' -  . - -
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PHYSICIAN

MEDICARE 
CONSULTATION SERVICES

SUI.V'Cl 
+r 
;(t"IIO
t . 
OFFICE OF INSPECTOR GENERAL
INSPECTIONS 
AN 
OFFICE OF ANALYSIS 
JUNE 1988 
. . .--0_
 . - '.-'  -- . "
OFFICE OF INSPECTOR GENERAL

effec-
Gener (OIG) is to promote the efficiency, 
The mission of the Officep orfo Ingspre citno rthe Unite States Deparnt of Health and 
tiveness and integ(rftSy o)f.  
 It dos ths by developing method to detet and prvent frud, 
Human Servces  Genera keeps both the 
Crated by statute in 1976, the Inspctor  progr or maagement
waste and abuse.  about 
Seceta and the Congrss fully and curntly inonnedp erfor its mission by conduct
corrctive action. The OIG 
sta 
problems and reommends  apprxitely 1,200  strtegicaly lo
insptions with 
ing audits, investigations and 
cated around the countr.

OFFICE OF ANALYSIS AND INSPECTIONS 
(OAl, one of the 
Analysis and Inspctions 
This report is produce by the Office of  Ofce of In
Office of Audit and the 
other tWo ar the 
major offices within the OIG. The  ar tyicay shor-term stUdies designed to 
vestigations. OAI conducts inspetions which 
 vUerabilty to frud or abuse.

progr 
detenne  effectiveness, efficiency and 
1MIS REPORT 
It was conducte to
Medcar Physician Consultation Servces.
Ths report is entitled " produrs in assurg appropriate

ascert the effectiveness of HCFA policies and 
 prvide to patients in a 
physician consultation servces 
Medicar reimburment for 
hospita settg.

Intor  Analysis and in-
Genera, Office of 
prepar by the Regional 
The study was  peple: 
the project were the followig 
Region. Parcipatig on 
spctions, New Yolk 
frect Staff 
Renee Schlesinger,

R..
Region 11  T.. M.P.A.

Lucille Cop, R.N. 
Region V  Huquarters liaison
John Traczyk  Ma Hogan 

Kan 
Region IX  Reynolds

Neil Merio  AN 
PHYSICI.
MEDICARE 
SERVICES 
CONSULTATION 
Richard P. Kussrow 
INSPECTOR GENERAL 
OAI88-02-050 
JUNE 198  .......... .... ..... .................. ........... ........ .......... ............. ......... .......... ........... 
................ .....
TABLE OF CONlENT

EXECUTIVE SUMMARY 
NTRODUCTION ........ ...... ....... ....... ... .... 

NDI NGS ... 
FI 
RECOMMENDATIONS ................................................. 
APPENDIX A................................................................. 
APPENDIX B....... ..... ..... .......

APPENDIX C.................................................................

APPENDIX D.................................................................
 EXECUTIVE SUMMARY 
PURPOSE 
The purpose of this' study was to ascertin the effectiveness of Health Ca Financing Ad
ministration (HCFA) policies and proedurs in assurng appropriate Medcare reimbur
sement for physician consultation services provided in a 
hospita settg. 
BACKGROUND 
A significant amount of Medcare 
dollar are spent each year for physician consultations. 
The HCFA reports $4h04o,9s43p,5i0t0 ainl sal.l owed charges to physicians ii 1985 for consult
ations perfonned in 
Some of the concerns ariculated by HCFA, Medicare carers 
and the GIG. were: 
Medicare carers' policies relating to 
physician consultations appear to 
var and may be contrbuting to wasteful payments; 
Medcar 
Physicians may be misinterpretig the  definition of. a 
consultation when billing the progr  rendere 
for services 
Some billngs for consultations may actually reflect ongoing definitive 
care instead of an advisory-type consultative servce; and 
Some physicians may be misrepresenting the intensity of the 
servce 
provided when submitting claims (upcodng). 
The traditional understanding of a consultation in the medcal community has ben for 
physicians to provide advice to each, other when the patient s condition is beyond the
scope of the treating physician s expertse. The Medcar progr  ognze ths
has 
practice of physicians seeking the opinion and advice of other qualed 
physicians to as
sist in the diagnosis and treatment of a patient. 
Originally, the only Medicare definition of a consultation was contaed in the Medcar
Canier s Manual (MCM). Recently, in an effort to establish uniormty, HCFA 
developed a new system of nomenclature called the HCF A Common Procedur Cong
System (HCPCS), which is based upon the Physicians  Currnt Predurl Tennnolo
oFoufrth  Eidnitioint (CiaPT-l4) .c Thios lnistinsg aulso ldtefainest ai coonsnultastio.n  and descbes 
five levels
Although the CPT-4 and MCM definitions have some simiarties, there ar 
also some
differences
, and neither definition addresses some of the aras of concern.  In order to answer some of the concerns expresse by HCFA, Medcar carers and the 
OIG, discussions were held with individuals from 15 Medcar carers, 12 Medcaid 
State agencies, 12 hospital administrtors and 40 physicians representing varous speial
ties. 
A random sample of 204 inpatient consultation claims were reviewed with their cor
reor 
responding medical record and beneficiar claims history. The medcal  were 
reviewed by a registered nurse to detennne whether a consultation was performd and 
whether the level of intensity claimed was accurate according to the CPf-4 defmition. 
MAJOR FINDINGS 
There is a substantial amount of excessive payment for physician consultations. 
incortly 
The review of records indicated that $92 millon was  allowed 
6 millon in overpayments. By incorprating 
in 1985, resulting in $73.
our recommended changes, we estimate HCFA could save $73 millon a 
year in the future. 
In 157 (77 percent) of the 204 sample cases, the amunt allowed for the 
consultation was incorrect because the CPf-4 definition was not met or 
because the consultation was allowed at an incorrct level of intensity. 
There is no clear understanding as to what constitutes a physician consultation that is 
reimbursed by Medicar. 
Fifty-three percent of the physicians were not famliar with the 
Medicare definition of a physician consultation. 
The definition of consultation vares among respondents. 
Distinguishing between concurent car and a consultation is confusing. 
Seventy-one percent of the respondents felt that the curnt 
five levels 
of CPT -4 reimbursement overlap. 
Marked inconsistency and varability exists in the carers' adistration of physician 
consultations. 
Carers range from having no controls to having very tight controls for 
both initial and follow-up consultations. 
The use of follow-up consultations vares with carers.  RECOMMENDATIONS 
The HCFA should: 
definitions. 

Develop and promulgate a definition of a consultation tha wil be 
comprehensive enough to eliminate the present confion between the two
Take measures to insure that carriers effectively convey the definition to the 
medical community.

Adopt specifc reimbursement criteria regarding initial andfollow
consultations . 
procedue codes 
Require all carriers to use CPT  -4  for consultations. 
Groupprocedures codes and collapse the numer of procedures codes for 
both initial and follow-up consultations to "brief' an "comprehensive.  INTRODUCllON 
BACKGROUND 
A significant amount of Medicar dollars is spent for physician consultations. The 
Health Care Financing Administration (HCFA) report $4,943,500 in allowed charges 
to physicians in 1985 for consultations perfonned in the hospital. 
The Medicare carers, HCFA and the OIG have arculated a number of concerns about 
the reimburement for physician consultations, including the following: 
physician consultations appear to 
Medicare carers' policies relating to 
var widely and may be contrbuting to wasteful payments; 
physicians in general may be misintetpreting the Medcar definition of 
a consultation when biling the program for services rendere 
some bilings for consultations may actually reflect ongoing definitive 
care instead of an advisory-typ consultative servce; 
some physicians are being reimbured for certai consultation services 
that should be included in their global fees for surgery; 
some physicians may be misrepresentig the intensity of the servce 
provided when submitting claims (upcodg); 
some routine medcal examnationsperfonned prior to surgery 
(preoperative clearance) may be biled improperly as consultations; 
for consultations when the servces 
some pathologists may be biling 
provided ar actually evaluations of routie labotory studies; 
for consultations when the services 
some physicians may be billng 
provided are orders for specific procedurs, such as biopsies; 
prior mediCal services by the same physician to the same patient may be 
present in a high percentage of cases.

The traditional understanding of a consultation in the medcal community has ben for 
physicians to provide advice to each other when the patient s conditaiodn its tb eyond the 
scope of the treating physician s expenise. For example, a patient  to the hospi
sph 
tal by a famly practitioner with a right-sided parsis and lack of  may nee a con adtting 
sultation by a neurologist to give advice to the  physician on a defiitive diag
nosis and tratment, or a patient admitted by an orthopest for hip surgery could 
develop chest pains and require a consultation by a cardiologist. 
progr  sekig 
The Medicare  has recognized this practice of physicians  the opinion and 
advice of other qualified physicians to assist in the diagnosis and tratment of a patient 
This opinion may be requested by one physician of another from more than 80 speialties 
recognized by the American Medical Association (AMA). Orginally, the only Medcar 
definition of a consultation was contained in the Medicare Carer s Manual (MCM) , Sec
tion 2020D, which defines a consultation as: 
A professional service furnished by a second physician or consultant at the request of 
the attending physician. Such a consultation includes the hitory and exanation of 
the patient as well as the written report, which is funished to the attending physician 
for inclusion in the patient s medical record. 
Additionally, Section 4142 of the MCM states: 
The attending physician ma remove himself from the claim and tun the patient over 
to the person who performed a consultation service. In this  initial ex
sitution, the 
amination would be a consultation if the requirements in 2020D were met at that 
time. 
Recently, in an effort to establish uniformity, HCFA develope a new system 
nomenclature called the HCFA Common Procedure Codg System (HCPCS) , based 
upon the Physicians  Current Procedural Terminolo  Four Edtion (CP-4). This list
ing of descriptive terms and identifying codes for reportng medcal services and proce
dures performed by physicians, published by the American Medcal Association, also 
defines a consultation as: 
Services rendered by a physician whose opinion or advice is requested by a physician 
or other appropriate source for further evaluation andor management of the patient. 
When the consulting physician assumes responsibilty for the contnung care of the 
patient, any subsequent service rendered by him wil cease to be a consultatin. 
consultant is expected to render an opinion and/or adice only. If he subsequently as
sumes responsibility for a portion of patient management, he wil be rendering concur
rent care. If he ha the case transferred or referred to him, he should then use the 
appropriate codes for services rendered on and subsequent to the date of transfer. 
Five levels of initial consultation are recognized by CPT- limited, intermdiate, ex-
4: 
These are described in Appendix A. As discussed 
tended, comprehensive and complex. 

later in this report, these descriptions may be overlapping and confusing. The amount 
reimbursed for each level ranges from carer to carer. As an example, the reimbure
ment for an initial consultation by one carer in the study rages from $85.00 for a  limited consultation to $125.00 for a complex consultation, with the other levels some
where in between. 
Although the CPT-4 and MCM definitions might appear simiar, the followig char

reflects some subtle differences.

DIFFERENT FACTORS ADDRESSED BYlHE DEFlNI110NS 
CPT - MCM 
Request by Attending 
for a Consultation  Yes 
Request by Physician 
or Other Source  Yes 
History, Examination Done 
& Written Report to be 
Completed by Consultant  Yes 
Advice or Opinion

from Consultant  Yes 
When Consultant 
Assumes Care, Ceases to be 
a Consultation  Yes 
Consultation Only When 
Attending Removes Himself 
Yes 
Levels (intensity) of Care 
Specified  Yes 
The following factors ar not addressed by either definition: 
prior patient encounters with the consultat; 
the time lapse between consultations; and 
whether the same or new diagnosis crates a new consultation.  ISSUES 
This study set out to answer the following key questions: 
Do varied definitions of physician consultations and their interpretations 
contribute to inappropriate Medicare reimbursement and related problems? 
an 
Do hospital, HCF A andor carrier policies  procedures contribute to 
inappropriate reimbursement for physician consultations? 
How effective are existing controls to assure proper reimbursement? 
METHODOLOGY 
Discussions were held with those who provide the servce and those who reimbure it 
Fifteen carers were contacted by either telephone (8) or in persn 
(7). Individuals from 
their Medicare offces, medical staff and private business depanments were interviewed 
to obtain their perceptions. Twelve hospitals were visited, and discussions held with 
hospital administrtive staff as well as with 40  speal
physicians reprsenting diferent 
ties. Several medical assistants or biling clerks of the physicians intervewed were con
tacted by telephone. 
Medicaid State agencies in the 12 sample States were contacted by telephone to obta in
fonnation on their physician consultation policies and procedurs. Meetings were also 
held with medical society representatives and the Peer Review Organzations (PROs). 
A random sample of 204 consultation claims 
processed by 13 carers (who represent 70 
percent of all inpatient consultation charges reported to HCFA' s BMAD system) in 1985 
was selected for review. The claims were for consultations provided in 88 hospitas in 12 
States (one State has two carers). One of the largest carers in the countr was not in
cluded in the sample because it was not using HCPCS procedur codes for consultations. 
Hospital records and carer Pan B claims histories (all physician services biled 
Medicare in 1985) were requested to correspond with each of the 204 
claim. The 
records were reviewed by a registere nure to detennne whether a consultation was per
fonned and whether the level of intensity claimed was accurte accordig to the CPT-
definition. No determination as to medical necessity was mad as pan of the review. 
The Par B claims histories for each of the patients in the sample were reviewed to se if 
there were prior, subsequent and same-day services by the physician who biled for the 
consultation in the sample.
 FINDINGS 
There is a substantial amount of excessive payment for Physician Consultations 
The review of records indicated that $92 millon was incorrtly alowed in 1985 
for physician consultations perfonned in the hospita. This resulte in $73.6 mil
lion in overpayments (Appendix B). 
The records review indicated the following: 
In 157 of the 204 sample cases, the amount allowed for the consultation was 
incorrct either because the CPT-4 definition for a consultation was not met, 
or because the consultation was allowed at an incOIt 
level of intensity. 
MEDICAL RECORD ANALYSIS 
Inpatient Consultation Sample 
Conslt 
No  (20) 
Reda 
No  (11) 
Prom 
No  (38) 
17, 
Mi8C 
(137) 
67, 
In 20 (9.8 percent) of the 204 sample cases, the CPT-
4 definition of a 
consultation was not met. 
The physicians in 20 cases mentioned above were providing medcal car rather 
than consultative services as defined in the CPT-
4. In some of these cases, there 
were no consultation reports in the record, but only 
documentation of perfonn
medical proedures such as an electrarogram (EKG) 
or bronchoscopy,  Similarly, claims for consultations by pathologists were actually for 
interpretation 
of routine laboratory findings. In other cases, the physicians 
provide a medcal

service such as emergency car or a history and physical examiation. 
In 137 (67.2 percent) of 204 sample cases,the documentation failed to 
support the level of intensity that was biled by the 
consultat. 
Ilustrtive of this is a case where an internist biled for a complex consultation on 
a patient scheduled for a bunionectomy. The documentation in the medcal
record did not show the required "in-depth evaluation of a crtical problem 
reuir
ing unusual knowledge, skill and judgment on the pan of the 
consultig
physician." Another case involved a 75-year-old patient adtte for anemia who 
had a complex hematology consultation biled. A review of the mecal reord
revealed a brief note by the hematologist recommnding a bone maw 
examna
tion, which was done and also biled by the 
consultat on the same day. 
In 36 (17.6 percent) of the 204 sample cases, the consultation servce was 
cOlTectly
claimed; half of these were biled at the lowest (or limite level) and a quaner at
the comprehensive level. 
In the remaining 11 (5.4 percent) sample cases, the hospitas did not supply 
suff
cient infonnation for a detennnation to be 
made concerning the valdity 
of the 
consultation claim. 
The sample indicated that 82 percent of the 
consultats saw the patient more than
once during the hospital stay. Typically the consultant may have provide the ini
tial advice and opinion to the attending, but also contiued 
to provide car
throughout the patient s entire hospital stay. In one case, the consultat 
saw a 
patient daily for the entire 13-day stay, wrte orders, dictated the discharge sum-
mar 
and charged for a consultation for each visit. 
d) The beneficiar history indicated that 26 percent of the physicians in the sample 
had seen and trated the patient prior to this hospita stay. 
On several occasions the consultant indicated in the 
mecal reor that patient is
known to me or grup. " In some instances, the consultat was the adtting
physician or the physician of record. 
The ary of procedur codes in the sample shows 
the  physicias biled 99 percent 
consultations for  reimbursement levels; 47 percent for 
comprehensive and
26 percent each for limited and complex.  PHYSICIAN CONSULTATIONS 
Distribution by Procedure Code 
Type of Coe 
Limited 
Intermiae 
Extede 
Co""ehensive 
Cole 
Dlhe, 
100 
% of Allinpal.nl. Cosutaon 
rhl8""_  S", (..20)  Un (t1 
There is no clear understanding as to what constitutes a Physician Consultation that is 
reimbursed by Medicare 
The results of the record review ar not surrising in light of the responses to 
questions about perceived definitions, such as: "What is your understading of the 
Medicare definition of a consultation?" 
Most physicians know only their own 
trditional definition. 
Twenty-one of the 40 physician  famar 
respondents (53 percnt) were not  with 
the Medicare definitions of a physician consultation. Thy 
gave vared answers as 
to what they believed to be the definition ranging frm any 
flIt encounter with a 
patient to a "one shot deal" for advice and opinion. Our sample indicated that 82 
mor 
percent of the beneficiares were actually sen  than once by the consultant 
When asked what factors cause them to request a consultation, 67 
percnt of the  " " " "
physicians gave as the primar reasons: "advice and opinion,  bettr car of 
patient,  for my expertse," or "for expertse I don t have. " Although most 
priar 
physicians gave malpractice as a reason, only 19 percent saw it as the 
reason. 
Other respondents use a varety of definitions. 
Some Medicare carers used  CPT- definition, some used the MCM defini
the 
tion and still others used a combination of both. One carer defined a consult
ation as "a service rendered by a highly skilled professional advisor whose opinion 
or advice is requested by the attending physician in the diagnostic evaluation

and/or treatment of a patient. 
While Medicaid definitions vared from State to State, they all reuird a reuest 
for an opinion or advice. Two of the 12 States said the consultat must be a 
CPT- definition. 
specialist; some States used the 
One State s workers compensation agency develope a defmition for a consult
, but also includes the following reuirments: 
ation which closely follows  CPT 
it must be a service rendered by a specialist; it must seek furer evaluation or 
opinion on how to proceed in the management of a patient s illness; the servce 
must be diagnostic; and treatment by the consultant cannot be involved. 
Most private insurer respondents said their policies often do not reimburse con
sultations, but when consultations ar a  CPT-
reimbursable servce they use the 
definition. One said: "A consultation is only for opinion and advice to develop 
and recommend treatment. 
Almost all respondents, including physicians, distinguished a consultation frm a 
referral. Most saw a referral as sending a patient to another physician, usually a 
specialist, for treatment rather than advice or opinion. Some felt a referrl only 
occurred when the referrng physician surndere car to the consultat Some 
fit 
felt the first visit would always be a consultation; others thought the  visit for a 
referral should be considered an initial medical visit 
Concurrent car: another area of confusion.

The difference between a consultation and concurnt car also appear to be un
clear to many. One carer s medical advisor said, "  s muddy water! Concurnt 
care is asking for a consultant to assist in the management of a patient It 
s dif
ficult to accept concurent car without an initial consultation to detennne if con
currnt car is appropriate.  Another carer s medcal advisor descbe a 
consultation as a one-time identifiable service, with concurnt car occwrng 
when another physician is actually providing tratmnt. Many respondents felt 
that concurrent care started after an initial consultation; others felt that the first  visit should be an initial visit when a second or thir physician is prvidig both 
diagnosis and treatment concurently, usually for a different diagnosis. 
ar 
d) The five levels of CPT-4 reimbursement  overlapping. 
All but three carers nationally were using CPT-4 initial consultation procedur 
codes. Most of the sample carers were allowing physicians to submit claims 
using all five of the levels of initial consultations descbe in the CPT-4 (Appen
although some were paying at only thee levels. 
dix  A), 
Seventy-one percent of the respondents did not  curnt  car 
lie the  five levels of 
thr 
and felt that two or  levels would be more appropriate. Many physician, car
rier and Medicaid respondents felt it was diffcult to decide where one level ends 
ar 
and another begins. They also indicated that the definitions of the levels  over
lapping, somewhat redundant and create an opportnity for "gamg 
the system. 
Marked inconsistency and variabilty exists in the carriers' administration of Physician 
Consultations 
Carrers range from having no controls to having very tight 
contrls for both 
initial and 
follow-up consultations. 
HCFA does not require any prepayment scrns for physician consultations. Such 
screens are left to each carrer s discretion. The experience in the sample ranged 
from some carrers having no screens and perceiving no problems to one carer 
who allows one initial consultation per physician per year and two follow-up con
sultations within 30 days. After that the service beomes a hospita visit and must 
meet concurrent car, screens (see Appendix C). 
The use of follow-up consultations vares with carers. 
The CPT-4 defines a follow-up consultation as a consultat s reevaluation of a 
patient on whom he has previously rendered opinion or advice. It provides for no 
patient management or treatment and descrbes four levels of follow-up consult
ations. 
Ten of the sample carers use follow-up consultation codes and five do not 
Some do not pay for follow-up consultations; others pay for an unlited number. 
When respondents were asked to define a follow-up consultation, their answers 
ranged from "continuation of an initial consultation any consultation after the 
" to "
first one.  The beneficiary claims histories revealed that 56 percent of the physicians 
provided medical service subsequent to the hospital stay. Of that 56 percent, 63 
percent provided ongoing medical treatment, 20 percent perfored proedurs
and 16 percent provided follow-up consultations. 
Eleven of the 15 sample carers paid for both diagnostic and therapeutic car in 
addition to a consultation.

Some of the sample carers include follow-up consultation codes in their concur
rent car screens, but most do not 
While there was concern that routine preoperative clearance was a problem
, the 
views of respondents and the results of the medcal review both indicate that ths 
is not a significant problem area. Properative clearce is a consultation per
formed prior to surgery to make sure a patient s condition is stable enough to safe
ly undergo the surgery. Hospital admnistrtors revealed no hospita 
policies
requiring routine preoperative 
consultations. Seven percent of the sample con
sultations were performed for preoperative clearance and appeard to have sup
porting documentation. Most respondents said that preoperative consultations, 
woen done, were necessar. One record revealed a consultation performed by a 
cardiologist in which the surgery was not performed beause of the changes 
revealed in the patient s EKG and beause of his unstable condition. Thus, the 
consultation prevented surgery from being perfonned that might have com
promised the patient. 
No new information relating to physician consultations has ben disseminated to 
carers by HCFA recently. The last issuance was MCM Section 5248 (March 
1986), which discusses makng reasonable charge determations for a consult
ation plus surgery when physicians previously biled global charges for surgery. 
All of the carers contacted were aware of this manual section. Most have always 
paid for a consultation with surgery and thus did not have to make any changes.  RECOMMENDATIONS 
The following recommendations were presented to HCF A in the drft repo. 
Develop and promulgate a definition of a consultation that will be comprehensive 
enough to eliminate the present confusion between the two definitions. Both 
definitions should be identical and include the following points: 
ab..  Who may request a consultation?
reuir? 
c. Should a physical examination of the patient always be 
Is a consultation always for advice and opinion? 
d. Must a consultation be for diagnosis only, or for diagnosis and tratment? 
e. Must a wrtten report always be promulgated? 
f. How should a consultation be distinguished frm a referr? 
g. How should a consultation be distiguished frm concurnt car?
h. 
Should a prior patient/physician relationship remove a patient encounter 
from the realm of a consultation? 
1. What is the time lapse between initial consultations?
J. 
Must a consultation be perfonned by a speialist? 
HCFA Comment 
We agree that it would be helpful in administerig the Medcar progr if the 
Medicare Carrers Manual (MCM) and the CPT -4 definitions of a physician con
sultation were the same or at least more consistent with one another. In view of 
the recent enactment of section 4055(a)(2) of the Omibus Budget Reconcilation 
Act (OBRA) of 1987, calling for the Secretar to develop (in consultation with ap
propriate national medcal specialty societies) unifonn defmitions of physicians 
services (including consultations), we intend to contrbute in every way possible to 
the Deparment s completion of that project by July 1 , 1989, as madated by the 
Congress. We also intend to present this issue to the CPT-4 Edtorial Panel for 
their consideration. We would also point out that we have develope crteria for 
carers to assist them in reviewing claims for clinical pathology consultations. 
(See section 8313. 1(c) of the MCM. 
Take measures to insure that carriers effectively convey the definition to the 
medical community. 
HCF A Comment 
scrn 
We are in the proess of developing a mandated medcal review  for con
sultations. More unifonn definitions and reimbursement policy wil be an out
growth of the educational work we wil be doing with our carers and they, in 
turn, wil do with the medcal community. We anticipate completig this educa
tional effort in early 1989.  Adopt specific reimbursment criteria regarding initial and follow-up

consultations.

HCFA Comment 
We disagree with adopting specific reimbursement criteria regarng initial and 
follow-up consultation. We believe it is within the carer s discretion to develop 
criteria regarding initial and follow-up consultations depending on local prevailing 
immate 
practices. Therefore, we plan to limit our  activity to ensurg that each 
carer follows its existing policy. 
4. 
Require all carriers to use CPT -4 procedure coes for consultations. 
HCF A Comment 
We are reviewing those Medicare carers that ar stil using local predurs
codes for physician consultations instead of the CPT-4 cods. We will permt con
nee 
tinued use of local codes only if there is a compellng 
Support the Omnibus Budget Reconcilation Act (OBRA) of 1986 (Pblic Law 
99-509) which calls for the collapsing of procedure coes. Collaps the number 
of procedure codes for both initial and follow-up consultations to brief and com
prehensive. 
HCFA Comment

We agree that the collapse of the number of procedurs cods may be desirble.

reuir 
We are considering this as par of our review of HCPCS cods as 
OBRA 1986, section 9331(d).  APPENDIX A 
LEVELS OF CONSULTATION 
consultation (9060) the physician confines his servce to the 
In a  limited 
examination or evaluation of a single organ system. Ths procedur includes 
documentation of the complaint(s), present ilness, pertnent examnation, review 
of medical data and establishment of a plan of management relating to the 
specific problem. An example might be a dermatological opinion about an un
complicated skin lesion. 
consultation (90605) involves examnation or evaluation of 
An  intermediate 
an organ system, a parial review of the general history, reommndations and 
preparation of a report. An example would be the evaluation of abdomen for pos
sible surgery that does not proceed to surgery. 
consultation (90610) involves the evaluation of problems that do not 
An  extended 
requir a comprehensive evaluation of the patient as a whole. Ths produr in
cludes the documentation of a history of the chief complaint(s), past medcal his
tory and pertnent physical examination, review and evaluation of the past medcal 
data establishment of a plan of investigative and/or therapeutic maagement, and 
the prepartion of an appropriate report. For example: the examation of a car
diac patient who needs assessment before undergoing a major surgical procedure 
and/or general anesthesia. 
consultation (90620) involves an in-depth evaluation of a patient 
comprehensive 
with a problem requirng the development and documentation of medcal data 
(the chief complaints, present ilness, famly history, past medcal history, personal
history, system review and physical examnation, review of 
al diagnostic tests and 
procedures that have previously been done), the establishment or verication of a 
plan for further investigative and/or therapeutic management and the preparation 
of a report. For example: young person with fever, artis and anemia; or a com
prehensive psychiatrc consultation that may include a detaled present ilness his
tory, and past history, a mental status examnation, exchange of infortion with 
prima 
physician or nursing personnel of famly members and other informnts 
and preparation of a report with recommendations. 
complex  consultation (90630) is an uncommonly performd servce that involves 
an in-depth evaluation of a critical problem that requirs unusual knowledge, skill 
and judgment on the par of the consulting physician, and the prepartion 
of a 
report. An example would be acute myocaral infartion with 
major complica
tions. Another example would be a young psychotic adult, unrsponsive to exten
sive treatment effort, who is under consideration for residential car.  APPENDIX B

METHODOLOGY FOR ESTIMATING SAVINGS 
The varance of the estimate was calculated by the following forula 
(for ratio estimates): 
Variance  t(x-ry)2 
= 593.204 
Where x is the amount originally allowed, 
r is the average errr rate observed in the sample (0. 198), 
y is the amount allowed in errr, and 
n is the total number of cases in the sample (204). 
NOTE:	 Although 11 cases were eliminated from the sample beause we were 
unable to obtain suffcient records frm  cas 
the hospitas, these 11 
arve at 
were considered in computing the varance to  the most 
conservative cost-savings estimate. 
The standad error of the 
estimate was calculated by the following fonnula: 
Standard error	 ance 
022 
Where x is the average amount allowed. 
The lower and upper ranges of the 90 percent confidence interval (CI) ar 16.1 percent 
and 23.5 percent, respectively. Prcision is 18.7 percent, a reflection of the varabilty in 
ma. 
the errors, of the fact that both over and underpayments were 
Projections were made by applying these 
percentages to the total allowed charges for in
patient consultations for the 13 carers in our sample: 
Estimate = $ 64,89, 
$ 52,698,00 =  Lower limit, 90% CI 
$ 76,920,00 =  Upper limit, 90% CI 
The total allowed charges for inpatient consultation for those 13 carers was 
$282,420,700.  These carrers represented 70 percent of all charges for inpatient consultations for 1985. 
If we assume that the remaining 30 percent resembles the majorty, prjections of 
amounts allowed in error may be: 
Estimate = $ 92,8,

$ 75,510,
00 =  Lower limit, 90 

$110,217,
00 = 
 Upper limit, 90 
 APPENDIX C 
CARRIER CONTROLS 
Carrier A	 Pay for place of service; two levels of car: Routie and Comprehensive.

Claims must have name and addrss of referrg physician and statement

report must be available. If not, then paid as regular mecal car. 
Comprehensive code requires specialty number. Not all speialties 
th  ar paid
for comprehensive consultation. Must have at least 
body systems 
involved for consultation to be comprehensive. If not, 
reuced to medcal 
care. More than 2 visits within 60 days, consult is not paid. It is reuced 
to medical car.

Carrier B	 Two consults per physician per patient, per diagnosis per hospita admssion. 
Carrier C	 One initial consultation within 30 days. Evidence of prior medical care wil 
reduce payment. Medical visit and consultation on the same day 
wil be 
denied. The level of care wil be reduced to the lowest level if code is 
unspecified on claim. Subseuent medcal care is reuce to medcal car. 
Carrier D	 NONE, although the second visit after consultation is paid as medcal car. 
Carrier E	
ConcuITent care screen for follow-up consultations. Attendings and specialists: 
they look at diagnosis of specialties and allow five follow-up visits for same 
specialty. For different speialty, allow consult plus 10 follow-up visits. 
90620 and 90630 reuire documentation. Use 5 levels of care and pay at 3 
levels: 9060-90605, 90610, 90620-9030. 
Carrier F	 One per month, not to excee 2 in 3 months. If more, then it is reviewed. 
Allow 7 follow-up visits per hospita stay. After that, consultat assumes 
care or is a referr. 
Carrier G	 None specific to consultations, but genera contrls include 2 medical car 
claims for same date; 3 visits in 3 months; mecal car with 3 
days of 
surgery . 
Carrier H	 One inpatient consultation per 30 days. 
Carrier I	 Wil suspend consult within 3 days of comprehensive visit or more than I 
consultation claim in 30 days. No inpatient consult by surgeon if 
surgery done. 
Follow-up consultation visits paid as medcal visits. 
Carrier J	 90630 must have attachment; more than 1 hospita consultation with same 
specialty in 1 month is not paid.  Carrier K	 I) Routine hospita visits ar not paid on sam day as consultation; 
2) Surgery with consultation within 7 days is not paid; 
3) Initial offce is not paid on sam day 
as consultation;p  rur;
4) Radiology is not paid when done with radiological 
do 
5) Level of service is reuced if second consultation is 
within 60 days. 
Carrier L	 I) Suspend concurrnt car; 
2) Multiple consultations within 3 months;

3) After 10 follow-up visits, visit is reuced to mecal car.

Carrier M	 I) One initial consultation per year per patient; 
andlte 
2) Follow-up consultation only in hospita  to 2 per 30 days. 
Carrier N	 One initial consultation plus 2 follow-up visits. The four 
hits the 
concurnt car screens. 
af fit 
Carrier 0	 None now. They are looking to downcode  initial consultation.  APPENDIX D 
HCFA COMMENTS ON METHODOLOGY 
We are concerned that the subject study might be flawed beause it is designed to focus 
on physician consultations perfonned in hospitas, while the use of the nine CP-4 cods 
for initial and follow-up consultations referr to in the study is not restrcte to the 
hospital setting. Accordng to the American Medcal Association, these nie cods may 
also be used for consultations furished in a physician s office. 
Another concern is that the sampling methodology is not descbe in enough deta so 
that it can be detennned whether the 204 cases from 13 carers is a vald sample since 
the universe is not indicated. Also the projection of a $73.6 millon overpaymnt based 
on such a small sample seems questionable. 
We also ar concerned about the qualification of the reviewer who perfonn the OIG 
nur 
study because a physician was not on the review team. We question whether a 
qualified to say what level of consultation was perfonn. 
In the 20 cases in which services provided did not met the CP-4 defition of consult
ation, the claiming of these costs as savings may be questionable as the servces may be 
reimbursable under other CPT -4 codes.

Finally, we note no attempt was made to represent the review fidings to the respetive 
carer staffs to obtan their reaction/comments to these fmdings. It might be that the 
reviewers' decisions may have ben questionable with respct to some of the clais 
reviewed. 
OIG RESPONSE 
It is tre that consultations ar perfonned in many settgs, but the largest 
porton of the charges (about 74 percent, according to carer reportg thugh 
BMAD) ar  In conducting ths study, we 
perfonned in inpatient hospitas. 
matched all of the Par B sample claims for consultations to Par A hospitazation 
records, thereby restrcting our review to those consultations perfonn in an in
settings only. 
patient hospita. All moneta projections ar based on that porton of the tota al
perfor 
lowed charges which can be attrbuted to consultations 
in inpatient
The 204 cases that make up the sample for this study were selected at radom frm 
the BMA beneficiar fie, based on the termal digits of the mCNs. Ths 
method is the same method that HCFA uses to create the BMA 
sample and 
varous other samples used by its Bureau of Data Management and Strtegy and  -'I 
the Offce of the Actuar. The validity of a projection is not dependent on the size 
of the sample, but rather on the method of selectig cass and the inerent vara
tion of the data being sampled. In keeping with ths thing, we selecte a strct 
estites. 
random sample and established confidence intervals for al our point 
We agree, however, that the tota amount of allowed charges for consultations in 
inpatient hospitals (the base on which all projections wer made) should be in
infontion 
cluded in Appendix B. Although this tota can be calculate from the 
ar 
easier to understad. We have amende 
given in the appendix, projections 
suggestion. 
the appendix according to your 
We are satisfied that the use of a Registere Nure for the purse of ths case 
Certy, if 
review, to determne the level of a consultation, was apprpriate.  at
tempts had been made to make judgments as to medcal necessity, we would have 
arnged for 
the physician support 
In those cases where another service (rather than a consultation) should have 
ben biled, we adjusted the potential savings by the alowed amunt for the other 
corrt 
service. In all cases, we used the reasonable charge for the  service for the 
locality and specialty indicated on the original clai to mae the adjustmnt. In 
some cases, the adjusted amount was actually higher than that biled for the con
sultation. The composite effect, however, was a net overayment, which resulte 
in our projected savings.