Department of Health and Human Services
OFFICE OF 
   
INSPECTOR GENERAL 
 
 
 
 
 
 
 
 
M P 2007
EDICARE  AYMENTS IN   
 
FOR ME  DICAL EQUIPMENT AND 
 
S C W I
UPPLY  LAIMS  ITH  NVALID 
 
I  R
OR  NACTIVE  EFERRING 
 
P I  
HY  SICIAN  DENTIFIERS 
 
 
Daniel R. Levinson  
Inspector General 
 
February 2009 
OEI-04-08-00470   
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.   
   
 E X E C U T I V E   S U M M A R Y  
OBJECTIVE
 
To determine the extent to which Medicare paid medical equipment and 
supply claims in 2007 submitted with (1) invalid or inactive unique 
physician identification numbers (UPIN) or (2) invalid referring 
physician national provider identifiers (NPI). 
BACKGROUND 
Medicare beneficiaries are eligible to receive medical equipment and 
supplies deemed medically necessary by a physician under Medicare 
Part B coverage.  In 2007, Medicare allowed almost $11 billion for 
medical equipment and supplies.  The Consolidated Omnibus Budget 
Reconciliation Act of 1985 required the Centers for Medicare & 
Medicaid Services (CMS) to establish UPINs for all physicians who 
provide services to Medicare beneficiaries.  A physician was allowed to 
obtain only one UPIN, but a UPIN may have been associated with more 
than one practice setting (i.e., location where a physician provides 
services).   
Medicare Claims Processing Using UPINs 
Providers of medical equipment and supplies obtain reimbursement for 
items that they provide to Medicare beneficiaries by submitting claims 
to the CMS contractors servicing their areas.  Billing suppliers 
identified themselves on claims using provider identification numbers.  
Medicare instructions also required suppliers to provide the UPIN of the 
referring physician (i.e., the physician who ordered the equipment 
and/or supplies) on claims.  Medicare payments for medical equipment 
and supplies are authorized only when the items are ordered by 
physicians and meet coverage requirements.  Therefore, claims with 
invalid or inactive UPINs should not be paid, and Medicare requires 
that they be returned to the supplier. 
In 2001, the Office of Inspector General reported that Medicare paid 
almost $91 million in 1999 for medical equipment and supply claims 
with invalid or inactive UPINs, including almost $8 million for claims 
with UPINs of deceased physicians.  Based on that report, CMS stated 
that it had initiated system changes to prevent payment of claims 
submitted with deceased physicians UPINs.  CMS also stated that it 
planned to implement changes to prevent payment of claims with 
invalid or inactive UPINs.   
 
  OEI-04-08-00470  MEDICARE PAYMENTS FOR CLAIMS WITH INVALID OR INACTIVE REFERRING PHYSICIAN IDENTIFIERS  i   
   
E X E C U T I V E   S U M M A R Y  
Medicare Claims Processing Using NPIs 
The Administrative Simplification provisions of the Health Insurance 
Portability and Accountability Act of 1996 required CMS to create NPIs 
to replace UPINs for Medicare claims processing.  Both physicians and 
suppliers must apply for and obtain NPIs from CMS.   
From May 2005 to May 2008, Medicare accepted medical equipment and 
supply claims that included UPINs only, NPIs only, or a combination of 
both.  However, as of May 23, 2008, suppliers are required to include 
their own NPIs in the primary provider field on claims, and the 
referring physicians NPIs in the secondary provider field.  On the date 
when the requirement went into effect, CMS noted a large number of 
rejected claims because suppliers were not submitting referring 
physician NPIs.  In response, CMS instituted a temporary provision 
that allows suppliers who, after reasonable effort, cannot obtain 
referring physicians NPIs to instead use their own NPI in the 
secondary provider field.  As of December 2008, CMS had not 
discontinued this provision. 
We determined the extent to which Medicare paid medical equipment 
and supply claims in 2007 submitted with invalid or inactive UPINs, 
including UPINs of deceased physicians, or invalid NPIs of referring 
physicians who ordered medical equipment and/or supplies for Medicare 
beneficiaries.  We did not determine the extent to which providers of 
medical equipment and supplies who received Medicare payments may 
have submitted claims with invalid or inactive provider identification 
numbers.    
We considered UPINs and referring physician NPIs that had never been 
assigned by CMS to be invalid and UPINs associated only with inactive 
practice settings to be inactive.   
FINDINGS 
Medicare allowed over $6 million for medical equipment and supply 
claims with invalid referring physician UPINs in 2007.   
Medicare-allowed amounts for claims with invalid referring physician 
UPINs totaled $6.1 million.  This amount was associated with  
4,428 invalid UPINs of the 543,841 UPINs submitted on claims in 2007.  
Of these invalid UPINs, 75 percent (3,335 of 4,428) were associated with 
less than $1,000 each in Medicare-allowed amounts.  However, 10 of 
these 4,428 invalid UPINs were associated with more than $50,000 each 
in Medicare-allowed amounts. 
  OEI-04-08-00470  MEDICARE PAYMENTS FOR CLAIMS WITH INVALID OR INACTIVE REFERRING PHYSICIAN IDENTIFIERS  ii   
   
E X E C U T I V E   S U M M A R Y  
Medicare allowed almost $28 million for medical equipment and 
supply claims with inactive referring physician UPINs in 2007.  
Medicare-allowed amounts for claims with inactive referring physician 
UPINs totaled $27.8 million.  This amount was associated with  
18,955 inactive UPINs of the 543,841 UPINs submitted on claims in 
2007.  Of the $27.8 million, over $24 million was associated with UPINs 
that had been inactive for at least 13 months and $5 million was for 
claims with dates of service after the dates of death of the referring 
physicians.  Certain Medicare claims may have been legitimately 
associated with UPINs that had been inactive for less than 13 months.  
However, claims with UPINs that had been inactive for over 13 months 
indicate that the UPINs were inactive on the date the rental began and, 
therefore, should not have been paid.  
Medicare allowed over $300,000 for medical equipment and supply 
claims with invalid referring physician NPIs in 2007.  Medicare-
allowed amounts for claims with invalid referring physician NPIs totaled 
$333,432.  This amount represented 313 invalid NPIs of the 475,535 NPIs 
submitted on claims in 2007.  All but two of these invalid NPIs followed 
the correct CMS format. 
RECOMMENDATIONS 
Prior to the full implementation of NPIs in May 2008, we analyzed 
Medicare medical equipment and supply claims from 2007 to determine 
whether CMS had addressed our earlier findings that Medicare paid 
claims with invalid or inactive UPINs, including UPINs belonging to 
deceased physicians.  Although the Medicare-allowed amount for claims 
with invalid or inactive UPINs that should not have been paid has 
declined since 1999, we found that Medicare continued to pay for claims 
with invalid or inactive UPINs.  Medicare allowed almost $34 million in 
2007 for claims with invalid or inactive UPINs, including $5 million for 
claims with deceased physicians UPINs.  We also found that Medicare 
allowed over $300,000 for claims with invalid referring physician NPIs. 
As CMS completes the transition from UPINs to NPIs, opportunities 
exist to address vulnerabilities highlighted in our earlier work and 
again in this study.  Based on our findings and discussions with CMS 
staff, we have concerns that invalid and inactive physician identifiers 
may continue to be a problem with NPIs.  Although CMS appears to be 
implementing system changes that will verify that NPIs are submitted 
in the correct format, it is unclear whether there will be controls to 
  OEI-04-08-00470  MEDICARE PAYMENTS FOR CLAIMS WITH INVALID OR INACTIVE REFERRING PHYSICIAN IDENTIFIERS  iii   
   
E  X E C U T I V E   S U M M A R Y  
 
identify NPIs that have not been assigned or that are inactive.  For this 
reason, we remain concerned that longstanding vulnerabilities, as well 
as new challenges, may affect the integrity of the NPI claims-processing 
system as it moves forward. 
To address these concerns, we recommend that CMS: 
Determine why Medicare claims with identifiers associated with deceased 
referring physicians continue to be paid. 
Implement claims-processing system changes to ensure that NPIs for 
both referring physicians and suppliers listed on medical equipment and 
supply claims are valid and active.   
Emphasize to suppliers the importance of using accurate NPIs for both 
referring physicians and suppliers when submitting Medicare claims. 
Determine the earliest date to end the provision that allows suppliers to 
submit claims without referring physician NPIs while maintaining 
beneficiary access to services.   
AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 
RESPONSE 
CMS concurred with our recommendations and stated that it has taken 
steps, incorporating the recommendations from this report, toward 
correcting the problems we identified.   
In addition, CMS provided general and technical comments on our 
draft report.  We have modified language in the report to address 
these comments as appropriate. 
  OEI-04-08-00470  MEDICARE PAYMENTS FOR CLAIMS WITH INVALID OR INACTIVE REFERRING PHYSICIAN IDENTIFIERS  iv   
 T A B L E   O F   C O N T E N T S  
 
EXECUTIVE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i
 
 
I N T RO DUC T IO N . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 
 
 
F I N D IN G S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 
  Medicare allowed over $6 million for claims with  
  invalid UPINs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 
   
  Medicare allowed almost $28 million for claims with  
  inactive UPINs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 
   
  Medicare allowed over $300,000 for claims with  
  invalid NPIs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 
 
 
R E C O MMEN D A T ION S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 
  Agency Comments and Office of Inspector General Response . . . . 9 
 
   
 
APPENDIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 
  Agency Comments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 
 
 
A C K NO WL E D G M E N T S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14   
   
 I N T R O D U C T I O N  
OBJECTIVE 
To determine the extent to which Medicare paid medical equipment and 
supply claims in 2007 submitted with (1) invalid or inactive unique 
physician identification numbers (UPIN) or (2) invalid referring 
physician national provider identifiers (NPI). 
BACKGROUND 
Medicare beneficiaries are eligible to receive medical equipment and 
supplies deemed medically necessary by a physician under Medicare 
Part B coverage.  In 2007, Medicare allowed almost $11 billion for 
medical equipment and supplies.  The Consolidated Omnibus Budget 
Reconciliation Act of 1985 required the Centers for Medicare & 
Medicaid Services (CMS) to establish UPINs for all physicians who 
provide services to Medicare beneficiaries.1  A physician was allowed to 
obtain only one UPIN, but a UPIN may have been associated with more 
than one practice setting (i.e., location where a physician provides 
services).  Until May 2008, CMS maintained a UPIN Registry 
containing information on all assigned UPINs. 
Medicare Claims Processing Using UPINs 
Providers of medical equipment and supplies obtain reimbursement for 
items that they provide to Medicare beneficiaries by submitting claims 
to the CMS contractors servicing their areas.  Billing suppliers 
identified themselves on claims using a provider identification number.  
Medicare instructions also required suppliers to provide the UPIN of the 
referring physician (i.e., the physician who ordered the equipment 
and/or supplies) on claims.2  Medicare payments for medical equipment 
and supplies are authorized only when the items are ordered by 
physicians and meet coverage requirements.  Therefore, claims with 
invalid or inactive UPINs should not be paid, and Medicare requires 
that they be returned to the supplier.3 4  We considered UPINs that had 
 
1 CMS also issued UPINs to doctors of osteopathy, limited licensed practitioners, and 
some nonphysician practitioners. 
2 CMS, Medicare Claims Processing Manual, Ch. 1  80.3.2.1.2, Rev. 1328.  Available 
online at http://www.cms.hhs.gov/manuals/downloads/clm104c01.pdf.  Accessed on August 
5, 2008.  
3 Ibid.  
4 Certain Medicare claims may have been legitimately associated with UPINs that had 
been inactive for less than 13 months.  However, claims with UPINs that had been inactive 
for over 13 months indicate that the UPINs were inactive on the date the rental began and, 
therefore, should not have been paid.  
  OEI-04-08-00470  MEDICARE PAYMENTS FOR CLAIMS WITH INVALID OR INACTIVE REFERRING PHYSICIAN IDENTIFIERS  1   
   
I N T R O D U C T I O N  
never been assigned by CMS to be invalid and UPINs associated only 
with inactive practice settings to be inactive.    
In 2001, the Office of Inspector General (OIG) reported that Medicare 
paid almost $91 million in 1999 for medical equipment and supply 
claims with invalid or inactive UPINs, including almost $8 million for 
claims with UPINs of deceased physicians.5  OIG recommended that 
CMS revise its claims-processing systems to ensure that UPINs listed 
on medical equipment and supply claims are valid and active.  In 
response to this recommendation, CMS issued two sets of instructions 
for system changes to its contractors to deny claims submitted with 
deceased physicians UPINs.  CMS also stated that it planned to 
implement changes to prevent payment of claims with invalid or 
inactive UPINs.  As of July 2008, CMS had not taken further action to 
address the issue of invalid and inactive UPINs.   
Medicare Claims Processing Using NPIs 
The Administrative Simplification provisions of the Health Insurance 
Portability and Accountability Act of 1996 required CMS to create NPIs 
to replace UPINs for Medicare claims processing.  Both physicians and 
suppliers must apply for and obtain NPIs from CMS.6  NPIs, as well as 
UPINs, are valuable program integrity safeguards.  Medicare relies on 
physicians and other health care providers to ensure that only medically 
necessary medical equipment and/or supplies are ordered.  When 
suppliers put UPINs or referring physicians NPIs on claims, they are 
indicating that physicians have verified the need for beneficiaries to 
obtain equipment and/or supplies.  In addition, UPINs and NPIs enable 
CMS to determine who prescribed the equipment and/or supplies as 
part of any postpayment reviews.  
From May 2005 to May 2008, Medicare accepted medical equipment and 
supply claims that included UPINs only, NPIs only, or a combination of 
both.7  As of May 23, 2008, suppliers are required to include their own 
NPIs in the primary provider field on claims and the referring 
 
5 OEI-03-01-00110, Medical Equipment and Supply Claims With Invalid or Inactive 
Physician Numbers. 
6 CMS launched an online NPI registry in September 2007.  See Data Dissemination 
for additional details.  Available online at 
http://www.cms.hhs.gov/NationalProvIdentStand/06a_DataDissemination.asp.  Accessed on 
August 12, 2008. 
7 CMS.  MLN Matters Bulletin, Number MM5595.  Available online at 
http://www.cms.hhs.gov/MLNMattersArticles/downloads/MM5595.pdf.  Accessed on   
August 7, 2008.  This bulletin states that Medicare will accept claims with legacy numbers 
only, NPIs only, or a combination.  UPINs are a subset of legacy numbers.  
  OEI-04-08-00470  MEDICARE PAYMENTS FOR CLAIMS WITH INVALID OR INACTIVE REFERRING PHYSICIAN IDENTIFIERS  2   
   
I N T R O D U C T I O N  
physicians NPIs in the secondary provider field.8 9  On the date when 
the requirement went into effect, CMS noted a large number of rejected 
claims because suppliers were not submitting referring physician 
NPIs.10  In response, CMS instituted a temporary provision that allows 
suppliers who, after reasonable effort, cannot obtain referring 
physicians NPIs to instead use their own NPIs in the secondary 
provider field.11  As of December 2008, CMS had not discontinued this 
provision. 
Related OIG Work 
In addition to issuing the 2001 report previously mentioned, OIG has 
issued several reports related to UPINs.  These reports address the 
accuracy of UPIN data as well as the use of invalid or inactive UPINs on 
claims for medical equipment and supplies. 
In a 1999 report, OIG included recommendations that the Health Care 
Financing Administration (now CMS) ensure that UPINs for inactive 
providers are deactivated.12  In a 2001 report, OIG recommended that 
CMS take steps to validate and update UPIN Registry data.13   
In 2002, OIG recommended that CMS perform a targeted review of 
medical equipment and supply claims ordered using surrogate UPINs 
(i.e., temporary, substitute UPINs).14  OIG also recommended that CMS 
continue to educate suppliers and physicians that accurate UPINs must 
be used on claims and that surrogate UPINs should not be used if the 
referring physicians had permanent UPINs.  Finally, in 2003, OIG 
issued a report including a recommendation for CMS to correct 
inaccurate and incomplete information in the UPIN Registry.15 
 
8 Overview:  National Provider Identifier Standard, p. 1.  Available online at 
http://www.cms.hhs.gov/NationalProvIdentStand/01_Overview.asp#TopOfPage.  Accessed 
on July 23, 2008.  
9 CMS Communications:  National Provider Identifier Standard, p. 1.  Available online 
at http://www.cms.hhs.gov/NationalProvIdentStand/02_WhatsNew.asp#TopOfPage.  
Accessed on July 23, 2008.   
10 Ibid. 
11 Ibid. 
12 OEI-07-98-00410, Accuracy of Unique Physician Identification Number Data. 
13 OEI-03-99-00131, Inaccuracies in the Unique Physician Identification Number 
Registry:  Incorrect Addresses for Mental Health Services Providers. 
14 OEI-03-01-00270, Durable Medical Equipment Ordered With Surrogate Physician 
Identification Numbers. 
15 OEI-03-01-00380, Accuracy of Unique Physician/Practitioner Identification Number 
Registry Data. 
  OEI-04-08-00470  MEDICARE PAYMENTS FOR CLAIMS WITH INVALID OR INACTIVE REFERRING PHYSICIAN IDENTIFIERS  3   
   
I N T R O D U C T I O N  
METHODOLOGY 
We determined the extent to which Medicare paid medical equipment 
and supply claims in 2007 submitted with invalid or inactive UPINs, 
including UPINs of deceased physicians, or invalid NPIs of referring 
physicians who ordered medical equipment and/or supplies for Medicare 
beneficiaries.  We did not determine the extent to which providers of 
medical equipment and supplies who received Medicare payments may 
have submitted claims with invalid or inactive provider identification 
numbers.    
Data Collection and Analysis 
We obtained a file containing 100 percent of 2007 medical equipment 
and supply claims from CMSs National Claims History File.  We also 
obtained a UPIN database extracted from the UPIN Registry.16  The 
UPIN database is composed of two files:  one file with UPINs associated 
with active practice settings in 2007 and another file with UPINs 
associated with inactive practice settings in 2007.  In addition, we spoke 
with CMS officials regarding NPIs and obtained the NPI directory from 
the CMS Web site on June 9, 2008. 
To identify claims with invalid or inactive UPINs, we first compared the 
files of UPINs associated with active and inactive practice settings 
contained in the CMS UPIN database.  We considered UPINs that were 
associated with at least one active practice setting to be active.  We 
considered UPINs associated only with inactive practice settings to be 
inactive.  This resulted in a list of active UPINs and a list of inactive 
UPINs for further comparison. 
We then compiled a list of UPINs appearing on the claims under review 
and compared them to the lists of active and inactive UPINs.  We 
considered all UPINs that appeared on the claims but not on either list 
of active or inactive UPINs to be invalid.   
We also compared the list of UPINs appearing on the claims under 
review to the list of inactive UPINs.  We considered all UPINs that 
appeared on claims on which the dates of service occurred after the most 
recent practice setting inactivation dates to be inactive. 
Once we identified claims with invalid or inactive UPINs, we 
determined whether they also had valid referring physician NPIs as 
 
16 According to CMS, the UPIN database was retired in June 2007 when CMS ceased 
issuing UPINs.  Although the UPIN files remain available, the information in the files has 
not changed since June 2007.   
  OEI-04-08-00470  MEDICARE PAYMENTS FOR CLAIMS WITH INVALID OR INACTIVE REFERRING PHYSICIAN IDENTIFIERS  4   
   
I N T R O D U C T I O N  
listed in the 2008 NPI directory.  We excluded all claims with 
invalid/inactive UPINs and valid referring physician NPIs from further 
analysis (this group included surrogate [i.e., temporary] UPINs).  From 
the remaining claims, we identified claims with invalid referring 
physician NPIs.   
To identify claims with invalid referring physician NPIs, we compiled a 
list of NPIs on the claims under review and compared them to the 2008 
NPI directory.  We considered all claims with NPIs that appeared on the 
claims but not in the directory to be invalid.  
We calculated the total allowed amounts for (1) claims with invalid 
UPINs (including those with no UPIN) and no referring physician NPIs, 
(2) claims with inactive UPINs and no referring physician NPIs, and  
(3) claims with invalid referring physician NPIs and invalid/inactive 
UPINs (including those with no UPIN). 
For claims with inactive UPINs and no referring physician NPIs, we 
also calculated the total allowed amount according to how long a UPIN 
had been inactive.  We determined how long a UPIN had been inactive 
by comparing the date of service on a claim to the most recent practice 
setting inactivation date, as listed in the UPIN database.  
In addition, we determined whether and/or when a referring physician 
had died using the file of inactive UPINs that we obtained from CMS.  
Next, we determined the total allowed amount for claims with inactive 
UPINs, no referring physician NPIs, and dates of service after the date 
of death of the referring physician.  
For claims with invalid referring physician NPIs, we also determined 
whether the NPIs followed the correct CMS format of 10 digits starting 
with a 1, 2, 3, or 4.   
Limitations 
We could not determine the extent to which claims with valid referring 
physician NPIs and dates of service after the death of the referring 
physician may have been paid.  The date of death information required 
to complete this analysis was not available at the time of our review. 
Standards 
This study was conducted in accordance with the Quality Standards for 
Inspections issued by the Presidents Council on Integrity and 
Efficiency and the Executive Council on Integrity and Efficiency. 
  OEI-04-08-00470  MEDICARE PAYMENTS FOR CLAIMS WITH INVALID OR INACTIVE REFERRING PHYSICIAN IDENTIFIERS  5   
   
F I N D I N G S  
 F I N D I N G S  
  
Medicare allowed over $6 million for medical  Medicare-allowed amounts for 
equipment and supply claims with invalid  claims with invalid referring 
physician UPINs totaled             
referring physician UPINs in 2007 
$6.1 million.17  This amount was 
associated with 4,428 invalid UPINs out of the 543,841 UPINs 
submitted on claims in 2007.  Of the invalid UPINs, 75 percent (3,335 of 
4,428) were associated with less than $1,000 each in Medicare-allowed 
amounts.  However, 10 of these 4,428 invalid UPINs were associated 
with more than $50,000 each in Medicare-allowed amounts, including 
three invalid UPINs that were associated with more than $100,000 
each.   
 
Medicare allowed almost $28 million for medical  Medicare-allowed amounts for 
equipment and supply claims with inactive  claims with inactive referring 
physician UPINs totaled        
referring physician UPINs in 2007 
$27.8 million.18  This amount was 
associated with almost 19,000 inactive UPINs out of the 543,841 UPINs 
submitted on claims in 2007.  Of the inactive UPINs, 94 percent  
(17,852 of 18,955) had been inactive for at least 13 months and 
accounted for a total of $24.8 million in Medicare-allowed amounts.19  
Thirty-five UPINs listed on medical equipment and supply claims had 
been inactive for more than 17 years each by the claims dates of 
service.20   
Certain Medicare claims may have been legitimately associated with 
UPINs that had been inactive for less than 13 months.  Suppliers may 
rent certain medical equipment, such as hospital beds, for as long as  
13 consecutive months to Medicare beneficiaries.21  A physician may 
 
17 The $6.1 million represents allowed amounts for claims with invalid UPINs and no 
referring physician NPIs. 
18 The $27.8 million represents allowed amounts for claims with inactive UPINs and no 
referring physician NPIs. 
19 There were a total of 18,962 inactive UPINs submitted on the claims under review, but 
there was insufficient information in the CMS UPIN directory to determine the length of 
time during which 7 of these UPINs had been inactive.  Therefore, we excluded these  
7 UPINs for a total of 18,955 inactive UPINs.  
20 No claim had a UPIN that had been inactive 18 years or longer.  
21 Deficit Reduction Act of 2005, S.1932  5101.  Available online at 
http://thomas.loc.gov/cgi-bin/query/F?c109:5:./temp/~c109ctUKD2:e104283.  Accessed on 
August 22, 2008. 
  OEI-04-08-00470  MEDICARE PAYMENTS FOR CLAIMS WITH INVALID OR INACTIVE REFERRING PHYSICIAN IDENTIFIERS  6   
   
F I N D I N G S  
have written a prescription for an item for 13 months and retired or 
died during the prescription period.  However, claims with UPINs that 
had been inactive for over 13 months indicate that the UPINs were 
inactive on the dates when the rentals began and, therefore, should not 
have been paid.   
Medicare allowed $5 million for claims with deceased physicians UPINs   
Of the $27.8 million that Medicare allowed for claims with inactive 
UPINs, $5 million was for claims with dates of service after the 
referring physicians dates of death.  The date of death information for 
these claims was contained in the CMS UPIN Registry.  However, CMS 
paid the claims with the deceased physicians UPINs.   
Table 1 shows timeframes for how long a physician had been deceased 
before the date of service and the allowed amount associated with each 
timeframe. 
 
TABLE 1 
Length of Time Physician Had Been  Allowed  Percentage of Total 
Deceased Before the Date of Service  Amount   Allowed Amount 
 
0 to 12 months  $870,465 
17.2% 
12 to 15 months  $368,715 
7.3% 
15 to 24 months  $1,223,630 
24.1% 
2 to 3 years  $1,293,517 
25.5% 
3 to 4 years  $714,381 
14.1% 
4 to 5 years  $225,661 
4.5% 
Over 5 years  $372,681 
7.4% 
        TOTAL  $5,069,050  100.1%* 
  * Total exceeds 100 percent because of rounding.
 
Medicare allowed over $300,000 for medical  Medicare-allowed amounts for 
claims with invalid referring 
equipment and supply claims with invalid 
physician NPIs totaled 
referring physician NPIs in 2007 
$333,432.22  This amount was 
associated with 313 invalid NPIs of the 475,535 NPIs submitted on 
claims in 2007.  All but two of the invalid NPIs followed the correct 
CMS format. 
 
22 The $333,432 represents claims with invalid referring physician NPIs and invalid or 
inactive UPINs. 
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 R E C O M M E N D A T I O N S  
 
UPINs and NPIs are valuable program integrity safeguards that 
indicate that physicians have verified the need for beneficiaries to 
obtain medical equipment and/or supplies.  In addition, they enable 
CMS to determine who prescribed the equipment and/or supplies as 
part of any postpayment reviews.   
Prior to the full implementation of NPIs in May 2008, we analyzed 
Medicare medical equipment and supply claims from 2007 to determine 
whether CMS had addressed our earlier findings that Medicare paid 
claims with invalid or inactive UPINs, including UPINs associated with 
deceased physicians.  Although the Medicare-allowed amount for claims 
with invalid or inactive UPINs that should not have been paid has 
declined since 1999, we found that Medicare continued to pay for claims 
with invalid or inactive UPINs.  Medicare allowed almost $34 million in 
2007 for claims with invalid or inactive UPINs, including $5 million for 
claims with deceased physicians UPINs.  We also found that Medicare 
allowed over $300,000 for claims with invalid referring physician NPIs. 
As CMS completes the transition from UPINs to NPIs, opportunities 
exist to address vulnerabilities highlighted in our earlier work and 
again in this study.  Based on our findings and discussions with CMS 
staff, we have concerns that invalid and inactive physician identifiers 
may continue to be a problem with NPIs.  Although CMS appears to be 
implementing system changes that will verify that NPIs are submitted 
in the correct format, it is unclear whether there will be controls to 
identify NPIs that have not been assigned or that are inactive.  For this 
reason, we remain concerned that longstanding vulnerabilities, as well 
as new challenges, may affect the integrity of the NPI claims-processing 
system as it moves forward. 
To address these concerns, we recommend that CMS: 
Determine Why Medicare Claims With Identifiers Associated With 
Deceased Referring Physicians Continue To Be Paid. 
Implement Claims-Processing System Changes To Ensure That NPIs for 
Both Referring Physicians and Suppliers Listed on Medical Equipment 
and Supply Claims Are Valid and Active.   
Emphasize to Suppliers the Importance of Using Accurate NPIs for Both 
Referring Physicians and Suppliers When Submitting Medicare Claims. 
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R E C O M M E N D A T I O N S  
Determine the Earliest Date To End the Provision That Allows Suppliers To 
Submit Claims Without Referring Physician NPIs While Maintaining 
Beneficiary Access to Services.   
In response to a large number of rejected Medicare claims that occurred 
after CMS required suppliers to replace UPINs with NPIs on claims, CMS 
instituted a temporary provision that allows suppliers to use their own 
NPIs in place of the referring physicians NPIs.  The provision became 
effective in June 2008, after the analysis review of this study.  However, 
this provision presents a claims-processing vulnerability similar to what 
we identified in 2007 with suppliers submitting claims with invalid or 
inactive UPINs.  
AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 
RESPONSE 
CMS concurred with our recommendations and stated that it has 
taken several steps, incorporating the recommendations from this 
report, toward correcting the problems we identified. 
CMS stated that it currently deactivates Medicare billing privileges of 
any provider that has not billed the Medicare program for  
12 consecutive months.  In addition, CMS stated that it has developed 
various procedures designed to ensure that the Medicare billing 
privileges of deceased physicians are promptly terminated.   
CMS also stated that it has developed procedures to reject claims if 
the referring physician is not enrolled in Medicare and is not of the 
specialization that can refer in the Medicare program.  Finally, CMS 
stated that it has conducted substantial outreach to the provider 
community and has instructed its contractors to perform outreach to 
medical societies and organizations, stressing the need for them to 
inform CMS contractors on the deaths of physicians participating in 
Medicare.  
However, CMS did not specifically address our recommendation that 
it determine the earliest date to end the provision that allows 
suppliers to submit claims without referring physician NPIs while 
maintaining beneficiary access to services.   
In addition to concurring with our recommendations, CMS provided 
general and technical comments on our draft report.  In its general 
comments, CMS recommended that OIG clarify that the UPINs at 
issue in our draft report were those used to identify referring 
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R E C O M M E N D A T I O N S  
physicians, not the suppliers who received the Medicare payments.  
We have incorporated additional clarifying language to address 
CMSs concerns.  
Finally, we have modified language in the report to address CMSs 
technical comments as appropriate.  The full text of CMSs comments 
is provided in the Appendix.
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 A P P E N D I X    
Agency Comments 
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A P P E N D I X    
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A P P E N D I X    
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 A C K N O W L E D G M E N T S  
 
This report was prepared under the direction of Dwayne F. Grant, 
Regional Inspector General for Evaluation and Inspections in the 
Atlanta regional office. 
Mary-Elizabeth Harmon served as the team leader for this study.  
Other principal Office of Evaluation and Inspections staff from the 
Atlanta regional office who contributed to the report include Gerius 
Patterson; central office staff who contributed include Eddie Baker, Jr., 
David Graf, and Rita Wurm.  Robert A. Vito from the Philadelphia 
regional office also contributed.  
 
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