Department of Health and Human Servces

OFFICE OF

INSPECTOR GENERA

LOW-COST ULTRASOUND EQUIPMENT

$9vr 
Richard P. Kusserow 
INSPECfOR GENERA 
rr 
OEI-03  1401  EXECUTIVE  SUMMAR 

PUROSE 
This report reviews the appropriateness of Medicare reimbursements for tests 
conducted with low-cost ultrasound equipment. 
BACKGROUN 
Diagnostic ultrasound tests are covered servces under Part B of the Medicare 
program. Medicare law prescribes certain coverage criteria for ultrasound tests. 
Primarily, a test must be "reasonable and necessary" for the diagnosis or treatment of 
a beneficiary s ilness or injury. In addition, the test must be conducted or ordered 
by a physician or performed under the physician s general supervsion. 
Used chiefly as a diagnostic technique, ultrasound is used in lieu of high-
risk invasive 
procedures to detect internal diseases and abnormalities. A wide range of 
specialties, such as cardiology, gyecology, and vascular surgery, use ultrasound as a 
diagnostic tool. Ultrasound devices send soundwaves into the body producing echoes 
as they encounter differences in tissue structures. The data produced by the echoes 
can be transmitted into an image which can be recorded in color 
as well as black 
and white. 
Low-cost ultrasound equipment has gained more prominence in the medical 
marketplace in the past 20 
years. Our recent report on noninvasive, diagnostic 
testing (Quality Assurance in Independent Physiological Laboratories, OAI-03-88-
01400), identified a number of concerns regarding this equipment. Primariy, these 
concerns center on the lack of regulation and oversight of these kinds of medical 
equipment devices. 
MEODOLOY 
We obtained information about the capabilties of ultrasound equipment from a 
variety of sources including medical diagnosticians, manufacturers, and technical 
publications. We reviewed data concerning specific ultrasound servces and 
corresponding procedure codes from Medicare Part B payment records.  MAOR FIINGS

A Varity of Ulasoun Eqpment Exts 
An extensive array of ultrasound equipment, exists in the medical marketplace. 
Equipment ranges from small, hand-held devices, popularly known as "Pocket 
Dopplers " to complex equipment which can perform a variety of tests. Costs range 
from $200 for a Pocket Doppler to more than $300 000 for state-of-the-art 
equipment. 
Res 
Cod  Ditiguh 
Medicare  Fail to  Between Test Type or 
Medicare procedure codes do not differentiate between the extent of a test or the 
nature of test results. 
Exese 
Thre are Strng Incenties for  Use of Pocket Dopple 
A 5-minute scan by a $300 Pocket Doppler can yield a payment of over $100. Thus 
excessive payments can be claimed for a relatively simple screening test based on a 
comparatively modest investment. 
HCF A is Vulble to Inapproprite Bilgs 
Th 
Medicare carrers lack sufficient safeguards to detect ultrasound bilings based on 
inferior test results.

Payt 
A Precednt Exts to Deny  for Pocket Doppler Tests 
In a previous decision regarding small diagnostic equipment, HCF A ruled 
that a 
portable hand-held x-ray instruent - a device comparable to the Pocket Doppler 
should be reimbursed as part of the physician s professional servce, and no 
additional charge should be allowed. 
RECOMMATIONS 
The HCFA should (1) prohibit payment for tests conducted with Pocket Dopplers 
and (2) advocate revisions in procedure codes and reimbursement rates to reflect the 
different levels of sophistication and quality of diagnostic information provided in 
ultrasonic vascular testing.  COMM 
OIG REPONSE 
and 
The RCF A concurred with our recommendation to prohibit payment for tests 
conducted with Pocket Dopplers. In the future, such tests will be paid as part of the 
physician s professional servce, and no additional charge will be allowed. 
The RCF A disagreed with our recommendation to revise procedure codes and 
reimbursement rates to reflect the different levels of sophistication and qualty 
provided in ultrasound tests. They indicated they may base payments on lithe level 
of treatment delivery, " rather than acquisition costs. 
Our report recommends that payment be based on different 
levels of sophistication 
and diagnostic quality, not equipment acquisition costs. If we interpret HCF A' 
response correctly to mean that the codes should encompass the nature and the 
quality of diagnostic testing, we believe our recommendation mirrors HCF A' 
intentions to base payments on "the level of treatment delivery. 
We contiue to believe that RCFA should advocate revisions in procedure codes 
reflecting the various levels of sophistication and quality of diagnostic information 
provided in ultrasound tests. This effort, combined with adjusted reimbursement 
rates, should result in more equitable reimbursement for these tests. We have 
modified our recommendation to give RCF A greater flexibility in achieving this 
result. 
We understand RCF A has encouraged procedure code revisions in vascular tests 
during recent contacts with the American Medical Association s editorial board. 
We support such efforts and encourage continued attempts until appropriate changes 
have been implemented.

We recently issued a Management Advisory Report 
quantifyg Medicare 
reimbursements and potential savings on Pocket Dopplers. We also plan to issue a 
related second report providing RCF A with information on "Zero-Crossing" devices 
ultrasound equipment similar to Pocket Dopplers.  . . . . . ..  ..  ..  ..  ..  ...   ...   ...   ...   ...   ...   ...   ...   ...   ...   ...   ...   ...   ...   ...   ...   ...   ...   ...   ...   ...   ...   ...   ...   ...   ..  ..  ..  ..  ..  . . . . . . . . .. .
TABLE OF CONTENTS

EXECUTIV SUMMAY 
INODUCfrON 
. . . . . . . . . . . 1

FINDINGS 
. . . . . . . . . . . . . . . . 3

RECOMMENDATIONS 
APPENDIX A: CPT Definitions of Procedure Codes  . . . . . . . . . . . . . . . .. . A
APPENDIX B: Comments  ..................................... B
 INTRODUCTION

PUROSE 
This report reviews the appropriateness of Medicare reimbursements for tests 
conducted with low-cost ultrasound equipment. 
BACKGROUN 
Diagnostic ultrasound tests are covered servces under Part B of the Medicare 
program. The Health Care Financing Administration (RCFA) has issued 
gudelines
in Medicare Carrers Manual Section 50-7 which states: "The use of the ultrasound 
technique is sufficiently developed that it can be considered essential to good patient 
care in diagnosing a wide variety of conditions. 
Under Medicare law, diagnostic tests, such as ultrasound, must meet certain coverage
criteria. Priariy, a test must be "reasonable and necessary" for the diagnosis or 
treatment of a beneficiary s ilness or injury. Further, the test must be conducted or 
ordered by a physician or performed under the physician s personal supervsion. 
Typically, ultrasound tests are conducted in a physician  , independent 
s office
laboratory, or outpatient hospital facilty. 
The RCF A requires Medicare carriers to apply safeguards against unnecessary 
utilization of servces furnished by 
physicians and other providers of servces. 
Carriers conduct prepayment and postpayment reviews designed to detect 
inappropriate, noncovered, or excessive servces. Measures used to correct abuses 
include overpayment recoveries and remedial counseling. 
Ultrasound is one of the most important developments in medical science in the last 
40 years. Primarily used as a diagnostic technique, ultrasound is used in lieu of high-
risk invasive procedures to detect internal 
diseases and abnormalities. 
A wide range of specialties, such as cardiology, gyecology, and vascular surgery, use 
ultrasound as a diagnostic tool. Ultrasound devices send high-frequency soundwaves 
into the body producing echoes as they encounter differences in tissue structures. 
The data produced by the echoes can be transmitted into an image which can be 
recorded in color as well as black and white. Typically, the tests are conducted by 
specially trained individuals known as ultrasonographers or, more commonly, 
sonographers. 
Ultrasound equipment has evolved into different levels of technological sophistication 
with corresponding price ranges. In particular, low-cost ultrasound equipment has 
gained more prominence in the medical marketplace in the past 20 years. Our 
recent report on noninvasive, diagnostic testing (Quality Assurance in Independent  Physiological Laboratories, OAI-03-88-01400), identified a number of concerns 
regarding this equipment. Primarily, these concerns center on the lack of regulation 
and oversight of these kinds of medical equipment devices. 
The Food and Drug Administration (FDA) has never established performance 
standards for any medical devices, including low-cost ultrasound equipment. 
accordance with the 1976 amendments to the Federal Food, Drug, and Cosmetics 
Act, FDA clears a new device for marketing if it has the same intended use or is 
substantially equivalent to a preenactment device. Low-cost ultrasound equipment 
met this requirement. However, even though performance standards have not been 
developed, FDA uses its own draft guidance instructions to manufacturers and 
voluntary standards to evaluate the performance of ultrasound 
devices. 
A comparison of 1987 and 1988 Medicare payment records reveals a marked 
increase in diagnostic ultrasound tests. Allowed charges for abdominal ultrasound 
tests reflect a 14 percent increase from 1987 to 1988. Five commonly performed 
ultrasound tests related to vascular diseases increased by approxiately 25 percent 
from 1987 to 1988. Allowed amounts for the 5 tests exceeded $97 millon, an 
increase of more than 34 percent. 
METIODOLOGY 
We obtained information about the capabilties of ultrasound equipment from a 
variety of sources. These sources included medical diagnosticians, equipment 
manufacturers, equipment evaluation organizations, and physiological laboratories. 
We selected respondents based on recommendations provided by experts in 
physiological testing. Our analysis focused on information presented in technical 
journals and periodicals on the performance 
characteristics of different levels of 
ultrasound devices. We studied materials obtained from equipment manufacturers 
which detailed technical specifications and principles of operation for their 
equipment. We contacted 15 Medicare carrers to determine if they had any special 
policies regarding tests conducted with Pocket Dopplers.  , independent 
In addition
diagnostic centers and hospital physiological laboratories sent us internal manuals 
describing step-by-step applications of ultrasound instrumentation in various tests. 
We also solicited and reviewed publications and materials submitted by industry 
associations. 
We obtained pertinent statistical information concerning ultrasound servces and 
corresponding procedure codes from HCF A's Part B payment data system.  FINDINGS

VAR  EXI 
ULTROUN EQUIME 
OF 
An extensive array of ultrasound equipment :exists in the medical marketplace. The 
gamut of equipment extends from small, hand- , popularly know as 
held devices
Pocket Dopplers " to complex, state-of-the-art equipment which can perform a 
variety of intricate tests. Equipment costs range from $200 for a Pocket Doppler to 
more than $300 000 for state-of-the-art equipment. 
The Pocket Doppler is a relatively unsophisticated and inexpensive instrument to 
operate. A hand-held device, often shaped like a ballpoint pen, the tyical Pocket 
Doppler works on a rechargeable 9-volt battery. It transmits a high frequency 
soundwave into the tissues. Soundwaves reflected from internal organs or the flow 
of blood shift in frequency by an amount proportional to blood flow velocity. The 
reflected sound is received and processed as an audible signal or recordable 
waveform. Typically, the Pocket Doppler is nondirectional (Le., it is incapable of 
determining the direction of blood flow), and produces audio signals only. These 
devices are marketed as ultrasound equipment and generally cost between $200 -
$600. 
The two principal methods of documenting test results are analog waveform analysis 
and spectral waveform analysis. Analog waveform 
ana1ysis provides a single 
frequency display of the soundwave whereas spectral analysis records multiple 
quantitative frequencies. The less costly analog system has been likened to recording 
the average speed of all the cars on a highway while the spectral device records the 
individual speed of each car. 
Manufacturers market Pocket Dopplers to many 
specialties for a variety of uses. 
Since it is designed primarily to detect a pulse or the flow of blood, its pricipal uses 
are in obstetrics and vascular diseases. Obstetricians use Pocket Dopplers to detect 
and monitor fetal heartbeats. Vascular surgeons and other practitioners, who treat 
diseases of the veins and arteries, employ these instruments to determine 
abnormalities in blood flow. Other specialties who frequently use Pocket Dopplers 
include internists, anesthesiologists, and podiatrists. They are also used in special 
situations, such as at the scene of an accident, in an emergency room, and as an 
adjunct to more complex ultrasound equipment.  Oinicians who want to use a device more sophisticated than the Pocket Doppler, but 
stil relatively inexpensive, have a variety of equipment to consider. Typically, these 
devices are bidirectional (capable of determining the direction of blood 
flow), and 
produce objective evidence such as a strip-chart record or graph. Some tyes come

with interchangeable probes and optional accessories depending on the depth and 
sensitivity of the tissues examined. Generally, devices in this category cost between 
$600 - $5 000. 
Diagnostic ultrasound tests are usually conducted using "mid-level" equipment. This 
equipment costs from $15 000 to $60 000 and offers a wide range of sophisticated 
options, such as remote control, selectable frequency ranges, and video spectru
analysis of blood flow measurements. More expensive equipment offers two-
dimensional displays, computerized analysis, and color-flow imaging. Devices 
equipped with color-flow imaging produce video pictures of blood flow velocities in 
combinations of red, blue, and green. Changes in the intensity of color and blood 
flow velocity can indicate an irregularity, such as 
a blockage. 
State-of-the-art equipment may exceed $300 000 depending on the manufacturer, the 
technological sophistication of the device, and the number of options available. 
Although stil in the experimental stage, some devices are capable of producing 
three-dimensional pictures of clogged arteries and cross-section images of damaged 
blood vessels. 
TE 
MEDICAR CODES FAl TO DISTIGUISH BETWEN 
TYES 
REULTS 
Medicare reimbursements for diagnostic ultrasound tests are linked to a procedure 
code system known as the Health Care Financing Administration Common Procedure 
Coding System (HCPCS). Under HCPCS, physician servces are reported as five-
digit codes defied in the American Medical Association  Cu"ent Procedural 
(CPT). The physician or diagnostic laboratory conducting a test requests 
Terminology 
payment by submitting a claim form to the servcing Medicare 
carrier indicating the 
appropriate HCPCS code. 
Under the HCPCS system, however, there is no differentiation between the extent of 
the test or the nature of test results. Thus, reimbursement for any particular 
ultrasound test is paid at the same rate without regard to the extensiveness of the 
test or the quality of the data produced. For example, procedure code 93910 
(noninvasive studies of the lower limbs), cites five possible elements of this test. 
(See Appendix A for CPT definitions of procedure codes used in ultrasound tests. 
If a practitioner perfonns anyone of the elements, he is legitimately entitled to claim 
the same reimbursement level as someone who conducts an exhaustive test producing 
more sophisticated results. "The codes do not distinguish the differences in testing, 
one expert said.  The chart below compares the claims processing results of the same test conducted 
with different levels of equipment and  , dissimilar levels of 
yielding, as a result
diagnostic evidence.

VASCULR TEST OF LOWER LIMBS 
Type of  Pocket Doppler  Automated imaging 
Equipment  system with 2
dimensional and 
color doppler

capabilty 
Price of  $200-$600  $60 000 - $100 000 
Equipment 
Data Analysis  Computer-enhanced 
Audio Signals Only 
tion 
high -res 01 u 
color image of 
blood flow 
anatomical parts 
and pathology 
1 Artery 
Exten t of  Multiple Arteries 
Test 
Length of  5 - 10 minutes  45 - 60 minutes 
Test 
HCPCS Code  93910  93910 
Average  $135  $135 
Charge 
Average 
$97  $97 
Allowance  , "
There are Strong Incenties for Excessive Use of Pocket Dopplers 
As the chart above indicates, a 5-minute scan by a Pocket Doppler results in the 
same reimbursement as a I-hour scrutiny of multiple arteries using sophisticated 
state-of-the-art equipment costing $100 000. As a result, excessive payments can be 
claimed for a relatively simple screening test based on a comparatively modest 
investment. 
One intervewee who had attended a demonstration of Pocket Dopplers given by a 
manufacturer described the event as  reimbursement sellng. " The manufacturer, he
noted, continually stressed the financial benefits the device would bring in relation to 
the time and expertise required to operate it. Another manufacturer routinely 
included procedure code descriptions and corresponding payment ranges in its sales 
brochures. 
The RCF A is Vulerable to Inappropriate Bilgs 
Medicare carrers do not have suffcient 
systemic and utilzation safeguards to detect 
ultrasound billngs based on unsophisticated or inferior test results. However 
although RCF A does not require carriers to determine the tye of equipment used 
to perform vascular tests, some carrers have initiated efforts to ascertain this 
information. Most carrers do not have the means or the resources to capture this 
information or to investigate each claim. 
In an attempt to quantify the extent of Medicare billngs 
involving low-cost 
equipment, we obtained sales figures from equipment manufacturers. According to 
these sources, at least 100 000 Pocket Doppler units are in active use in the medical 
community. Approximately 20 000 new units were sold in 1990. The most frequent 
purchasers include hospitals, obstetricians, vascular specialists, and podiatrists. We
have released a Management Advisory Report quantifyng the monetary 
effects of 
prohibiting distinct coverage for Pocket Dopplers. 
A Precedent Exts to Deny Payment for Pocket Doppler Tests 
The HCF A previously established a precedent regarding the coverage of small 
diagnostic instruments. Medicare Carriers Manual section 50-48 (Coverage Issues 
Diagnostic Servces) details the usage of a portable hand-held x-ray instrument
, a 
device we consider comparable to the Pocket Doppler. This section states: "The 
use of the portable hand-held x-ray instrument as an imaging device is covered under 
Medicare. It should be reimbursed as part of the physician s professional servce 
and no additional charge should be allowed.  Some carrers have taken action to prevent inappropriate payments. Eight of the 
carriers we contacted deny payment for ultra50und tests if they know Pocket 
Dopplers were used to conduct the tests. Some carriers, through prior utilization 
contacts, have compiled lists of the kinds of equipment providers use in their servce 
areas. One carrier utilization 
review representative contacts providers during claims 
processing if there is any question concerning the tye of equipment used: 
Several carrers have instituted wrtten policy changes designed to curb unwarranted 
reimbursements. A written policy implemented by Blue Shield of Alabama was 
tyical of carrers which decided to deny payment for Pocket Doppler usage. The 
policy states: "No reimbursement is allowed for a simple hand-
held doppler device 
as this is considered to be a part of the physical examination of the vascular system. 
Pennsylvania Blue Shield implemented a policy change effective March 1 
, 1990 
preventing payment for Pocket Dopplers. For vascular tests to be reimbursable, the 
policy requires that equipment: (1) must produce a hard-copy report for objective 
determg 
review, and (2) must be bidirectional or capable of  blood flow diecton. 
The carrer plans to conduct postpayment reviews to monitor adherence 
to its policy. 
Four carrier representatives stated that Pocket Doppler examinations should be 
considered part of the office visit. "  s just an extension of the doctor s servce " one 
medical director said. Another representative compared the Pocket Doppler to a 
mechanical device used by a chiropractor. "Medicare only pays a chiropractor if he 
uses his hands to do a manual manipulation. There is no extra payment if he uses 
a mechanical device.  RECOMMENDA TIONS

The HCFA should 
prohibit payment for tests conducted with Pocket Dopplers, and 
advocate revisions in procedure codes and reimbursement rates 
to reflect 
the different levels of sophistication and quality of diagnostic information 
provided in ultrasonic vascular testing. 
SUMY OF RECOMMATIONS AN AGENCY COMM 
The HCFA concurred with our recommendation to prohibit coverage for tests
conducted with Pocket Dopplers. They 
plan to issue a claims manual instruction 
treating Pocket Doppler tests in a manner similar to portable hand-
held x-ray 
instruments (Medicare Claims Manual section 50- , Coverage Issues - Diagnostic 
Servces ). 
The HCFA disagreed with our recommendation to revise procedure codes and 
payment rates to reflect different levels of sophistication and diagnostic quality 
provided in ultrasound tests. According to HCF A, it is not a good idea to base
payments totally on equipment acquisition costs. Instead, HCF A, which compared
vascular testing to radiation therapy servces, intends to base payments on "the level 
of treatment delivery. 
Our report recommends that payment be based on different 
levels of sophistication 
and diagnostic quality, not equipment acquisition costs. We believe our 
recommendation--if we interpret HCF A's response correctly to mean that the codes 
should encompass the nature and the quality of diagnostic testing--mirrors HCFA' 
intentions to base payments on "the level of treatment delivery. 
We continue to believe that HCFA should advocate revisions in procedure codes 
reflecting the various levels of sophistication and quality of diagnostic information 
provided in ultrasound tests. This effort, combined with adjusted reimbursement 
rates, would result in a more equitable reimbursement 
system for these tests. 
have modified our recommendation to give HCF A greater flexibility in achieving this 
result. 
We understand HCFA has encouraged procedure code 
revisions in vascular tests 
during recent contacts with the American Medical Association s editorial board. 
We support such efforts and encourage continued attempts until appropriate 
changes 
have been implemented.
 The Assistant Secretary for Management and Budget provided 
comments supporting 
our findings and recommendations. The full: text of these comments, as well as 
HCF A' s comments, are contained in Appendix B. 
In addition to the Management Advisory Report on Pocket Dopplers, we wi soon 
issue a related second report providing HCF A with information regarding "zero
crossing" devices--ultrasound equipment similar to Pocket Dopplers.  APPENDIX

CP DEFIONS OF PROCEUR CODES USED IN ULTROUN TETS 
(Note: Pocket Dopplers. are capable of performing only those elements shown in 
boldface. ) 
Stu 
Arer 
Cerebrovascu 
93850  Non-invasive studies of cerebral arteries other than carotid (e. 
periorbital flow direction with arterial compression, periorbital 
photoplethysmography with arterial compression, ocular plethysmography 
with brachial blood pressure, ocular and ear pulse wave timing, vertebral 
arteries flow direction measurement) 
93860  Non-invasive studies of carotid arteries, non-imaging (e. 
patt 
phonoangiography with or without spectrum analysis, flow velocty 
evuation, analog velocty wave form analyis diastolic flow evuation) 
93870  Non-invasive studies of carotid arteries, imaging (e.  , flow imaging by 
ultrasonic arteriography, high resolution B-scan with or without pulsed 
Doppler flow evaluation, Doppler flow or duplex scan with spectrum 
analysis) 
Stu 
Lim Areril 
93890  Non-invasive studies of upper extremity arteries (e.  , segmental blood 
pressure measurements, contiuous wave Doppler analog wave form
analis 
evocative pressure response to exercise or reactive hyperemia, 
photoplethysmographic or pulse volume digit wave form analysis, flow 
velocty signal) 
93910  Non-invasive studies of lower extremity arteries (e.g., segmental blood 
pressure measurements, contiuous wave Doppler analog wave form
analis 
evocative pressure response to exercise or reactive hyperemia 
photoplethysmography or pulse volume digit wave form analysis, flow 
velocity signal) 
Stu 
Venous 
93950  Non-invaive studies of extemity vein (e.  , Doppler studies with 
evuation of venous flow patterns and responses to compression and 
other maneuvers, phleborheogrphy, impedace plethysmography)  93960  Quantitative venous flow studies (e.  , capacitance and outflow 
measurement of calf, measurement of calf venous reflux, quantitative 
photoplethysmography) 
Dign Uloun 
Othe  Tes Commnl Perorm 
76805
 Echography, pregnant uterus, B-scan and/or real time with image 
documentation; complete (complete fetal and maternal evaluation) 
76815
 Limited (gestational age, hear beat, placental location, fetal position, or 
emergency in delivery room) 
76816
 Follow-up or repeat (see 76815)

76830
 Echography, transvaginal 
76855
 Echogrphy, pelvc area (Doppler) 
76870
 Echography, scrotum and contents 
76925
 Echography, periphera vascular sytem (e.g., B-sca Doppler or real-
tie sca)

76926
 Echography, head and trunk, vascular system (e.  , duplex Doppler) 
A  APPENDIX 

COMMNT  , . 

.? ....  , -
r.u 
DmAS  HealthA Cadr.m 

DEPARTMENTOFHEALTH&.HUMANSERVJI  a =k 
't 
;8ndurr 
C1(L  BE '-
Date 
Administrator  DATE  c :

Care Financing Administration

Heal th 
;:rom 
OIG Draft Report: LoW-Cost Ultrasound Equipment, 
-;1
OEI-03-88-01401 
Subject 
The Inspector General  ""1 
Office of the Secretary

Thank you for the opportunity to comment on the above

referenced draft report discussing the appropriateness of
Medicare payment for certain types of ultrasound
equipment. 
We concur with the recommendation that HCFA should

prohibit payment for tests conducted with Pocket Dopplers
under the Medicare program. 
We recently presented this 
issue to our Coverage/Payment Technical Advisory Group

and the members advised us that Pocket Dopplers are part
I s 
of the physician  armamentarium and, like ordinary 
stethoscopes, should not qualify for separate payment

under the program. 
Accordingly, we are preparing a 
manual instruction that will limit Medicare payment for
tests conducted with the Pocket Doppler in a manner

similar to the way in which we limi tea payment for

portable hand-held x-ray units in section 50-48 of the

Coverage Issues Manual: They will be paid for as part of

the physician s professional service with no additional

charge allowed. 
We disagree with the recommendation that 
HCFA revise

procedure codes and payment rates to reflect the

different levels of sophistication and 
quality of
diagnostic information provided in ultrasound tests. 
far as the hand-held devices are concerned, we do not
believe that revised procedure codes or payment levels
are needed, since such procedures should 
be payable
through visit or other physicians I service codes, and

ul trasound codes should never be billed. 
should make clear that the codes for ultrasHooweuver,n  d 
procedures do not apply to the hand-held device. 
wi th respect to the mid-level and upper-level equipment,
it is not clear that any action is needed. 
Further, we
do not believe it is a good idea to base payments totally

on the acquisition costs of the equipment used in
providing the service. We are facing a similar problem

with regard to radiation therapy services furnished in 
ambulatory settings. In such situations, the state-of-
 Page 2 - The Inspector General

the-art equipment can deliver treatments at all levels,
and we intend to base payments at the level of treatment

deliver
! ra  he acquisition cos s of the
equipment.  her than 
Since your office is completing a follow-up study to

determine the extent to which carriers are paying doctors

for ultrasound tests conducted with Pocket Dopplers, we

request that you defer a determination of potential

savings until that study is completed. 
Attached are additional comments on technical aspects of

this report. 
Please advise us whether you . 
agree with our
position on the report' 
s recommendations at your earliest
convenience. 
::nsky, 
Gail R 
Ph. D. 
Attachment  Care Financina Administrion 
Heal th 
Comments on Office of the Ins  or General

Draft Re ort - "Lo , Cos  Ultrasound
EauiDment" (OEI-03-88-01401) 
Procedure Codes

In specifying which Common Procedural Terminology (CPT

codes met the definition of "radiology services" for purposes

of payment under the fee schedules for radiologist services,
42 CFR 40S. 530(c) (1) included those ultrasound services in the

CPT-4 70000 series and excluded those in th 
90000 series.

The American College of Radiology has indicated 
that, for the

subgroup of procedures classified as ultrasound procedures,

the relative value scale it developed for pUrposes of payment

under the fee schedules for radiologist services reduced the

values assigned to ultrasound procedures by 2 percent. This
reduction affected procedures furnished by fee schedule

physicians on or after April 1, 1989.

Effective for services furnished on or after April 
1, 1990,

the prevailing charges for CPT-4 codes 76925 and 76426 were

limi ted 
by the radiologist fee schedule amounts in those 
localities in which carriers recognized specialty

differentials. Furter, 
section 4102 (c) of the Omnibus Budget
Reconciliation Act 
(OBRA) of 1990 establishes the radiologist 
fee schedule amounts in individual localities as limits

, on
prevailing charges for all 70000 series procedures, including

ul trasound 
procedures , effective for services furnished on or 
after January 1, 1991.

As is the case with nearly all diagnostic procedures,

'11 trasound procedures have both a professional and a technical 
component. If the second recommendation relates only to the

equipment costs of mid-level and upper-level equipment, we

believe that the recommendation should specify that it applies

only to the technical component of ultrasound procedures. 
this regard, we would point out that section 4108 of OBRA 
1990 
provides that the reasonable charge for the technical

component of certain high-volume diagnostic tests (including
the applicable portion of the global service) may not exceed

the national median of such charges for all localities.

Reasonable charge allowances below the national median are not

raised to the national median level. 
CPT-4 procedure codes

93850, 93860, 93870 , 93910, and 93950 are subject to this

limitation effective for services furnished on or after

January 1, 1991.  Page 2

As far as radiologist fee schedule payments are 
concerned, we

have seen no evidence to indicate that technical component
paymant levels for ultrasound procedures are out of line. For
eoxfa mpleO, .c ode 76855 has a technical component relative value

Using the 1990 weighted average conversion 
4.  factor of
$13. 20, the fee sched1ul2e . amount for the technical component
the procedure is $54.  This amount would be payable
regardless of the type of ultrasound equipment used to furnish 
the service and would seem to pale in compari 
on with 
technical component payments of $200 for 
computerized Axial

Tomography 
(CT) procedures and over $400 for Magnetic
Resonance Imaging (MRI) procedures. 
Billinas for Pocket DooDlers

It is not possible to determine the extent 
of billings for the

use of Pocket Dopplers from existing Medicare Part B Service
Data System (BMD) data. Billings can be determined by place

of service, but canot 
be used to determine what device was 
used to perform the diagnostic test. The information 
presented in the report that the largest provider of
ambulatory ultrasound services in the country estimated that
10-20 percent of in-office ultrasound tests were conducted

with Pocket Dopplers is also not very helpful.  estimate
OIG' s 
of $18 million in Medicare expenditures 
furter  for the use of Pocket

Dopplers needs  study and refinement.  -(

/ ........'  /'  -.=- =- 
"-  :,_,-,.. . =-: . -
n. 3 
(!Lr"..tA..
the Secetay
DEPARTMENT OF HEALTH &. HUMAN SERVICES  SRd  Offce of 
Washington. D. C. 20201 
JAN 2 8 1991 
C' ::

G) il'
;T 0 CJ 
Richa 
usserow 
MEMORADUM TO:  neral r - ;VgIm c:
Insp 
(" C7

K V n E.

FROM  Assistant  Bud 
ecretary for Management of 
OIG Draft Report: II Low-Cost Ultrasound
SUBJECT 
Equipment II  OIL/o/ 
03- i7 -
I have reviewed the OIG draft inspectioenn trheupsoirats teinctailtlyle d

IILow-cost Ultrasound Equipmentll and I 
support the report findings and recommendations.

I would hope that HCFA would take action as soon as feasible

to implement the report recommendations and prohibit payment

Addi tionally, HCFA
for tests conducted with pocket Dopplers. 

should begin to revise current procedure codes and

reimbursement rates to reflect the varying levels of the

used.
ultrasound devices being 

I commend the Office of the Inspector General on their

area. 
excellent work in this 
18-
:2:JIG 
IJ: 
1-;. 
C:' 
/IG OFFCE OF INSPECTOR GENRA

The mission of the Offce 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 Servce 
(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 three OIG operating components: the Offce of Audit 
Servces, the Offce of Investigations, and the Offce of Evaluation and Inpections. The 
OIG also informs the Secretary of HHS of program and management 
problems and 
recommends courses to correct them. 
OFFICE OF AUDIT SERVICE 
The OIG's Office of Audit Servces (OAS) provides all auditing servces 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 
carrng out their respective responsibilities and are intended to provide independent 
assessments of HHS programs and operations in order to reduce waste, abuse, and 
mismanagement and to promote economy and efficiency throughout the Department. 
OFFICE OF INTIGATIONS 
The OIG's Offce of Investigations (01) conducts criminal, civi, and administrative 
investigations of allegations of wrongdoing in HHS programs or to HHS beneficiaries and of 
unjust enrichment by providers. The 
investigative efforts of 01 lead to criminal convictions 
administrative sanctions, or civil money penalties. The 01 also oversees State Medicaid fraud 
control units which investigate and prosecute fraud and patient abuse in the Medicaid 
program. 
AN 
OFFICE OF EVALUATION  INSPECTONS 
The OIG's Offce of Evaluation and Inspections (OEI) conducts short-term management and 
program evaluations (called inspections) that focus on issues of concern to the Department 
the Congress, and the public. The findings and recommendations contained in these 
inspection reports generate rapid, accurate, and up-to-date information on the effciency, 
vulnerability, and effectiveness of departmental programs. 
The report was prepared by the Philadelphia Regional offce under the direction of 
Joy Quil, Regional Inspector General and Robert Vito, Deputy Regional Inspector General. 
Project Staff: 
Robert A Katz  Project Leader 
Linda M. Ragone 
Cynthia R. Hansford 
W. Mark Krushat (Headquarters)
Wayne Powell (Headquarters)