Department of Health and Human Services 
OFFICE OF 
INSPECTOR GENERAL 
Inconsistent Medicare Data Concerning 
Carrier Payment Dates 
JUNE GIBBS BROWN 
Inspector General 
SEPTEMBER 2000 
OEI-03-00-00350  OFFICE OF INSPECTOR GENERAL 
The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, is to 
protect the integrity of the Department of Health and Human Services programs as well as the 
health and welfare of beneficiaries served by them.  This statutory mission is carried out through a 
nationwide program of audits, investigations, inspections, sanctions, and fraud alerts.  The 
Inspector General informs the Secretary of program and management problems and recommends 
legislative, regulatory, and operational approaches to correct them. 
Office of Evaluation and Inspections 
The Office of Evaluation and Inspections (OEI) is one of several components of the Office of 
Inspector General.  It conducts short-term management and program evaluations (called 
inspections) that focus on issues of concern to the Department, the Congress, and the public.  The 
inspection reports provide findings and recommendations on the efficiency, vulnerability, and 
effectiveness of departmental programs. 
OEI's Philadelphia Regional Office prepared this report under the direction of Robert A. Vito, 
Regional Inspector General, and Linda M. Ragone, Deputy Regional Inspector General.  Principal 
OEI staff included: 
REGION  HEADQUARTERS 
Tara Schmerling, Project Leader	 Stuart Wright, Program Specialist 
Brian Ritchie, Technical Support Staff 
To obtain copies of this report, please call the Philadelphia Regional Office at 1-800-531-9562. 
Reports are also available on the World Wide Web at our home page address: 
http://www.hhs.gov/oig/oei  June Gibbs Brown

Inspector General

OIG Final Report:  Inconsistent Medicare Data Concerning Carrier Payment Dates, 

OEI-03-00-00350

Nancy-Ann Min DeParle

Administrator

Health Care Financing Administration

Summary 
The purpose of this report is to inform the Health Care Financing Administration (HCFA) of 
an inconsistency involving their claims payment data.  According to HCFAs National Claims 
History File data, it appears that Medicare paid over 80 percent of Part B claims prior to the 
14-day floor requirement.  However, according to HCFAs Contractor Reporting of 
Operational and Workload Data (CROWD) system, payments for less than 1 percent of these 
Part B claims were made prior to the 14-day floor.  Information from both HCFA and carrier 
staff indicates that data from the National Claims History File may not accurately reflect the 
carriers actual date of payment. 
Background 
The Health Care Financing Administration, which administers the Medicare program, 
contracts with companies called carriers to process Medicare Part B claims.  Local carriers 
process physician and outpatient claims.  Four regional carriers, called durable medical 
equipment regional carriers (DMERCs), process claims for durable medical equipment, 
prosthetics, orthotics, and supplies. 
Claims Processing Standards.  According to the Medicare Carriers Manual, certain claims 
processing standards must be met by the carriers, including a payment floor standard. 
Carriers are instructed to hold payment of electronic claims for 13 days and to hold payment 
of paper claims for 26 days, starting their count on the day after the claim is received.  This 
translates to a 14-day floor standard for electronic claims and a 27-day floor standard for paper 
claims.  For example, payment of an approved electronic claim received on October 1, 1998, 
should not be made before October 15, 1998.  Payment of an approved paper claim received 
on October 1, 1998 should not be made before October 28, 1998. 
HCFA Data Systems.  In 1991, HCFA implemented the Common Working File (CWF) to 
improve claims processing in the Medicare program.  Under the CWF system, carriers send 
claim information to one of nine CWF host sites for approval.  Before sending a claim to the 
CWF host sites, carriers enter the claim into their processing system, perform consistency and 
utilization edits, calculate a payment amount, and enter a scheduled date of payment.  At the  Page 2 - Nancy-Ann Min DeParle 
host sites, checks are performed on the claim for consistency, entitlement, and duplication of 
services.  Once the host sites perform these edits, they authorize the carrier to pay the claim, 
reject the claim, or hold the claim until more information is obtained. 
The CWF host sites also forward claims data to HCFA central office.  This data is used to 
produce HCFAs National Claims History File and other claims and utilization files.  Some of 
this data is available to persons outside of HCFA, including persons within the Department of 
Health and Human Services, other Federal agencies, research organizations, and State 
agencies. 
The CROWD system provides HCFA with automated capabilities for monitoring and 
analyzing data relating to the Medicare contractors ongoing operational activities.  Data from 
the CROWD system is provided by the contractors and is used by HCFA when conducting 
contractor performance evaluation reviews. 
Methodology 
National Claims History File. Using HCFAs National Claims History File, we gathered all 
1998 local carrier and DMERC-processed claims for a 1 percent sample of Medicare 
beneficiaries.  We used two variables to determine if the claims were paid under the floor 
requirement.  The first variable, claim receipt date, is defined by HCFA as the date the carrier 
receives the claim from the physician or supplier.  The second variable, the claim payment 
date, is defined by HCFA as the scheduled date of payment to the physician or supplier.  This 
scheduled payment date appears on the carrier claim sent to the CWF host sites and is 
considered to be the date the claim is paid since no additional information regarding the actual 
payment date is available in the file. 
We subtracted the claim receipt date from the claim payment date to calculate the number of 
days it took to pay the claim.  We then identified those claims paid in less than 14 days since 
the floor for electronic claims is 14 days and the majority of claims were submitted 
electronically. 
To perform a further check on the claim payment date, we also looked at another National 
Claims History File variable, the claim accretion date.  The claim accretion date is defined as 
the date the claim is accreted (posted/processed) to the beneficiary master record at the CWF 
host site and authorization for payment is returned to the carrier.  We subtracted the claim 
accretion date from the claim payment date to compare the date of the CWFs authorization to 
pay the claim with the scheduled date of payment as indicated by the carriers. 
In addition, to determine carriers payment patterns, we ran a frequency distribution on the 
claim payment date by carrier number.  This data showed us the number of different pay dates 
for each carrier.  Page 3 - Nancy-Ann Min DeParle 
CROWD System. The HCFA provided us with system printouts of 1998 local carrier and 
DMERC data from their Contractor Reporting of Operational and Workload Data system. 
The information provided contains the number of claims paid and their associated processing 
times.  To calculate the processing time for a claim, carriers are instructed to subtract the 
claim receipt date from the claim payment date.  The carriers retrieve this data from their 
claims processing system.  To calculate the percent of claims paid prior to the 14-day floor, we 
aggregated the number of claims paid during day 1 through day 13 and divided this number by 
the total claims processed.  We did not independently verify the data contained in the 
CROWD system. 
Other Data Sources.  We reviewed pertinent sections of the Medicare Carriers Manual.  We 
spoke with HCFA and contractor staff regarding the National Claims History Files claim 
payment date variable and with HCFA staff regarding data contained in the CROWD system. 
Findings 
The National Claims History File and CROWD system contain contradictory data 
regarding claims paid prior to the 14-day floor requirement 
According to HCFAs 1998 National Claims History File data, Medicare paid 83 percent of 
local carrier claims and 82 percent of DMERC claims prior to the established 14-day floor 
requirement.  More than half of the identified local carrier claims were paid one to three days 
after the claim was received by the carrier.  Over two-thirds of the identified DMERC claims 
were paid three to five days after the carrier received the claim.  However, according to 
HCFAs CROWD system data, less than 1 percent of both local carrier and DMERC 1998 
claims were paid prior to the 14-day floor requirement. 
In discussions with HCFA, we raised questions about the accuracy of the claim payment date 
variable in the National Claims History File.  Information from both HCFA and contractor 
staff indicates that this variable may not accurately reflect the providers actual date of 
payment.  One HCFA explanation was that carriers pay claims on a cycle, and that the claim 
payment date was the date of the carriers next payment cycle.  Based on this explanation, one 
would expect the carriers scheduled dates of payment to cluster around certain dates. 
However, we performed analysis on the National Claims History data and found that the 
carriers paid claims on almost every day of the year. 
In addition, one carriers explanation of the claim payment date variable was that their system 
used the date that the claim was sent to the CWF and simply added two days to arrive at the 
scheduled date of payment.  We compared the date of the CWFs authorization to pay the 
claim (i.e., accretion date) with the scheduled date of payment assigned by the carriers.  We 
found that for 22 percent of the local carrier claims and 4 percent of the DMERC claims, the 
scheduled payment date was actually prior to the date that the CWF authorized the carrier to 
pay the claim.  Page 4 - Nancy-Ann Min DeParle 
Recommendations 
Since the claim payment date variable in the National Claims History File does not appear to 
adequately reflect the carriers actual date of payment, we recommend that HCFA conduct a 
review of the carriers claims processing data to examine the scheduled date of payment 
entered on claims sent to the CWF.  If there is no correlation between the claim payment date 
variable and the carriers actual date of payment, we recommend that HCFA (1) define for 
carriers what data should be entered into this field and how it should be calculated, and/or (2) 
revise the current variable definition to clarify for National Claims History data users that the 
scheduled date of payment is not an accurate reflection of the actual claim payment date. 
In light of our findings, we believe that HCFA should also review the carriers claims 
processing data to determine the accuracy of information contained in the CROWD system. 
Agency Comments 
The HCFA believes the inconsistency found between the CROWD and National Claims 
History File data is a result of the way carriers are entering prospective payment dates on 
claims sent to the CWF.  In order to fully understand this discrepancy, the HCFA stated that a 
review is underway to compare data contained in the National Claims History File with data at 
the local carrier level.  In addition, HCFA has approved two new edits which will enforce the 
payment floor standards on claims sent to the CWF.  Based on the validity of the CROWD 
data through 1994, HCFA believes that payment floor standards are being met, and therefore 
does not plan on examining the accuracy of the CROWD data unless their review reveals 
problems with the CROWD system.  The full text of HCFAs comments is attached. 
OIG Response 
We support HCFAs effort to uncover the cause of inconsistent payment data between the 
National Claims History File and the CROWD system.  We believe the new edits will help to 
ensure that payment floor standards are being enforced at the CWF level.  Along with these 
edits, we hope HCFA will instruct carriers how to calculate the scheduled payment date so 
this variable is accurate and consistently defined among carriers.  Although the CROWD data 
does indicate that payment floor standards are being met, validation studies of the CROWD 
data have not been conducted in the last six years.  Therefore, we continue to believe it is 
important to validate the data in the CROWD system to ensure its accuracy with regard to the 
payment floor standards.  Attachment  Attachment