEI reports also present practical recommendations for 
improving program operations.  
Office of Investigations 
The Office of Investigations (OI) conducts criminal, civil, and administrative investigations of fraud and 
misconduct related to HHS programs, operations, and beneficiaries.  With investigators working in all 
50 States and the District of Columbia, OI utilizes its resources by actively coordinating with the  
Department of Justice and other Federal, State, and local law enforcement authorities.  The investigative 
efforts of OI often lead to criminal convictions, administrative sanctions, and/or civil monetary penalties. 
Office of Counsel to the Inspector General 
The Office of Counsel to the Inspector General (OCIG) provides general legal services to OIG, rendering 
advice and opinions on HHS programs and operations and providing all legal support for OIGs internal  
operations.  OCIG represents OIG in all civil and administrative fraud and abuse cases involving HHS 
programs, including False Claims Act, program exclusion, and civil monetary penalty cases.  In  
connection with these cases, OCIG also negotiates and monitors corporate integrity agreements.  OCIG 
renders advisory opinions, issues compliance program guidance, publishes fraud alerts, and provides other 
guidance to the health care industry concerning the anti-kickback statute and other OIG enforcement 
authorities.