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Department of Health and Human Services 

OFFICE OF 

INSPECTOR GENERAL 

C S
HIROPRACTIC  ERVICES IN THE

M P : 

EDICARE  ROGRAM
P V A
AYMENT  ULNERABILITY  NALYSIS 
Inspector General 
June 2005 
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Office of Inspector General 

http://oig.hhs.gov 
The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, 
as amended, is to protect the integrity of the Department of Health and Human Services 
(HHS) programs, as well as the health and welfare of beneficiaries served by those 
programs.  This statutory mission is carried out through a nationwide network of audits, 
investigations, and inspections conducted by the following operating components: 
Office of Audit Services 
The OIG's Office of Audit Services provides all 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 in order to reduce waste, abuse, and 
mismanagement and to promote economy and efficiency throughout the department. 
Office of Evaluation and Inspections 
The OIG's Office of Evaluation and Inspections (OEI) conducts 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 the inspections reports generate rapid, accurate, and up-to-date information on the 
efficiency, vulnerability, and effectiveness of departmental programs.  The OEI also 
oversees State Medicaid fraud control units, which investigate and prosecute fraud and 
patient abuse in the Medicaid program. 
Office of Investigations
The OIG's Office of Investigations (OI) conducts criminal, civil, and administrative 
investigations of allegations of wrongdoing in HHS programs or to HHS beneficiaries 
and of unjust enrichment by providers.  The investigative efforts of OI lead to criminal 
convictions, administrative sanctions, 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 in OIG's internal operations.  The OCIG imposes program exclusions and 
civil monetary penalties on health care providers and litigates those actions within the 
department.  The OCIG also represents OIG in the global settlement of cases arising 
under the Civil False Claims Act, develops and monitors corporate integrity agreements, 
develops compliance program guidances, renders advisory opinions on OIG sanctions to 
the health care community, and issues fraud alerts and other industry guidance.  Report Template Version  = 03-01-05_rev.07  
  E X E C U T I V E   S U M M A R Y   
OBJECTIVE 
To determine the underlying causes of, and potential ways to reduce, 
vulnerabilities associated with Medicare payments for chiropractic 
services. 
BACKGROUND 
In 1972, Congress passed Public Law 92-603, which amended section 
1861(r) of the Social Security Act (the Act) to define chiropractors as 
physicians who are eligible for Medicare reimbursement, but only for 
manual manipulation of the spine to correct a subluxation, or 
malfunction of the spine. Federal regulations (42 CFR  410.21(b)) 
further limit Medicare payment to treatment of subluxations that result 
in a neuromusculoskeletal condition for which manual manipulation is 
appropriate treatment. In addition to these specific provisions, sections 
1862(a)(1)(A) and 1833(e) of the Act require that all services billed to 
Medicare, including chiropractic manipulations, be medically necessary 
and supported by documentation. 
The Medicare Carriers Manual (the Manual) outlines additional 
coverage criteria for chiropractic services billed to Medicare.1 Pursuant 
to section 2251.2 of the Manual, the existence of a subluxation must be 
documented through an X-ray or physical examination and chiropractic 
services must be provided as part of a written plan of care that should 
include specific goals and measures to evaluate effectiveness.  Section 
2251.3 of the Manual states that chiropractic treatment . . . must 
provide a reasonable expectation of recovery or improvement of 
function.  The same Manual section states that . . . ongoing 
maintenance therapy is not considered to be medically necessary under 
the Medicare program, and is therefore noncovered. 
Chiropractic has experienced considerable growth in Medicare, from 
11.2 million services and $255 million allowed in 1994 to 21 million 
services and $683 million allowed in 2004.  In previous studies, 
published in 1986, 1998, and 1999, the Inspector General found that a 
1 At the time of our study, the references to the Medicare Carriers Manual were accurate.  
The Centers for Medicare & Medicaid Services has since moved to web-based manuals.  The 
Carriers Manual sections cited in this report are now found in the Medicare Benefit Policy 
Manual, Pub. 100-2, Chapter 15, sections 30.5 and 240. 
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significant vulnerability existed in connection with chiropractic services, 
particularly concerning maintenance care.2 
To gain a deeper understanding of the underlying causes of these 
vulnerabilities and ways to reduce them, we selected a simple random 
sample of 400 Medicare services (total allowed amount = $12,638.38) 
submitted by chiropractors and allowed in 2001.  We contracted with 
practicing chiropractors who reviewed each service according to a 
standard protocol, which was based on Medicare coverage guidelines 
and requirements.  The review instrument solicited information about 
the beneficiarys chiropractic treatment as a whole and about the 
individual sampled service in particular.  This enabled the reviewers to 
determine if the services billed to Medicare were covered, coded 
correctly, and properly documented. In particular, it enabled the 
reviewers to determine the extent to which payments were made for 
maintenance services, which are not covered under Medicare. Based on 
the results of this review, we also determined the likelihood of services 
being noncovered depending on the number of services billed per 
episode of care.  Knowing this, Medicare carriers can make informed 
choices regarding the level of effort to expend in reviewing questionable 
billings based on billing patterns. 
Because we only reviewed services provided by chiropractors in 2001, 
our sample results cannot be extrapolated to other periods.  Accordingly, 
we make no inferences to chiropractic error rates in subsequent years. 
FINDINGS 
Maintenance services were the most common type of noncovered 
chiropractic services that Medicare paid for in 2001. Medicare 
carriers routinely deny all chiropractic claims that do not carry a code 
for spinal manipulation, which is, by law, the only treatment for which 
chiropractors may be reimbursed.  Our medical reviewers found that 
although billed with an allowable code, 57 percent of these services did 
not meet Medicare coverage criteria (i.e., were noncovered).  In addition, 
16 percent were miscoded or billed at the wrong level of spinal 
manipulation, and 6 percent were undocumented.  Twelve percent had 
2 Utilization Parameters for Chiropractic Treatments(OEI-04-97-00496), Chiropractic
Care:Controls Used by Medicare, Medicaid, and Other Payers(OEI-04-97-00490), and
Inspection of Chiropractic Services under Medicare(OAI-05-86-00002). 
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multiple errors, yielding an overall error rate of 67 percent, resulting in 
$285 million in improper payments. 
Medical reviewers determined that the majority of inappropriately paid 
services were maintenance treatments ($186 million in allowed 
payments), which Medicare defines as medically unnecessary, and are 
therefore not covered.  Another 14 percent ($65 million) were found to 
be medically unnecessary for other reasons.  Medicare also allowed   
$24 million for services billed with a spinal manipulation code that were 
actually extraspinal manipulations or non-manipulative treatment, 
such as massage.  Apart from coverage issues, upcoding was also a 
significant problem, resulting in a $15 million overpayment.  
Supporting documentation for chiropractic services rarely met all 
Medicare Carriers Manual requirements.  The Manual requires that 
specific supporting documentation be present in the chiropractic record.  
Nearly 94 percent of chiropractic services, though, lacked at least one of 
the supporting documentation elements listed in section 2251.2 of the 
Manual (including those that were completely undocumented).  The lack 
of one or more of these elements did not automatically lead us to 
conclude a service was noncovered, although these determinations were 
often related.  For instance, 34 percent of chiropractic services were not 
supported by an evaluation that met the Manuals specific requirements 
for documenting a subluxation. Most, but not all, of these services were 
also determined to be noncovered. 
Lack of medical necessity is directly related to service volume. As 
chiropractic care extends beyond 12 treatments in a year, it becomes 
increasingly likely that individual services are medically unnecessary.  
The likelihood of a service being medically unnecessary increases even 
more significantly after 24 treatments.  Accordingly, identifying and 
carefully scrutinizing services beyond a certain frequency threshold 
could result in significant savings.  Although frequency-based controls 
are common among carriers and in the private sector, the Centers for 
Medicare & Medicaid Services (CMS) does not have a national policy 
addressing their use. 
Carrier controls to prevent overutilization are inconsistent.  
Although all carriers have some mechanisms to prevent and recoup 
improper payments for chiropractic services, a significant vulnerability 
surrounding this benefit persists. 
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RECOMMENDATIONS 
Based on the volume of medically unnecessary, undocumented, and 
noncovered services allowed, chiropractic services represent a 
significant vulnerability for the Medicare program.  Therefore, we 
recommend that CMS take the following actions: 
Ensure that chiropractic services comply with Medicare coverage 
criteria. CMS should require that its carriers or Program Safeguard 
Contractors conduct service-specific reviews of chiropractic services to 
identify improper payments.  CMS should also implement national 
frequency-based controls to target high-volume services for review, since 
our medical review identified a strong correlation between high service 
volume and lack of medical necessity.  When conducting reviews of 
individual providers, it is imperative that reviewers collect the entire 
records associated with services selected as part of a service-specific 
review.  Several records we reviewed would have appeared legitimate 
for any one particular day of service; however, that days documentation 
was repeated verbatim for the entirety of the patients treatment. 
Require that its carriers educate chiropractors on Medicare Carriers 
Manual requirements for supporting documentation. Many 
chiropractors seem unaware of the specific documentation requirements 
outlined in the Manual.  CMS should address this lack of knowledge by 
directing its carriers to issue provider bulletins reminding chiropractors 
of their responsibilities. 
In addition to these recommendations, we have forwarded information 
on the noncovered, miscoded, and undocumented services identified in 
our sample to CMS for appropriate action.  
AGENCY COMMENTS AND OIG RESPONSE 
In its comments on our draft report, CMS agreed with our findings and 
recommendations.  The agency has clarified its chiropractic coverage 
criteria and indicated that most carriers are taking steps to reduce 
chiropractic error rates, including targeted educational efforts and 
service-specific medical reviews. In addition, as of October 1, 2004, 
CMS has required that chiropractors use the AT modifier to indicate 
that a service is not maintenance; only claims to which this modifier is 
attached are payable. 
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We appreciate CMSs response to our report, and support the steps the 
agency is currently undertaking to help prevent paying for noncovered, 
miscoded, and undocumented services.  
CMS noted in its comments that while this Office of Inspector General 
(OIG) study projected that 67 percent of the chiropractic services 
allowed by Medicare did not meet program requirements, CMSs 
Comprehensive Error Rate Testing (CERT) program identified a claims 
paid error rate of approximately 16 percent for claims submitted by 
chiropractors in 2002. CMS further noted that differences in the 
methodological approaches accounted for the significantly different 
rates.  CMS recognized that OIGs review of a beneficiarys entire course 
of treatment enabled us to determine that approximately 40 percent of 
all chiropractic services are attributable to maintenance care, and thus 
are not covered under Medicare.  In contrast, the CERT paid claims 
error rate is based on a review of a single claim, which limits its ability 
to detect uncovered maintenance costs. 
We agree with CMS and would like to emphasize that the purpose of 
this inspection was to determine the underlying causes of, and potential 
ways to reduce, vulnerabilities associated with payments for 
chiropractic services.  It was not designed to reproduce, or to review, the 
CERT paid claims error rate.  In addition to the different 
methodological approaches that are noted above, the CERT used 2002 
data, whereas our data was drawn from 2001.  Hence, our results 
cannot be compared directly to the CERT program results.  
Furthermore, chiropractic payment errors, while a significant 
vulnerability, contribute only minimally to the overall CERT national 
paid claims error rate.  Medicare allowed approximately $191 billion for 
Medicare fee-for-service claims in 2001.  Chiropractic services accounted 
for $500 million, or 0.26 percent of this amount. Therefore, the 
chiropractic-specific error rate has minimal influence on the overall 
CERT error rate for fee-for-service claims. 
Given that Medicare payments for chiropractic services have continued 
to increase since 2001, the need for a more effective way to eliminate 
inappropriate maintenance payments is crucial.  We recognize that it 
may not be practical for the CERT program to expend its limited 
resources to collect the extensive documentation that we used in our 
review. Therefore, in the future, CMS may wish to conduct additional 
studies outside the scope of the CERT program to determine cost-
efficient ways to address chiropractic payment errors. 
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  T A  B L E   O F   C O N T E N T S  
EXECUTIVE SUMMARY ......................................... i

INTRODUCTION ................................................ 1

FINDINGS ....................................................... 8

Noncovered and miscoded services ............................ 8 

Supporting documentation deficient .......................... 10 

  Medical necessity linked to frequency ......................... 11 

Carrier controls inconsistent .................................  15 

RECOMMENDATIONS ......................................... 16 

AGENCY COMMENTS ......................................... 19

APPENDIXES .................................................. 21 

A.	  Detailed Methodology .................................. 21 

B.	 Further Discussion of the Effects of Removing the X-ray 

Requirement .......................................... 24 

C.  Confidence Intervals for Selected Statistics............... 27 

D.  Significance Tests for Selected Comparisons.............. 30 

ACKNOWLEDGMENTS ......................................... 31
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  I N T R O D U C  T  I O N  
OBJECTIVE 
To determine the underlying causes of, and potential ways to reduce, 
vulnerabilities associated with Medicare payments for chiropractic 
services. 
BACKGROUND 
Chiropractic:  History and Practice 
According to the American Chiropractic Association, the professions 
largest association, chiropractic is a form of health care aimed 
primarily at enhancing a patient's overall health and well-being without 
the use of drugs or surgery.3 Central to chiropractic philosophy and 
practice is the use of manual manipulation to correct a subluxation of 
the spine.  Etymologically, the term subluxation simply means a 
partial dislocation of a joint.  Although a single standard definition of 
subluxation in the chiropractic context does not exist, the term is 
generally used by chiropractors to describe a complex of functional 
and/or structural and/or pathological articular changes that compromise 
neural integrity and may influence organ system function and general 
health.4 
Chiropractic has established itself and grown as a profession since it 
was founded in 1895. The practice is now licensed in all 50 States, and 
at least 16 accredited chiropractic colleges confer Doctor of Chiropractic 
degrees on their graduates.  In 1970, there were approximately    
13,000 licensed chiropractors in the United States.  According to the 
Bureau of Labor Statistics, that number grew to 50,000 in 2000.  Both 
the Bureau and the American Chiropractic Association predict that the 
number of chiropractors will continue to increase in the future. 
Patients most often seek out chiropractors for treatment of back pain, 
especially low back pain. Low back pain is a pervasive American health 
3 Chiropractic:  A Rapidly Growing Profession.  Consumers/Media. American 
Chiropractic Association.  Retrieved October 23, 2003, 
http://www.amerchiro.org/media/growing_profession.shtml. 
4 Chiropractic Paradigm.  Association of Chiropractic Colleges. Retrieved October 24, 
2003, http://www.chirocolleges.org/missiont.html. 
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problem, from which approximately 31 million citizens suffer at any 

given time.5

Medicare Coverage of and Requirements for Chiropractic Services 
General provisions of the Social Security Act (the Act) govern Medicare 
reimbursement of all services, including chiropractic services.  Section 
1862(a)(1)(A) of the Act states that . . . no payment may be made 
[under the Medicare title for services that] are not reasonable and 
necessary for the diagnosis or treatment of illness or injury or to 
improve the functioning of a malformed body member.  Section 1833(e) 
requires that providers furnish such information as may be necessary 
in order to determine the amounts due in order to receive Medicare 
payment. Related regulations at 42 CFR  411.15(k) and      
42 CFR  424.5(a)(6) implement these provisions of Federal law. 
On October 30, 1972, Congress passed the Social Security Amendments 
of 1972, extending Medicare reimbursement to chiropractors, but only 
for manual manipulation of the spine to correct a subluxation 
demonstrated by an X-ray.6,7  Federal regulations (42 CFR  410.21(b)) 
further limit Medicare chiropractic coverage to treatment of 
subluxations that result in a neuromusculoskeletal condition for which 
manual manipulation is appropriate treatment.  Restricting 
reimbursement to spinal manipulation means Medicare may pay 
chiropractors for only three Current Procedural Terminology (CPT) 
codes: 98940 (Chiropractive Manipulative Treatment; spinal, one to
 two 
regions), 98941 (three to four regions), and 98942 (five regions). In

2001, CPT code 98942 accounted for fewer than 10 percent of the 
chiropractic services allowed by Medicare, with each of the lower-level 
CPT codes accounting for approximately 45 percent of the total. 
The Balanced Budget Act of 1997 removed the X-ray requirement as of 
January 1, 2000, and instructed the Secretary of the Department of 
Health and Human Services to establish utilization guidelines for 
5 Jensen, M., M. Brant-Zawadzki, N. Obuchowski, et al. Magnetic Resonance Imaging of 
the Lumbar Spine in People Without Back Pain.  New England Journal of Medicine 1994; 
vol. 331: 69-116. Cited in: Back Pain Statistics.  American Chiropractic Association.  
Retrieved October 24, 2003, http://www.amerchiro.org/media/whatis/benefits.shtml. 
6 Note that no payment is provided to chiropractors for services other than manual 
manipulation of the spine; i.e., X-rays and other diagnostic tests are not covered services 
when performed by chiropractors. 
7 The chiropractic provisions (section 273) of the Social Security Amendments of 1972 
modified section 1861(r)(5) of the Act.  
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subluxations not evidenced by an X-ray.  Guidelines for demonstrating a 
subluxation are found in section 2251.2 of the Medicare Carriers 
Manual (the Manual).8  The Manual defines a subluxation as a motion 
segment, in which alignment, movement integrity, and/or physical 
function of the spine are altered although contact between joint surfaces 
remains intact.  If used, an X-ray generally must be taken between  
12 months before and 3 months after the start of treatment. A physical 
examination must identify at least two criteria for treatment, one of 
which must be asymmetry/misalignment or a range of motion 
abnormality. The other criterion can be pain/tenderness or changes in 
the associated soft tissue.  
No matter how the presence of a subluxation is established, section 
2251.3 of the Manual stipulates that beneficiaries also must present a 
significant health problem in the form of a neuromusculoskeletal 
condition necessitating treatment, and the manipulative services 
rendered must have a direct therapeutic relationship to the patients 
condition and provide reasonable expectation of recovery or 
improvement of function.  Furthermore, section 2251.3 of the Manual 
states that . . . [a] treatment plan that seeks to prevent disease, 
promote health and prolong and enhance the quality of life, or therapy 
that is performed to maintain or prevent deterioration of a chronic 
condition is not a Medicare benefit.  Once the maximum therapeutic 
benefit has been achieved for a given condition, ongoing maintenance 
therapy is not considered to be medically necessary under the Medicare 
program.  In other words, Medicare covers only treatment of acute or 
chronic subluxations, not preventive or maintenance care.9  The 
Manual also lists eight absolute and five relative contraindications 
regarding manual manipulation of the spine, such as acute fractures of 
the spine or severe demineralization of the bones.  Such conditions 
preclude the use of or impart significant risk to spinal manipulation. 
Section 2251.2 of the Manual requires that chiropractors document an 
initial history of the patients complaint and establish a treatment plan. 
8 At the time of our study, the references to the Medicare Carriers Manual were accurate.  
The Centers for Medicare & Medicaid Services has since moved to web-based manuals.  The 
Carriers Manual sections cited in this report are now found in the Medicare Benefit Policy 
Manual, Pub. 100-2, Chapter 15, sections 30.5 and 240. 
9 Revisions to the Medicare Carriers Manual issued on May 28, 2004, further clarify the 
definition of maintenance care.   Since our inspection focused on services provided in 2001, 
we cite here the definition effective during that year. 
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The treatment plan should include the expected duration and frequency 
of the patients treatment, specific treatment goals, and objective 
measures against which to evaluate effectiveness.  Though supporting 
documentation must be kept in the medical record, it need not normally 
be submitted to the carrier for a claim to be processed and paid. 
Growth in Medicare Chiropractic Services 
Medicare reimbursement of chiropractic services has increased 
dramatically in recent years. In 1994, the program allowed $255 million 
for 11.2 million services for chiropractic manipulation.  By 2004, those 
numbers had grown to $683 million and 21 million services allowed.  As 
shown in Figure 1, the rate of growth in annual services and dollars 
allowed has accelerated since the X-ray requirement was lifted in 2000.  
For a detailed analysis on the effect of removing the X-ray requirement, 
see Appendix B. 
FIGURE 1  $700  24.0 
Medicare 
reimbursement for 
chiropractic has  $525  18.0 
grown more rapidly 
since 2000. 
$350  12.0 
$175  6.0 
$0  0.0 
4 5 6 7 8 9 0 1 2 3 4 
9 9 9 9 9 9 0 0 0 0 0
9 9 9 9 9 9 0 0 0 0 0
1 1 1 1 1 1 2 2 2 2 2
Allowed dollars(millions)  Allowed services (millions)
Source:  National Claims History Part B 1 Percent Files, 1994  2002

and Medicare Part B Extract and Summary System, 2003 - 2004 

Prior Inspector General Work 
In November 1999, the Office of Inspector General (OIG) responded to a 
request from the Centers for Medicare & Medicaid Services (CMS) to 
analyze the potential impact of establishing chiropractic utilization 
review thresholds at either 18 or 12 treatments per year. In Utilization 
Parameters for Chiropractic Treatments(OEI-04-97-00496), OIG 
concluded that the proposed thresholds would have saved Medicare 
$19.4 million and $30.2 million, respectively, in 2000, and that 
relatively few beneficiaries would be affected by either parameter. 
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Therefore, OIG recommended that CMS institute a national utilization 
review threshold of 12 services per year.  CMS ultimately did not adopt 
a national frequency threshold and continues to leave the matter to 
individual carriers discretion. 
In September 1998, OIG released a report entitled Chiropractic Care: 
Controls Used by Medicare, Medicaid, and Other Payers 
(OEI-04-97-00490).  Based on an analysis of the National Claims 
History Data File, the OIG estimated that $68 million of the  
$294 million Medicare spent on chiropractic treatments in 1996 was for 
chiropractic maintenance treatments. 
In 1986, OIG released a report entitled Inspection of Chiropractic 
Services under Medicare(OAI-05-86-00002).  OIG found that because of 
disagreement about the ability of an X-ray to reveal a subluxation, the 
existing X-ray requirement was not well enforced, might actually have 
been unenforceable, and was highly conducive to abuse.  In addition, the 
report described a lack of standards within the chiropractic profession 
and a number of questionable practices.  For these reasons, OIG 
concluded that chiropractic constituted a serious vulnerability to the 
Medicare program. 
METHODOLOGY 
We used multiple methodologies to accomplish our objectives.  The 
primary method was medical review of chiropractic records.  We also 
interviewed carriers, analyzed historical claims data, and accessed 
external Government data sources. Point estimates with confidence 
intervals for selected statistics and the results of statistical tests for 
selected comparisons from the findings are contained in Appendixes  
C and D, respectively. 
Medical Review10 
We defined our universe as 91 percent of services provided by 
chiropractors in 2001 and allowed by Medicare.11  This universe 
10 For a more detailed discussion of the medical review methodology, refer to Appendix A. 
11 A data processing error prevented us from using 100 percent of claims.  The original 
data was contained in five compressed files.  We decompressed these files and merged them 
into a single population data set.  However, one of the smaller files failed to read into our 
population data set correctly, and therefore, contributed far fewer claims than expected to 
the population. Most of the omitted claims were for beneficiaries with Medicare numbers 
associated with the Railroad Retirement Board or the State of Massachusetts. 
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contained 14,497,406 claims with a total allowed amount of 
$457,444,574.32.  To make statistically valid projections of the dollar 
value of all noncovered, miscoded, or undocumented chiropractic 
services allowed in 2001, we selected a simple random sample of   
400 Medicare services from this universe.  The total allowed amount in 
our sample was $12,638.38.  We then identified and contacted the 
chiropractor listed on each claim for service to request records for the 
beneficiarys entire course of treatment.12 
We contracted with practicing chiropractors to review each service 
according to a standard protocol, which was based on Medicare coverage 
guidelines and requirements.  The review instrument solicited 
information about the beneficiarys chiropractic treatment as a whole 
and about the individual sampled service in particular.  This enabled 
the reviewers to determine if the services billed to Medicare were 
covered, coded correctly, and properly documented.  In particular, it 
enabled the reviewers to determine the extent to which payments were 
made for maintenance services, which are not covered under Medicare. 
The results of our review of the 400 sampled services were not shared 
with the Medicare carriers who paid the chiropractors for these services. 
Further, the level of information that we collected would not generally 
be available to those carriers unless they were to conduct a 
comprehensive medical review of a particular chiropractor or patient.  
After completing their review, the contractors returned the completed 
instruments to us for data entry.  We analyzed the medical reviews 
using the statistical software packages SAS and SUDAAN.  For a more 
detailed discussion of this methodology, see Appendix A. 
Based on the results of this review, we also determined the likelihood of 
services being uncovered depending on the number of services billed per 
episode of care.  Knowing this, Medicare carriers can make informed 
choices regarding the level of effort to expend in reviewing questionable 
billings based on billing patterns. 
12 We were unable to contact two chiropractors and removed the two claims associated 
with these chiropractors from consideration. In addition, the chiropractors identified on 
four claims failed to respond to our repeated requests for recordsthese services were 
considered undocumented. 
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Because we only reviewed services provided by chiropractors in 2001, 
our sample results cannot be extrapolated to other periods.  Accordingly, 
we make no inferences to chiropractic error rates in subsequent years. 
Additional Methods 
We conducted telephone interviews with all Medicare carriers using a 
standardized interview guide.  We also collected policy guidance that 
had been issued by each carrier to its provider community.  We 
researched carriers Local Medical Review Policies, as well as laws, 
regulations, and policy, concerning the chiropractic benefit. 
We reviewed literature from chiropractic organizations and other 
sources to gather background on chiropractic and help refine our 
medical review instrument.  Information from Government sources, 
such as the Agency for Healthcare Research and Quality and the 
Bureau of Labor Statistics, provided background and comparative trend 
data. Lastly, we collected and tabulated information gleaned from 
online brochures for Federal Employee Health Benefits Plans. 
This inspection was conducted in accordance with the Quality 
Standards for Inspections issued by the Presidents Council on Integrity 
and Efficiency. 
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Maintenance services were the most common  In 2001, Medicare allowed 
type of noncovered chiropractic services that  approximately $457 million for the 
14.5 million chiropractic services in 
Medicare paid for in 2001 
our universe.  Based on our medical 
review, although billed with allowable spinal manipulation codes, 57 
percent of these services did not meet Medicare coverage criteria (i.e., 
were noncovered).  An additional 16 percent were miscoded or billed at 
the wrong level of spinal manipulation, and 6 percent were 
undocumented.  Twelve percent had multiple errors, yielding an overall 
error rate of 67 percent.  Figure 2 groups the improperly paid services in 
our sample by the type of error and gives statistical projections of these 
errors to the population. 
Figure 2:  Noncovered and Miscoded Chiropractic Services 
Sample 
Projected 
(400 Total Services) 
Allowed  Services  Allowed Amount 
Type of error  Services  Amount  (Proportion)  (Millions) 
Noncovered: 
- Not medically necessary: 
161  $5,144.85  0.40  $186 
maintenance 
- Not medically necessary:  other  57  $1,790.59  0.14  $65 
- Not manual manipulation of the 
21  $668.89  0.05  $24 
spine 
- (Both medically unnecessary 
(13)  ($396.95)  (0.03)  ($14) 
and not manipulation of the spine) 
Total noncovered  226  $7,207.38  0.57  $261 
Total coded at wrong level (net)  64  $410.31  0.16  $15 
Undocumented: 
- Non-response  3  $89.63  *  * 
- Missing documentation  21  $661.78  0.05  $24 
Total undocumented  24  $751.41  0.06  $27 
(Overlapping errors)  (49)  ($504.17)  (0.12)  ($18) 
Total 265   $7,864.93 0.67  $285 
Source:  Medical Review of Year 2001 Services by Practicing Chiropractors.  The * indicates the n for that cell is too 
small to reliably project. Totals may not be equal to the sum of individual rows due to rounding. 
Noncovered:  Not medically necessary. Section 1862(a)(1)(A) of the Act 
excludes services that are not reasonable and necessary from Medicare 
coverage.  However, 55 percent of the chiropractic services allowed in 
2001, totaling $251 million, did not meet Medicare criteria for medical 
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necessity.  Most of these services (74 percent of medically unnecessary 
services40 percent overall) were correctly billed as spinal 
manipulations but met Medicares definition of maintenance care 
which section 2251.3 of the Manual defines as not medically necessary, 
and is therefore not covered.  In general, the remainder were not 
medically necessary because they did not bear a therapeutic 
relationship to the patients condition, did not provide a reasonable 
expectation of recovery or functional improvement, or were provided 
with excessive frequency or duration. 
Noncovered:  Not manual manipulation of the spine. Section 1861(r)(5) of 
the Act clearly states that Medicare may reimburse chiropractors only 
for manual manipulation of the spine. Chiropractors, though, received 
approximately $24 million from the Medicare program and its 
beneficiaries in 2001 for services other than manual manipulation of the 
spine.  These chiropractors bypassed Medicares coverage limitations by 
submitting claims with a manipulation code that was allowable but did 
not match the service actually provided.  Documentation for several 
services showed that the chiropractor actually performed an extraspinal 
adjustment (e.g., shoulder or knee adjustment) rather than spinal work. 
Other chiropractors billed non-manipulative treatment, such as muscle 
work or network spinal analysis, as spinal manipulation.  Our medical 
reviewers, who are practicing chiropractors, noted that some of this 
treatment was acceptable from a chiropractic standpoint, and may have 
been beneficial to the patient. 
Coded at wrong level.  Medicare allowed $85 million for spinal 
manipulations billed for the incorrect number of regions according to 
the documentation.  The net cost to the program, i.e., the amount 
actually allowed for these services less the amount that would have 
been allowed if the services had been billed correctly, was $15 million.  
Coding errors generally involved upcoding, which is billing a more 
complex and higher-paying service than the one documented in the 
medical record. Approximately 69 percent of services billed for spinal 
manipulation on five regions (CPT code 98942) were upcoded, compared 
to 21 percent of services billed for manipulation on three to four regions 
(CPT code 98941). 
Undocumented.  Chiropractors did not provide substantiating 
documentation for approximately 6 percent of the services billed to 
Medicare. Despite repeated requests, we did not receive the medical 
records related to three of the chiropractic services in our sample.  The 
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chiropractors who rendered an additional 21 of the services provided us 
with records that did not substantiate that any service was rendered on 
the date claimed.  Based on these findings, we estimate that Medicare 
may have allowed approximately $27 million in 2001 for undocumented 
chiropractic services.  Although some cases of missing documentation 
may be attributable to billing errors (e.g., putting the wrong date on the 
claim form), others may represent services not rendered.  In any case, 
claims for services that lack sufficient documentation to show that care 
was provided do not meet the requirements of section 1833(e) of the Act. 
Supporting documentation for chiropractic  Separate from the completely
undocumented services previously 
services rarely met all Medicare Carriers 
discussed, nearly 94 percent of chiropractic 
Manual requirements 
services lacked some or all of the 
supporting documentation that section 2251.2 of the Manual requires.  
The lack of one or more of these elements did not automatically lead us 
to conclude that a service was noncovered, although these 
determinations were often related. For example, even if each visit did 
not include a history and physical, which is required by  
section 2251.2 of the Manual, the service rendered on that day was not 
automatically deemed to be medically unnecessary by the chiropractic 
reviewers. Therefore, we did not include lack of supporting 
documentation as a subcategory of noncovered in the first finding, and 
we do not project an improperly allowed amount merely related to 
deficiencies in supporting documentation.  
FIGURE 3 
Many services do 
Improper 
not meet Medicare  No diagnosis 
evaluation 
requirements for  29% 
documenting a  8%  Diagnosis not 
subluxation.  subluxation 
4% 
No evaluation 
Subluxation 
26% 
diagnosis 
Proper 
67% 
evaluations 
Source:  Medical Review of Year 2001 Claims by Practicing Chiropractors 
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Approximately 34 percent of services were not supported by an 
evaluation of the patient that met the Manuals requirements for 
documenting a subluxation.  In fact, there was no evaluation at all in 
the medical record for 26 percent of services; the remaining 8 percent 
were supported by tests that did not meet the requirements established 
in the Manual.  Furthermore, more than one-third of proper 
evaluationsthose meeting Medicare rules for demonstrating the 
presence of a subluxationresulted in no diagnosis (29 percent) or a 
diagnosis other than subluxation of the spine (4 percent). 
Though a documentation requirement, chiropractors infrequently 
developed treatment plans for their Medicare patients.  Just 28 percent 
of chiropractic services were provided as part of a written plan of care, 
and only 23 percent of those plans included specific treatment goals and 
objective measures to evaluate progress towards those goals. The 
absence of specific goals was a strong indicator of unnecessary care; only 
14 percent of services associated with specific, written goals were 
medically unnecessary compared to 61 percent of those without written 
goals. 
Though infrequently evaluated for them, Medicare beneficiaries rarely 
present contraindications to chiropractic treatment. 
Chiropractors do not routinely evaluate patients for conditions 
mentioned in the Manual, such as severe demineralization of the bones 
or spinal malignancies, which could contraindicate spinal manipulation.  
We found that 66 percent of all chiropractic services were not preceded 
by an evaluation sufficient to detect such contraindications. Although 
potentially compromising quality of care, we found no cases where this 
omission led to complications, and only 21 percent of the evaluations 
that were conducted revealed the presence of even a relative 
contraindication.  In 18 percent of these cases (1 percent overall), our 
reviewers believed that the dangers presented by the beneficiarys 
condition outweighed the potential benefits of chiropractic treatment. 
When chiropractic care extends beyond   
Lack of medical necessity is directly 
12 treatments in a year, it becomes 
related to service volume 
increasingly likely that individual 
services are medically unnecessary. As shown in Figure 4 (next page), 
services provided among the first 12 in a course of treatment to a 
particular beneficiary by the same chiropractor were approximately   
50 percent likely to be medically unnecessary.  That likelihood increased 
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to approximately 67 percent for services between the 13th and 24th and 
to 100 percent for services beyond the 24th.  In addition, these medically 
unnecessary services are more likely to be maintenance in nature at 
higher service volumes. 
FIGURE 4  1 
Higher-volume services  y
are more likely to be  all
medically unnecessary,  dicry 0.75 
ea
particularly  mss
maintenance.  n ce 0.5 
oe
tin
orn
pu 0.25 
o
r
P
0 
1 - 12  13 - 24  25 or higher 
Service number (in course of treatment) 
Maintenance  Other medically unnecessary 
Source:  Medical Review of Year 2001 Claims by Practicing Chiropractors 
Given the link between medical necessity and service volume, reviewing 
services that exceed a certain volume threshold could result in 
significant savings. Figure 5 shows the proportion of all services beyond 
specific thresholds that were medically unnecessary and the projected 
savings if carriers had identified and disallowed these services.  See 
Appendix A for further explanation of Figures 4 and 5. 
1
FIGURE 5 
100%  100% 
Lower frequency  0.9 94%  93%  96% 
90%  90% 
thresholds would  0.8 85%  85%  87% 
have resulted in 
greater savings, but  0.7 77%  75%  78% 
captured more  0.6
covered care. 
0.5 8
7
0.4 $ 64 9 
00..23 $ $5 $52 $48 $47 $43 $43 $35 $31 $29 $26 $26 
0.1
0
12  13  14  15  16  17  18  19  20  21  22  23  24 
Threshold 
Projected savings if frequency edit had been set at this level (in millions) 
Proportion of services above threshold that were medically unnecessary 
Source:  Medical Review of Year 2001 Claims by Practicing Chiropractors 
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Carriers and private plans commonly use frequency edits to limit utilization 
and limit improper payments. 
Medicare carriers and private Federal Employee Health Benefits 
(FEHB) plans often manage chiropractic utilization through frequency 
controls, which are based on the number of adjustments provided.  
These frequency-based controls generally fall into one of two categories: 
soft caps (also called frequency edits) and hard caps.  With either type of 
cap, the payer determines the number of services it will routinely allow 
during a specified time period, usually 1 year.  The payer tracks the 
number of services each patient receives and generally pays all claims 
up to this frequency threshold without question.  Payers that use soft 
caps suspend payment for any services that are billed beyond the 
threshold and request additional documentation from the chiropractor.  
If the documentation demonstrates that continued treatment is 
medically necessary, the claims are paid.  Payers that use hard caps do 
not pay for services beyond the established frequency threshold, even if 
they are medically necessary. 
Fourteen of nineteen carriers (74 percent) currently use soft caps as 
their primary means of limiting inappropriate payments, and none use 
hard caps. Individual carriers decide if they want to use the caps and 
also establish their own frequency thresholds.  Historically, most 
carriers imposed a frequency threshold of 12 visits on chiropractic 
services.  Due, at least in part, to complaints from chiropractors who 
believed the 12-visit limit had become a de facto hard cap, many 
carriers have raised their thresholds or eliminated them altogether.  
Figure 6 shows the frequency thresholds currently employed by carriers 
and the distribution of these controls among the States.13 
Figure 6: Frequency Edits Used by Medicare Carriers 
Frequency  12 or fewer  13 to 24  More than 24  No frequency 
threshold  services  services  services   edit 
Number of carriers 
3  8  6  6 
using threshold 
Number of States 
with threshold  4  18  12  22 
Source:  Carrier Interviews Conducted by Office of Evaluation and Inspections Analysts in 2003 
13 Some carriers serve more than one State and use different thresholds in each.  
Similarly, some States are served by multiple carriers, each with its own limit.  In such 
instances, the carrier or State is counted once in each category into which one of its edits 
falls. States include the District of Columbia, Puerto Rico, and the U.S. Virgin Islands. 
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In contrast to Medicare carriers, all but one of the FEHB plans that use 
frequency-based controls to limit chiropractic utilization impose hard 
caps.  Instead of capping the number of services, some FEHB plans limit 
the total dollar amount they will pay for chiropractic services or the 
duration of care.  In addition, many FEHB plans do not offer any 
chiropractic coverage, and others require prior authorization or a 
referral from a medical physician before they will pay for care.  Others 
have no controls other than a member co-payment.  Figure 7 shows the 
controls used by the 132 FEHB plans listed on the Office of Personnel 
Managements Web site. 
Figure 7:  Controls on Chiropractic Services Used by FEHB Plans 
Type of  No  Co-pay  Prior  Freq. cap  Financial  Duration 
control  coverage  only  auth. or  cap  cap 
referral 
Number 
of plans  20  36  26  36  8  6 
Source:  Year 2003 FEHB Brochures Accessed through http://www.opm.gov/insure/03/html/blinks.asp 
Carriers support a national policy on frequency limits. 
At least six carriers would like CMS to develop and enforce a national 
frequency edit or a hard cap on chiropractic services.14   One carrier 
noted that when the 12-visit thresholds were nearly ubiquitous, 
chiropractors generally accepted them; however, when some carriers 
changed or eliminated their thresholds, other carriers were pressured 
by chiropractors in their jurisdictions to follow suit. 
Although generally opposed to frequency-based controls, the provider 
community has previously accepted the idea of a national frequency cap. 
The American Chiropractic Association expressed support for a national 
cap in an October 21, 1999, letter to the Director of the Office of Clinical 
Standards and Quality at the Health Care Financing Administration 
(currently CMS).  Based on the recommendations of a representative 
panel of chiropractors, the letter states that [a threshold of 18 services] 
reflects the consensus of the chiropractic profession and is clinically 
relevant.15 
14 We did not ask carrier staff their opinions on a national frequency edit; these six 
volunteered this opinion when asked for their general comments about the Medicare 
chiropractic benefit. 
15 Specifically, the panel supported an 18 + 6 utilization review parameter where a 
threshold of 18 services would be used as a soft cap and 24 as a hard cap. 
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Carrier controls to prevent overutilization are  All 19 carriers have mechanisms in 
inconsistent  place to prevent and recoup improper 
chiropractic payments. Controls may 
include pre-payment edits that suspend or deny claims based on 
information from the submission, as well as pre-or post-payment 
medical review. Every carrier denies claims from chiropractors for 
noncovered CPT codes and claims for chiropractic CPT codes from non-
chiropractors. In addition, every carrier except one uses computer edits 
that suspend or deny claims with improper diagnosis codes. As 
previously discussed, 15 carriers use frequency edits to control 
utilization. Some carriers use chiropractors, medical physicians, or, 
more commonly, nurses to conduct medical review before they pay 
claims that have been flagged through frequency edits. Other carriers 
conduct a non-medical claims audit of flagged claims. A number of 
carriers indicated they automatically deny claims that exceed their 
frequency threshold unless the claim meets certain criteria, such as 
having a particular diagnosis code. 
Carriers vary widely in the resources they devote to monitoring 
chiropractic utilization. For example, the number of pre-payment 
claims reviews conducted by carriers averaged from zero at some 
carriers to approximately 85,000 per year at one large carrier. Some of 
the less active carriers depend entirely on diagnosis-based edits to 
identify improper claims, meaning that as long as a claim is submitted 
with a covered diagnosis code, it will be paid. The use of post-payment 
reviews is equally inconsistent. Although most carriers indicated they 
might conduct post-payment reviews of chiropractic services, only three 
provided evidence that any were conducted recently, and one of those 
had done only two. One large carrier noted that post-payment reviews 
are now the province of the Program Safeguard Contractors. The 
variation observed among the carriers may be due, in part, to different 
philosophies regarding controlling chiropractic claims. For example, 
some carriers believe that oversight of chiropractic services is not a 
priority for CMS, given limited budgets and the relatively small amount 
of money associated with chiropractic services. 
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 R E C O M M E N  D A T  I O N S  
Based on the volume of noncovered, miscoded, and undocumented 
services that were paid, we conclude that chiropractic services represent 
a significant vulnerability for the Medicare program.  As more 
beneficiaries avail themselves of chiropractic care, the amount of money 
lost to medically unnecessary, non-manipulation, and undocumented 
services is likely to increase unless appropriate controls are instituted. 
Therefore, we recommend that CMS: 
Ensure that chiropractic services comply with Medicare coverage criteria. 
Given the strong correlation between the number of services a 
beneficiary receives and the likelihood a service is not medically 
necessary, CMS should implement a national frequency edit to target 
high-volume serviceswhich are especially likely to be medically 
unnecessaryfor medical review. Carriers or Program Safeguard 
Contractors should then obtain and review the records of beneficiaries 
targeted by the frequency edit in order to identify and collect 
overpayments. 
Many services that would not exceed even a very low frequency 
threshold were medically unnecessary, undocumented, not spinal 
manipulation, or miscoded.  Therefore, in addition to whatever 
frequency control is chosen, CMS should require that its carriers or 
Program Safeguard Contractors conduct routine service-specific reviews 
of chiropractic services.  When conducting reviews of individual 
providers, it is imperative that reviewers collect the entire records 
associated with services selected as part of a service-specific review. 
Several records we reviewed would have appeared legitimate for any 
one particular day of service; however, that days documentation was 
repeated verbatim for the entirety of the patients treatment. 
Require that carriers educate chiropractors on Medicare Carriers Manual 
requirements for supporting documentation. 
Many chiropractors seem unaware of the specific documentation 
requirements outlined in section 2251.2 of the Manual.  CMS should 
address this lack of knowledge by directing its carriers to issue provider 
bulletins reminding chiropractors of their responsibilities.  Due to the 
relationship we found between the lack of treatment plans and 
medically unnecessary services, the bulletins should especially 
emphasize this requirement. 
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In addition to these recommendations, we have forwarded information 
on the noncovered, miscoded, and undocumented services identified in 
our sample to CMS for appropriate action. As mentioned in the 
methodology, the results of our review of the 400 sampled services were 
not shared with the Medicare carriers who paid the chiropractors for 
these services. 
AGENCY COMMENTS 
In its comments on our draft report, CMS agreed with our findings and 
recommendations. The agency has clarified its chiropractic coverage 
criteria and indicated that most carriers are taking steps to reduce 
chiropractic error rates, including targeted educational efforts and 
service-specific medical reviews. In addition, as of October 1, 2004, 
CMS has required that chiropractors use the AT modifier to indicate 
that a service is not maintenance. Only claims to which this modifier is 
attached are payable. The full text of CMSs comments begins on 
page 19. 
OIG RESPONSE 
We appreciate CMSs response to our report, and support the steps the 
agency is currently undertaking to help prevent paying for noncovered, 
miscoded, and undocumented services. 
CMS noted in its comments that while this OIG study projected that 
67 percent of the chiropractic services allowed by Medicare did not meet 
program requirements, CMSs Comprehensive Error Rate Testing 
(CERT) program identified a claims paid error rate of approximately 
16 percent for claims submitted by chiropractors in 2002. CMS further 
noted that differences in the methodological approaches accounted for 
the significantly different rates. In particular, CMS recognized that 
OIGs review of a beneficiarys claims during their entire course of 
treatment enabled us to determine that approximately 40 percent of all 
chiropractic services are attributable to maintenance care, and thus are 
not covered under Medicare. In contrast, the CERT paid claims error 
rate is based on a review of a single claim, which limits its ability to 
detect uncovered maintenance costs.
 We agree with CMS and would like to emphasize that the purpose of 
this inspection was to determine the underlying causes of, and potential 
ways to reduce, vulnerabilities associated with payments for 
chiropractic services. It was not designed to reproduce, or to review, the 
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CERT paid claims error rate.  In addition to the different 
methodological approaches that are noted above, the CERT used 2002 
data, whereas our data was drawn from 2001.  Hence, our results 
cannot be compared directly to the CERT program results.  
Furthermore, chiropractic payment errors, while a significant 
vulnerability, contribute only minimally to the overall CERT national 
paid claims error rate.  Medicare allowed approximately $191 billion for 
Medicare fee-for-service claims in 2001.  Chiropractic services accounted 
for $500 million, or 0.26 percent of this amount. Therefore, the 
chiropractic-specific error rate has little influence on the overall CERT 
error rate for fee-for-service claims. 
Given that Medicare payments for chiropractic services have continued 
to increase since 2001, the need for a more effective way to eliminate 
inappropriate maintenance payments is crucial.  However, we recognize 
that it may be impractical for the CERT program to expend its limited 
resources to collect the extent of documentation used in our review. 
Therefore, in the future, CMS may wish to conduct additional studies 
outside the scope of the CERT program to determine cost-efficient ways 
to address chiropractic payment errors. 
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A G E N C Y   C O M M E N T S

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  A P P E N D I X   ~   A
Detailed Methodology 
We defined our universe for the review as allowed services provided in 
2001 by chiropractors (specialty code 35).  Due to an internal processing 
error that was only discovered during the analysis phase, our actual 
universe was limited to 91 percent of such services.16   From this 
universe of 14,497,406 services (with a total allowed amount of 
$457,444,574.32), we selected a simple random sample of 400.   
Next, we matched the Unique Physician Identification Number (UPIN) 
and carrier-assigned provider identification number of the chiropractor 
who submitted the claim to the national UPIN registry in order to 
obtain the chiropractors name and mailing address.  A significant 
number of claims failed this match.  We first attempted a manual 
Internet search for these unmatched UPINs; if unsuccessful, we 
telephoned carrier staff in order to obtain a valid name and address. 
After obtaining mailing addresses, we sent letters to each chiropractor, 
requesting medical and billing records for each beneficiary associated 
with that doctor.  The letter requested that the chiropractor include all 
records for the beneficiary, not just those for services rendered in 2001.  
A significant number of these initial letters were returned as 
undeliverable.  We used Internet searches or called carriers to obtain 
correct addresses.  Ultimately, we were unable to contact two 
chiropractors, representing one sample service each; we removed these 
two from consideration. 
If we did not receive a response within approximately 5 weeks, we sent 
a second letter to the initial address.  The second mailing also revealed 
a significant number of incorrect addresses, which we resolved in the 
manner described above. If we received no response after the second 
mailing, we obtained phone and/or fax numbers from the Internet or the 
carriers and telephoned or faxed the nonrespondents.  Although we 
managed to contact every chiropractor except the two mentioned above, 
three did not provide records, and one sent records after the study 
period had been closed for more than a month. 
16 The original data was contained in five compressed files.  We decompressed these files 
and merged them into a single population data set.  However, one of the smaller files failed 
to read into our population data set correctly, and therefore, contributed far fewer claims 
than expected to the population.  Most of the omitted claims were for beneficiaries with 
Medicare numbers associated with the Railroad Retirement Board or the State of 
Massachusetts. 
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A P P E N D I X   ~   A  
We organized each record and placed it into a folder to which the 
beneficiarys 2001 claims history was appended.  We sent these folders 
to our medical review contractor, who forwarded them to chiropractic 
consultants for review.  Each consultant/reviewer is a currently 
practicing chiropractor with experience in reviewing Medicare claims. 
We had previously developed a review instrument based on Medicare 
coverage criteria with the assistance of the medical review contractor. 
Before beginning the review, we met with the chiropractors to finalize 
the review protocol and to orient the reviewers to its use. The review 
instrument solicited information about the beneficiarys chiropractic 
treatment as a whole and about the individual sampled service in 
particular; the majority of the findings are based on the individual 
service questions. 
After reviewing the records, the chiropractors returned the completed 
instruments to the contractor for quality control, who then forwarded 
them to us for entry into a data set.  All analysis of the medical reviews, 
which included merging our data with census and other outside sources 
of information, was conducted using the statistical software packages 
SAS and SUDAAN. 
Note on factors associated with medical necessity.  We tested medical 
necessity as the response variable in a logistic regression with the 
following factors:  the number of previous services allowed for the 
chiropractor-beneficiary combination in 2001, the absence of a 
treatment plan with stated goals, the presence of CPT code 98941 on the 
claim, the service being in the first month of treatment, and the 
urban/rural characteristics of the county where the service was billed.  
The number of prior services, the presence of CPT code 98941, and 
being in the first month of treatment were significant at the 95 percent 
confidence level. 
Note on Figures 4 and 5.  To obtain the estimates for the proportions of 
chiropractic services that were not medically necessary for Figures 
4 and 5, we first determined the position of the sample service in the 
beneficiarys series of treatments.  That is, we determined, for each 
claim, the number of services that had been previously allowed for that 
chiropractor-beneficiary combination in 2001.  For Figure 4, we then 
grouped the sample services into the categories shown in Figure 4 
(1 to 12 services, 13 to 24 services, 25 or more services) depending on 
the number of prior services allowed and determined the proportion of 
services in each category that were medically unnecessary. For Figure 
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5, on the other hand, we determined the proportion of all services 
exceeding each threshold analyzed that were medically unnecessary.  
Hence, the numerator (medically unnecessary services) for each 
estimate in Figure 5 includes all services from the 25 or more group 
from Figure 4, since the highest threshold analyzed was 24 services. 
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 A P P E N D I X   ~   B
Further Discussion of the Effects of Removing the X-ray 
Requirement 
National Claims History data strongly suggest that removing the X-ray 
requirement spurred an increase in the number of beneficiaries 
receiving chiropractic care.  As shown in Figure A-1, the proportion of 
Medicare beneficiaries using chiropractic services grew fairly steadily 
from 4.6 percent in 1994 to 4.8 percent in 1999, at a rate that 
approximately mirrored that in Americans less than 65 years old.17  In 
2000, the Medicare proportion jumped to 5.5 percent, roughly 2.5 times 
the combined increase from the previous 5 years, with no evidence that 
this change was reflected in the under-65 population.  Medicare did not 
issue any policy changes other than removal of the X-ray requirement, 
or experience any shifts in its population (such as changes in the 
proportion of beneficiaries in rural areas) that would account for this 
increase. 
FIGURE A-1 
Medicare chiropractic utilization grew 
more rapidly after 1999 compared to the 
general population. 
7% 
c  6% 
cti
a
r 5% 
p
o
r
hi 4% 
c
g 
n
si 3% 
u
t 
n 2% 
e
c
r
e
P 1% 
0% 
1994  1995  1996  1997  1998  1999  2000  2001  2002 
Medicare beneficiaries 
Under-65 population (with standard errors) 
Medicare trend (as established 1994 - 1999) 
Source:  National Claims History Part B 1 Percent Files, 1994 to 2002 and 
Agency for Healthcare Research and Quality Medical Expenditure Panel 
Survey, 1996 to 2001 
17 The under-65 population data from the Medical Expenditure Panel Survey is only 
available for the years displayed. 
  OEI-09-02-00530  CHIROPRACTIC SERVICES IN THE MEDICARE PROGRAM:  PAYMENT VULNERABILITY ANALYSIS  24  Report Template Version  = 03-01-05_rev.07  
A P P E N D I X   ~   B  
We used a commercial time series program called ITSM 2000 to develop 
an auto-regressive moving average model of the proportion of 
beneficiaries who received chiropractic services in each month from 
January 1994 to December 1999.  Using this model, we forecast this 
proportion and produced the upper bound of a 90 percent confidence 
interval for each month from January 2000 to December 2002.  As 
shown in Figure A-2, the actual proportion of beneficiaries who received 
chiropractic services surpasses the 90 percent confidence upper bound of 
our projection in nearly every month since the removal of the X-ray 
requirement. 
FIGURE A-2 
Elimination of the X-ray requirement coincides 
with greater-than-expected growth in the 
proportion of beneficiaries who receive 
chiropractic services. 
0.04 
0.035 
n 
o
orti 0.03 
p
o
Pr
0.025 
0.02 
Jan-94  Jan-95  Jan-96  Jan-97  Jan-98  Jan-99  Jan-00  Jan-01  Jan-02 
Actual  Predicted  90% Confidence Upper Bound 
Source:  National Claims History Part B 1 Percent Files, 1994 to 2002 
  OEI-09-02-00530  CHIROPRACTIC SERVICES IN THE MEDICARE PROGRAM:  PAYMENT VULNERABILITY ANALYSIS  25  Report Template Version  = 03-01-05_rev.07  
A P P E N D I X   ~   B  
As shown in Figure A-3, the number of new chiropractic beneficiaries 
(those who had never previously received a chiropractic service in 
Medicare), increased dramatically after the removal of the X-ray 
requirement, from approximately 441,000 beneficiaries in 1999 to 
565,000 beneficiaries in 2000.18   One possible explanation stems from 
Medicares inability to pay for diagnostic tests ordered or performed by 
a chiropractor.  Although a radiologist or medical physician may order 
and be reimbursed for tests on a patient referred by a chiropractor, the 
cost for X-rays may be assumed by the chiropractor or passed on to the 
beneficiary in many cases. Prior to January 2000, many chiropractors 
and beneficiaries may have been unwilling to shoulder the cost for   
X-rays, and hence the requirement may have served as a cost barrier to 
covered chiropractic care. 
FIGURE A-3 
The number of new chiropractic 
beneficiaries increased dramatically after 
removal of the X-ray requirement. 
700 
s
e
ari 600 
ci
fi
ne )  500 
e s
B d
n
c  a 400 
cti us
ra ho 300 
p t
o n 
hir (i 200 
C
" 
w 100 
e
N
"
0 
1996  1997  1998  1999  2000  2001  2002 
Source:  National Claims History Part B 1 Percent Files, 1994 to 2002 
18 We used the 1 percent National Claims History files from 1994 to 2002 to formulate 
the numbers of new beneficiaries.  Therefore, it is possible that some of the new 
chiropractic beneficiaries in each year shown had actually received chiropractic services 
sometime prior to 1994. 
  OEI-09-02-00530  CHIROPRACTIC SERVICES IN THE MEDICARE PROGRAM:  PAYMENT VULNERABILITY ANALYSIS  26     Report Template Version  = 03-01-05_rev.07  
  A P P E N D I X   ~   D
Significance Tests for Selected Comparisons 
Comparison  Test Result  P-value 
Medically unnecessary services by number of  12 or fewer services versus 13 to 24 services  -2.45  0.0146 
services, pairwise t-tests 
12 or fewer services versus more than    -17.87 0.0000 
(Bonferroni threshold = 0.016667)  24 services 
13 to 24 services versus more than    -5.17  0.0000 
24 services 
Medically unnecessary services by presence of a treatment plan with specific goals,  24.91  0.0000 
chi-square test 
  OEI-09-02-00530  CHIROPRACTIC SERVICES IN THE MEDICARE PROGRAM:  PAYMENT VULNERABILITY ANALYSIS  30  Report Template Version  = 03-01-05_rev.07  

 A C K N O W L E D G M E N T S
This report was prepared under the direction of Paul Gottlober,  
Regional Inspector General for Evaluation and Inspections in 
the San Francisco regional office, and Deborah Harvey, Assistant 
Regional Inspector General.  Other principal Office of Evaluation and 
Inspections staff that contributed include: 
Scott Hutchison, Team Leader 
Michael Henry, Program Analyst 
Cindy Lemesh, Program Analyst 
Cheryl Dotts, Program Assistant 
Stephanie London, Program Specialist 
Tricia Davis, Director,Medicare and Medicaid Branch 
Technical Assistance 
Rob Gibbons, Program Analyst 
Scott Horning, Program Analyst 
Linda Moscoe, Program Analyst 
Barbara Tedesco, Mathematical Statistician 
We would like to thank our medical review contractor and the 
individual chiropractors who performed the review, as well as the 
carrier staff who participated in our interviews and assisted us in 
obtaining contact information for the chiropractors whose services were 
selected for review. 
  OEI-09-02-00530  CHIROPRACTIC SERVICES IN THE MEDICARE PROGRAM:  PAYMENT VULNERABILITY ANALYSIS  31