Department  of Health  and  Human  Services 
OFFICE  OF 
INSPECTOR  GENERAL 
Portable  Imaging  Services: 

Nursing  Home  Perspectives 
JUNl3 GIBBS  BROWN 
Inspector  General 
NOVEMBER  1997 
OEI-09-95-00091  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. 

OEIs San Francisco  Regional  Office  prepared  this report  under the direction  of 

Kaye D. Kidwell,  Regional  Inspector  General,  and Paul A.  Gottlober,  Deputy  Regional 

Inspector  General.  Principal  OEI staff included: 

REGION  IX  HEADQUARTERS 
Brad Rollin,  Project  Leader  Stuart Wright,  Program  Specialist 
Robert  Gibbons,  Project  Leader 

Kathy  Dezotte 

Don Loeb 

Thomas  Purvis 

Joseph  Corso,  Consultant 

To obtain  a copy of this report,  call the San Francisco  Regional  Office  at 415-437-7900.  Department  of Health  and  Human  Services 
OFFICE  OF 
INSPECTOR  GENERAL 
Portable  Imaging  Services: 

Nursing  Home  Perspectives 
JUNE  GIBBS BROWN 
Inspector  General 
NOVEMBER  1997 
OEI-09-95-00091  EXECUTIVE  SUMMARY 
PURPOSE 
This inspection  determined  when,  how,  and why nursing  homes use portable  imaging 
services  for their  patients. 
BACKGROUND 
Portable  Imaging 
Nursing  homes* provide  directly  or arrange  for ancillary  services--such  as x-rays--for 
patients  who require  them.  In some instances,  firms known  as portable  x-ray suppliers 
provide  portable  x-ray  and electrocardiogram  (EKG) services  in nursing  homes.**  These 
services  may be billed  either by skilled  nursing  facilities  to the Part A fiscal  intermediary 
or by the portable  supplier  to the Part B carrier.  Direct billing  occurs when the 
portable  supplier  bills the carrier.  Billing  under  arrangement  occurs when,  based on a 
contractual  agreement,  a skilled  nursing  facility  bills the fiscal intermediary  and pays the 
portable  supplier  for services rendered.  Skilled  nursing  facilities  may bill under 
arrangement  even for patients  who are not in Part A-covered  stays. 
When  a fiscal  intermediary  processes the claim,  reimbursement  is based on a 
predetermined  interim  payment  which  is finalized  after a skilled  nursing  facility  submits 
its annual  cost report.  When  a carrier  processes the claim,  reimbursement  is based on a 
combination  of a reasonable  charge determination  and the national  fee schedule. 
In a companion  report,  entitled  Portable  Imaging  Services:  A Costly  Option 
(OEI-09-9500090),  we found that portable  services cost much more than non-portable 
services  and that Medicare  pays too much when services are billed  under  arrangement. 
As a result,  we conducted  interviews  with nursing  homes that provide  portable  services  to 
determine  (1) why they use portable  services and (2) why they bill under  arrangement. 
Another  companion  report,  Imaging  Services  for Nursing  Home  Patients:  Medical 
Necessity  (OEI-09-95-00092),  assesses the medical  necessity  and quality  of care. 
Methodology 
We conducted  the interviews  with a sample of 93 nursing  homes that had provided  a 
portable  chest x-ray  for the patients  sampled in our studies on costs,  medical  necessity, 
* For purposes  of this inspection,  nursing homes refers to skilled nursing,  Medicaid nursing,  board and 
care,  assisted living,  and retirement  facilities collectively.  Where appropriate,  we distinguish  between 
skilled nursing  facilities  and these other facilities. 
**Other options  for nursing homes include transporting  patients to hospital outpatient  departments, 
imaging centers,  physician  offices,  or other facilities for x-rays or EKGs. 
i  and quality  of care of selected imaging  procedures  provided  in different  settings.  We 
asked the nursing  homes how they provide  services,  how they bill  for them,  and their 
rationale  for these decisions.  For skilled  nursing  facilities  that bill under  arrangement,  we 
obtained  copies  of their  contracts  with portable  suppliers. 
Operation  Restore Trust 
In May  1995, President  Clinton  announced  Operation  Restore  Trust (ORT),  a crackdown 
on Medicare  and Medicaid  fraud,  waste,  and abuse in home health  agencies,  nursing 
homes,  and durable  medical  equipment  suppliers.  The ORT focuses on the five  States-
California,  New York,  Florida,  Texas,  and Illinois--that  account  for 40 percent  of the 
nations  Medicare  beneficiaries  and program  expenditures.  This was an ORT inspection, 
and this report  is the second in a series on imaging  services  for nursing  home patients 
prepared  by the Office  of Inspector  General. 
FINDINGS 
Portable services have become  routine 
Although  Health  Care Financing  Administration  (HCFA)  regulations  state that physicians 
must justify  the need for the use of a portable  imaging  supplier,  portable  services  are 
routinely  provided  to patients  who reside in the sampled nursing  homes.  Approximately 
one-third  of the physician  orders  for chest x-rays that were provided  by portable  suppliers 
indicated  the reason  why the x-ray was medically  necessary  but did not justify  the need 
for portable  services.  Furthermore,  there was no indication  in more than 50 percent  of 
the beneficiaries  medical  records  that they would be unable  to be transported  outside  of 
the nursing  home  for medical  services.  In response to these findings,  sampled  nursing 
homes  stated that patients  routinely  receive  portable  services because  (1) portable  services 
are less costly  and more  convenient  for nursing  homes and (2) they believe  that portable 
services  are easier  and more convenient  for the patient. 
Reasons for  billing under  arrangement  are questionable 
In our report  on the costs of imaging  services,  we found that portable  services  billed 
under  arrangement  cost as much as nine times more than the same services provided  in 
other  settings.  Respondents  were unable  to shed much light on the subject of billing  under 
arrangement,  however.  They  stated that they were unable  to answer questions  about 
billing  under  arrangement  because they  were too new to the skilled  nursing  facility,  were 
not involved  in the decision,  or did not occupy  a decision-making  position  when the 
facility  negotiated  the arrangement. 
Patient records  are not secure 
Approximately  21 percent  of nursing  homes  in our sample stated that portable  x-ray 
technicians  have  access to the medical  file for the patient  who is receiving  a portable 
service. 
ii  RECOMMENDATIONS 
In the draft  of this report,  we recommended  that HCFA: 
b 	 eliminate the requirement that physicians just@  the use of portable  services for 
nursing  home patients and 
b  remind nursing  homes that suppliers should not have access to patient records. 
The HCFA  concurred  with our recommendation  on patient  records  but did not concur  with 
our recommendation  that it eliminate  the requirement  that physicians  justify  the use of 
portable  services.  The HCFA  believes  that the current  requirements  should be maintained 
but does not state that it will enforce  them. 
After  we released  our draft report,  President  Clinton  signed into law the Balanced  Budget 
Act of  1997.  Among  the provisions  in this law,  it (1) establishes  a prospective  payment 
system for beneficiaries  in Part A-covered  stays in skilled  nursing  facilities,  to be phased 
in over  several  years;  (2) requires  that all Part B items and services  furnished  to residents 
of nursing  homes  (not covered  under Part A) be billed  by the nursing  homes  as part of a 
consolidated  billing  system;  (3) limits  reimbursement  for services paid under  consolidated 
billing  to the Part B fee schedule;  and (4) requires  HCFA  Common  Procedure  Coding 
System codes for services provided  to skilled  nursing  facility  patients  that are billed  to 
fiscal  intermediaries. 
Based on HCFAs  comments  as well as the impact of the Balanced Budget Act,  we have 
amended  our recommendations.  We now recommend  that HCFA: 
enforce the requirement that physicians justify  the need for portable  services, 
b 
We estimate  that HCFA  could save as much as $63.7 million  in  1 year  and 
$37 1.9 million  over 5 years by enforcing  current  requirements. 
b 	 take into account the unnecessary payments  that have been made for  portable 
imaging services when it implements the prospective  payment  and Part B 
provisions  of the Balanced Budget Act,  seeking legislative  authority  if 
necessary,  and 
Because HCFA  has not enforced  the physician  justification  requirement,  services 
that were not justified  were routinely  paid. 
remind nursing homes that suppliers should not have access to patient  records. 
b 
Most nursing  homes know that portable  suppliers  do not need access to patient 
records.  Federal  law dictates that nursing  homes maintain  strict control  of these 
records. 
. . . 
111  TABLE  OF  CONTENTS 
PAGE 

EXECUTIVE  SUMMARY 

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

FINDINGS  ..............................................  5 

Portable  services  have become  routine  ...........................  5 

 
Reasons  for billing  under arrangement  are questionable  .................  6 

 
Patient  records  are not secure  ................................  7 

 
RECOMMENDATIONS  .....................................  8 

APPENDICES 
A:  Agency  Comments  .....................................  A-l 
B:  Confidence  Intervals  ....................................  B-l 
C:  Estimated  Savings  .....................................  C-l  INTRODUCTION 
PURPOSE 
This inspection  determined  when,  how,  and why nursing  homes use portable  imaging 
services  for their patients. 
BACKGROUND 
Congress  enacted  Medicare  in  1965 to provide  health  services to the elderly  and disabled. 
The program  consists  of two distinct  parts.  The first part is hospital  insurance  or Part A. 
Part A covers  services  furnished  by providers,  i.e.,  hospitals,  home health  agencies,  and 
skilled  nursing  facilities.  The second part,  supplementary  medical  insurance  or Part B, 
covers  a wide range of medical  services  and supplies.  These include  physician  services, 
outpatient  hospital  services,  diagnostic  laboratory  tests,  x-rays,  ambulance  services,  and 
durable  medical  equipment. 
The Health  Care Financing  Administration  (HCFA)  administers  Medicare  and contracts 
with private  insurance  companies  to process and pay claims.  Contractors  that process  Part 
A claims  are referred  to as fiscal  intermediaries.  Contractors  that process  Part B claims 
are called  carriers.  Some companies  operate  as both fiscal intermediaries  and carriers. 
The HCFA  provides  substantial  guidance  to fiscal intermediaries  and carriers  on applicable 
laws,  regulations,  national  polices,  fee schedules,  and other requirements.  In some areas, 
Federal  law and HCFA  allow the fiscal intermediaries  and carriers  considerable  latitude  in 
determining  both coverage  and reimbursement. 
Skilled nursing  facilities and other  extended  care facilities 
Medicare  beneficiaries  recuperating  from an acute episode may be eligible  for post-acute 
skilled  nursing  services.  The Medicare  program  provides  coverage  under  Part A for 
skilled  nursing  services but not for custodial  care.  The skilled  nursing  benefit  includes: 
nursing  care, 

b 
b  bed and board, 

b  physical,  occupational,  or speech therapy, 

b  medical  social  services,  and 

b  drugs,  biologicals,  supplies,  appliances,  and equipment  for use in the facility. 

Medicare  law stipulates  that beneficiaries  are eligible  for skilled  nursing  benefits  if they 
are transferred  to a skilled  nursing  facility  after a minimum  3-day covered  stay in an acute 
 An exception  to this general rule is that fiscal intermediaries  process Part B claims submitted by 
hospitals  (for inpatient  and outpatient  services), home health agencies, and nursing facilities. 
1  hospital.  The patient  must require  skilled nursing  care,  and a physician  must order  the 
services.  Part A covers  skilled  nursing  services  for up to  100 days per  spell of illness.  
In addition  to skilled  nursing  facilities,  other  facilities  offer  varying  levels  of care for 
Medicare  beneficiaries.  These include  Medicaid  nursing,  board  and care,  assisted living, 
and retirement  facilities.  We have included  all of these facilities  in the scope of this 
study and  refer  to them collectively as  nursing  homes. I  We do,  however,  refer  to 
skilled nursing  facilities  specifically where findings  pertain  solely to these entities. 
Portable x-ray and EKG  services 
Nursing  homes  provide  directly  or arrange  for ancillary  services--such  as x-rays--for  their 
patients  who require  them.  In some instances,  firms known  as portable  x-ray suppliers 
provide  portable  x-ray  and electrocardiogram  (EKG) services  in nursing  homes.2 
Medicares  portable  x-ray benefit  covers  skeletal  films of the arms,  legs, pelvis,  vertebral 
column,  and skull as well as chest and abdominal  films that do not use contrast  media. 
Medicare  also covers  EKG services under the portable  benefit,  if they are medically 
necessary  and are performed  by certified  portable  x-ray  suppliers.  All of these services 
must be diagnostic  rather  than therapeutic.  Portable  x-ray  suppliers  must meet HCFAs 
conditions  of participation  to receive  reimbursement  for these services.  These conditions 
of participation  require,  among other things,  that suppliers  comply  with  State and local 
laws,  which  may provide  for the licensing  and regulation  of portable  suppliers. 
According  to Medicare  regulations,  all portable  x-ray  services must be ordered  by a 
physician.  The physicians  signed order must specify  the reason  why the x-ray  is being 
taken,  the area of the body to be exposed,  the number  of x-rays to be taken,  and the views 
needed.  The physician  also must state why portable services are necessary. 
Portable  x-ray  suppliers  must maintain  records  for each patient.  These records  should 
include  the examination  date,  a description  of the x-rays that were taken,  the name of the 
referring  physician,  the equipment  operator,  the physician  to whom the x-rays  were sent 
for interpretation,  and the date the x-rays were sent to that physician. 
Billing for  portable  x-ray and EKG  services 
Portable  x-ray  and EKG services provided  to nursing  home patients  may be billed  either 
by a skilled  nursing  facility  to the Part A fiscal intermediary  or by the portable  supplier  to 
the Part B carrier.  Skilled  nursing  facilities  have the option  to do either.  When  the 
portable  supplier  bills the carrier,  this is called  direct  billing.   When the skilled  nursing 
facility  bills  the fiscal  intermediary  and pays the portable  supplier  for the services 
provided,  this is called  billing under  arrangement.  I  Skilled  nursing  facilities  may bill 
2 Other options  for nursing  facilities include transporting  patients to hospital outpatient  departments, 
imaging centers,  physician  offices,  or other facilities for x-rays or EKGs.  under  arrangement  even for patients  who are not in Part A-covered  stays.  In these cases, 
the skilled  nursing  facility  submits an outpatient  claim to the fiscal  intermediary. 
When  the claim  is processed  by the fiscal  intermediary,  reimbursement  is based on a 
predetermined  interim  payment  which  is finalized  when the skilled  nursing  facility  submits 
its annual  cost report  to its fiscal  intermediary.  When the claim  is processed  by the 
carrier,  reimbursement  is based on a combination  of a reasonable  charge  determination 
and the national  fee schedule. 
These different  billing  methods  can result in vastly  different  reimbursement  rates and costs 
to the Medicare  program  and beneficiaries,  particularly  when one compares  reimbursement 
made by the fiscal  intermediary  to that made by the carrier.  A companion  report,  entitled 
Portable  Imaging  Services:  A Costly  Option  (OEI-09-9500090),  contains  a full 
description  of these billing  methods. 
Recent  work on ancillary services for  nursing  home patients 
A 1996 General  Accounting  Office  report  entitled  Fraud and Abuse:  Providers  Target 
Medicare  Patients  in Nursing  Facilities  (GAO/HEHS-96-18)  warned that 
. . .a population  with extensive  health  care needs grouped together  at a single 
location  offers  unscrupulous  providers  the opportunity  for volume  billing,  and 
Medicare  often  does not look for warning  of egregious  overutilization  or rapid 
increases  in billing. 
Operation Restore  Trust 
In May  1995, President  Clinton  and Health  and Human  Services  Secretary  Donna  Shalala 
announced  the kickoff  of Operation  Restore Trust (ORT),  a new health  care anti-fraud 
initiative.  The ORT is a crackdown  on Medicare  and Medicaid  fraud,  waste,  and abuse in 
home  health  agencies,  nursing  homes,  and durable medical  equipment  suppliers.  It 
focuses  on the five States--California,  New York,  Florida,  Texas,  and Illinois--that 
account  for 40 percent  of the nations  Medicare  beneficiaries  and program  expenditures. 
The ORT includes  Federal  and State agencies  in collaboration  with private  sector entities 
and beneficiaries.  The Federal  agencies  involved  in this effort  include  the Office  of 
Inspector  General  (OIG),  HCFA,  and the Administration  on Aging.  The OIG has 
undertaken  a number  of national  program  inspections  aimed at identifying  and eliminating 
systemic  weaknesses  that allow  fraud,  waste,  and abuse to occur in the areas of home 
health,  nursing  homes,  and durable  medical  equipment.  This inspection  was conducted  as 
part of ORT. 
METHODOLOGY 
In the companion  report,  Portable  Imaging  Services:  A Costly  Option,  we found  that 
portable  services  cost much more than non-portable  services and that Medicare  pays too 
3  much when  services  are billed  under arrangement.  As a result,  we conducted  interviews 
with nursing  homes  who provide  portable  services to determine  (1) why they use portable 
services  and (2) if and why they bill under  arrangement. 
From  a 1 percent  simple random  sample of the Common  Working  File,  we extracted  data 
on all beneficiaries  who were in a nursing  homes or who received  a portable  imaging 
service  at any time during  calendar  year  (CY)  1994.  We then extracted  claims  data on all 
imaging  services  provided  to these beneficiaries  during  CY 1994. 
We identified  these nursing  home residents  through  several  indicators  in the claims  data. 
These  indicators  included  place of service,  hospital  discharge  destination,  skilled  nursing 
claims,  and HCFA  Common  Procedure  Coding  System (HCPCS)  codes that are likely  to 
correspond  to a nursing  home  resident  (such as transportation  of portable  x-ray 
equipment).  Based on a pre-test  of this approach,  we estimate that our database  included 
approximately  93 percent  of all imaging  services provided  to nursing  home  residents. 
From  this newly  created database,  we selected a stratified  random  sample of 729 imaging 
services  that were provided  while the beneficiaries  were nursing  home residents.  The 
strata are illustrated  below: 
r 
Stratum  1 Sample  size  11 
1 ORT States  1  ::  ( 
Billed as part of 
Part-A nursing  SbY  NonsORT States 
Chest x-rays (HCPCS = 
71010 through  71035)  I  I  II
ORT States  134 
All other billing 
II 
arrangements 
Non-ORT  States  60 
ORT States  143 
_  .
EKGs (numerous  HCPCS codes ) 
Non-ORT  States  65 
ORT States  167 
Computerized  axial tomography  and magnetic 
resonance  imaging  (numerous  HCPCS codes) 
Non-ORT  States  75 
When  there  was no skilled  nursing  facility  claim overlapping  the date of imaging  service 
in our sample,  we attempted  to verify  that the beneficiary  was a nursing  home  resident  by 
contacting  providers  and nursing  homes. 
We conducted  interviews  with the 93 nursing  homes that we verified  had provided  a 
portable  chest x-ray  for the patients  in our sample.  We asked the nursing  homes  how they 
provide  services,  how they bill  for them,  and their rationale  for these decisions.  For 
skilled  nursing  facilities  that bill under  arrangement,  we obtained  copies of their  contracts 
with portable  suppliers.  We also collected  medical  records  for all beneficiaries  in our 
sample  for our report  Imaging  Services  for Nursing  Home Patients:  Medical  Necessity 
(OEI-09-95-00092). 
4 
 FINDINGS 

Portable  services  have  become  routine 
Although  HCFAs  regulations  state that physicians  must justify  the need for the use of a 
portable  imaging  supplier,  portable  services are routinely  provided  to patients  who reside 
in the sampled  nursing  homes.  For our review  of medical  necessity,  we collected  medical 
records  for all of the patients  in our sample.  In order to assess compliance  with HCFAs 
regulations  on use of portable  services,  we reviewed  each patients  record  to determine 
whether  a clear justification  for portable  services was stated. 
Approximately  one-third  of the physician  orders for chest x-rays that were provided  by 
portable  suppliers  indicated  the reason why the x-ray was medically  necessary  but did not 
justify  the need for portable  services.  Furthermore,  there was no indication  in more  than 
50 percent  of the beneficiaries  medical  records that they would be unable  to be 
transported  outside  of the nursing  home  for medical  services. 
In response  to these findings,  we asked sampled nursing  homes why their  patients 
routinely  receive  portable  services.  They cited two reasons,  the first of which has nothing 
to do with the patients  condition: 
w  Portable services are less costly and more  convenient for  nursing  homes 
When  asked why their  nursing  homes routinely  used portable  services,  respondents 
mentioned  the increased  cost to their  nursing  home of using non-portable  services 
far more  frequently  than they mentioned  the benefits  to their  patients. 
Transporting  patients  for services that otherwise  could be provided  by a portable 
supplier  and paid fully  by Medicare  causes nursing  homes to incur additional  costs. 
These include  (1) the cost of sending  an aide with the patient  and (2) the cost of 
transporting  the patient,  which  is not covered  by Medicare  if it consists  of a 
wheelchair  van or other non-emergency  transportation.  On the other hand, 
respondents  noted that beneficiaries  routinely  travel to other medical  appointments. 
More than  88 percent  of nursing  homes  in our sample acknowledged  that 
beneficiaries  take wheelchair  vans to other appointments,  and approximately 
38 percent  noted that family  members  sometimes take patients  to medical 
appointments. 
While  sampled nursing  homes  save themselves  money  by using portable  services, 
they  do not consider  the cost to beneficiaries,  Medicare,  and third party  payers 
when  selecting  a portable  supplier.  Less than 8 percent  of nursing  homes  solicit 
bids,  negotiate,  or otherwise  consider  the cost-effectiveness  when selecting  their 
portable  supplier.  Those that solicit  bids tend to be public  facilities  that are 
required  to do so in order to meet State or local  laws.  Nursing  homes use other 
criteria  to select portable  suppliers.  Timeliness  and responsiveness  are the primary 
5 
 reasons  why nursing  homes use their portable  suppliers.  Nursing  homes  also 
consider  the suppliers  reputation,  equipment,  and reliability. 
Lack of competition  among portable  x-ray suppliers  is a factor.  Only  26 percent 
of the nursing  homes  in our sample reported  considering  other portable  imaging 
suppliers  when they decided to use their  current  supplier.  In addition,  about half 
of the nursing  homes  stated that no other portable  suppliers  solicit  their  business. 
For the half that do receive  solicitations,  almost all of them noted that the 
suppliers  marketing  efforts  were ineffective.  At the same time,  the number  of 
consolidations  and buyouts  of portable  suppliers  is significant.  We requested 
medical  records  from portable  suppliers  for all beneficiaries  in our sample who 
received  portable  services.  We encountered  numerous  instances  where the supplier 
who provided  the service  in 1994 had been bought  out by a larger  corporation. 
The market  is now dominated  by national  chains. 
b 	 Sampled  nursing  homes  believe that portable  services are  easier and more 
convenient for  the patient 
Respondents  stated that transporting  patients  for imaging  services  creates  a 

hardship.  Patients  may have to endure  long waits in hospital  outpatient 

departments  where emergency  services are given priority  over non-emergency 

imaging  procedures. 

A patients  ability  to ambulate  has no bearing  on how the services  are provided. 

In sampled nursing  homes,  physicians  know that if they order  a service  that can be 

portable,  it will be portable.  In fact,  no nursing  homes  in our sample have  criteria 

that would  determine  when a patient  should be transported  for a routine  or 

otherwise  non-emergency  chest x-ray. 

Reasons  for  billing  under  arrangement  are  questionable 
In our report  on the costs of imaging  services,  we found that portable  services billed 
under  arrangement  cost as much as nine times more than the same services provided  in 
other  settings.  Respondents  were unable  to shed much light on the subject of billing  under 
arrangement,  however.  They  stated that they were unable  to answer questions  about 
billing  under  arrangement  because they were too new to their  skilled  nursing  facility,  were 
not involved  in the decision,  or did not occupy  a decision-making  position  when the 
skilled  nursing  facility  negotiated  the arrangement. 
Approximately  14 percent  of respondents  from  skilled  nursing  facilities  that bill  under 
arrangement  acknowledged  that they do so to increase  Medicare  revenue.  Other  reasons 
for billing  under  arrangement  included  that (1) it was the policy  of the skilled  nursing 
facility  or its corporate  entity  to provide  all ancillary  services under  arrangement  or 
(2) the facility  thought  that Medicare  required  it to bill under arrangement. 
6 
 Most respondents  (72 percent)  do not know whether  they would continue  billing  under 
arrangement  if the fee schedule  were applied.  This is primarily  because they  are not 
acquainted  with the fee schedule. 
Patient  records  are  not  secure 
Approximately  21 percent  of nursing  homes  in our sample stated that portable  x-ray 
technicians  have  access to the medical  file for the patient  who is receiving  a portable 
service,  In all other  nursing  homes,  respondents  stated that they provide  the technician 
with a specific  order  and that the patients  file is kept under  strict control  of the facilitys 
personnel. 
7 
 RECOMMENDATIONS 
Legislative Update 
Afler we released our dra$!report?PresidentClintonsigned into law the Balanced 
Budget Act of X997, Among the provisionsin this law, it: 
* 	 establishesa prospectivepaymentsystemfor beneficiariesin Part A-covered 
staysin skillednursingfacilities, to be phased in over severalyears; 
w 	 requires thatull Part B itemsand servicesfurnished to residentsof nursing 
homes (notcovered under Part A/ be billed by the nursing homes as part of a 
consolidatedbilling system; 
* 	 limitsreimbursementforservicespaid under consolidatedbilling to the 
Purt B fee schedule; and 
* 	 requires HCPCS codesforservicesprovided to skillednursingfacility 
patientsthat are billed tofiscal intermediaries. 
In the draft  of this report,  we recommended  that HCFA: 
b 	 eliminatethe requirementthatphysiciansjustifythe use of portable servicesfor 
nursing homepatientsand 
b  remind nursing homes thatsuppliersshouldnot have access to patient records. 
AGENCY  COMMENTS  AND REVISED RECOMMENDATIONS 
The HCFA  concurred  with our recommendation  on patient  records but did not concur  with 
our recommendation  that it eliminate  the requirement  that physicians  justify  the use of 
portable  services.  The HCFA believes  that the current  requirements  should be maintained 
but does not state that it will enforce  them.  The full text of HCFAs  comments  appears  in 
appendix  A. 
Based on HCFAs  comments  as well as the impact of the Balanced Budget Act,  we have 
amended  our recommendations.  We now recommend  that HCFA: 
8 
 b  enforce  the requirement  that physicians justify  the need for  portable  services, 
We estimate  that HCFA  could save as much as $63.7 million  in  1 year  and 

$371.9  million  over 5 years by enforcing  current  requirements. 

Appendix  C describes  how we estimated  the cost savings. 

b 	 take into account  the unnecessary  payments  that have been  made for  portable 
imaging  services when it implements the prospective payment  and Part B 
provisions  of the Balanced  Budget  Act,  seeking  legislative authority if 
necessary,  and 
Because HCFA  has not enforced  the physician  justification  requirement,  services 
that were not justified  were routinely  paid.  In implementing  the Balanced  Budget 
Act,  HCFA  needs to take these unnecessary  payments  into account  and reduce 
prospective  payment  and Part B ancillary  rates accordingly.  This recommendation 
should be considered  in tandem with a recommendation  in our report  Portable 
Imaging  Services:  A Costly  Option.  That report  recommends  that,  in 
implementing  the Balanced Budget Act,  HCFA  should take into account  the 
inflated  charges  for (1) services billed  under arrangement  (including  payments  for 
services  that were non-covered)  and (2) transportation  charges that were excessive 
or prorated  incorrectly. 
b  remind  nursing  homes  that suppliers should  not have access to patient  records. 
Most nursing  homes know that portable  suppliers  do not need access to patient 
records.  Federal  law dictates that nursing  homes maintain  strict control  of these 
records. 
9 
 APPENDIX  A 
AGENCY  COMMENTS 
Health  Care Financing  Administration 
DEPARTMENT  OF HEALTH  a  HUMAN  SERVICES  Health Care Financing  Administration 
The Administrator 
Washin&n.  D.C.  202Of 
AUG 4  " 
l 
JUL 241997 
DATE: 
TO:  June Gibbs Bmwn 
Inspector General 
FROM:  Bruce C. Vladeck  ! 
Administrator  G \ 
SUBJECT:  Oftice of Inspector General (OIG) Dratl Reports:Portable Imaging 
Services:A Costly Option (OEI-O9-95-00090)a,nd Portable Imaging 
Services:Nursing Facility Perspectives,(OEI-O9-95-00091) 
We reviewed tbe above-referencedreports identifying a number of problems with how 
nursing facilities provide and bill for imaging servicesfor their patients. 
Our detailed comments on the recommendationsare attachedfor your consideration. 
Thank you for the opporhmityto review end commenton these reports. 
A-l  Comments of the Health Care Financirm Administration IHCFA) 

gn Offke of lnsuector General (OIG1 Draft Reuorts: 

Portable Imaaitm Services: A Costlv Oution (OEI-09-95-000901. and 

Portable ha&n  Services: Nursine. Facilitv Persuectives. (OEI-09-95-00091) 

General Comments 
The Inspector General should be aware of legislation proposed by the President in his 
fiscal year (FY) 1998 budget that would mitigate problems with ancillary billing that are 
experienced under current law. 
First, the President proposed to implement a prospective payment system (PPS) for 
skilled nursing facilities (SNFs) effective July 1,1998.  Prospective payments would 
cover all SNF service costs, including routine service costs, ancillary costs (whether 
provided under Part A or Part B of Medicare), and capital-related costs. A PPS would 
eliminate cost-based discrepancies between direct billing and under arrangement 
billing. 
Second, the Presidents consolidated billing proposal is designed to address the current 
laws lack of restraints on aucillary billing.  Under the proposal, SNFs would be required 
to bill Medicare for all services (except the services of physicians, certified muse 
midwives, psychologists, hospice care, and nurse anesthetists).  This proposal would 
prohibit payment to any entity other than the SNF for services or supplies furnished to 
Medicare-covered SNF patients 
Finally, as recommended by OIG, the Presidents FY 1998 budget legislation would 
require SNFs to include HCFA common procedure coding system (HCPCS) codes on 
their bii.  --- 
OIG Draft Reuort -OEI-O9-9540090 -Portable Imaninu Services: A Costlv Option 
OIG Recommendation 
HCFA should instruct fiscal intermediaries (FIs) to never pay more than the fee schedule 
amount for portable imaging services billed under arrangement. 
A-2 
 2 
HCFA Resuonse 
We concur.  However, we note it will take a considerable amount of administrative work 
to implement this policy.  (For example, it is currently impossible to impose this 
requirement because SNFs use reveuue codes rather than HCPCS codes wbeu billing for 
these services. It is impossible to compare services usiug these codes. It will take time to 
make the changes necessary to require SNFs to use HCPCS codes.) HCFA already 
instructed the FIs, that in applying the prudent buyer principle, they should compare the 
price paid by SNFs for portable x-ray services with the amount paid when portable x-ray 
services are billed by the supplier to the carrier. 
OIG Recommendation 
HCFA should require FI edits and HCPCS codes on all claims to discontinue payments 
for non-covered services. 
HCFA Resuonse 
We concur with the intent of the recommendation.  HCFA is currently pursuing 
legislation that will change SNF payment methodology and make this action unnecessary. 
We believe implementation of consolidated billing and an amendment to the current 
statute is a broader approach to resolving issues surrouuding non-covered services and 
excessive costs associated with SNFs big  for portable imaging services. In the 
interim, HCFA explored use of HCPCS codes. However, this would require a major 
change to the Medicare Uniform Institutional Provider Billing Form (UB-92) and costly 
claims processing systems changes. Therefore, it is not cost effective over the longer 
term.  -_.. 
OIG Recommendation 
HCFA should require FIs to disallow any nursing facility overhead associated with 
portable imaging services. 
HCFA Resuonse 
We do not concur. Portable x-ray costs incurred by the SNF under arrangement are 
subject to the test of reasonableness as required by regulations at 42 CFR 413.9, Costa   
Related to Patient Care, and Chapter 21, Costs Related to Patient Care, of the provider 
Reimbursement Manual (PRM). As pointed out in PRM section 2103B, Prudent Buyer-
Application of Prudent Buyer Principle, intermediaries may employ various means for 
A-3 
 detecting and investigating situations where costs appear to be excessive.  Included may 
be such techniques as comparing the prices paid by providers to the price paid by others. 
HCFA instructed the FIs, that in applyiug the prudent buyer principle, they should 
compare the price paid by SNFs for portable x-ray services with the amouut paid when 
portable x-ray services are billed by the supplier to the carrier. After allowing any 
reasonable amout  of actual overhead that may be applied to the cost incurred by the SNF 
for the technical component and transportation component of the portable x-ray charge 
made by the.carrier to the SNF, that amount should be compared with the amount paid 
when portable x-ray services are billed by tbe supplier to the carrier (excluding the 
professional fee portion). 
OIG Recommendation 
HCFA should immediately convert transportation reimbursement rates to a national fee 
schedule, rebundle equipment setup with transportation, and remind carriers that they 
must prorate transportation charges when multiple patients are seen at the same facility. 
HCFA Resuonse 
We partially concur.  We will soon publish a proposed role for the 1998 Medicare 
physician fee schedule. Among the proposals will be one addressing au adjustment of 
practice expense relative values assigned to codes payable under the physician fee 
schedule. As a part of that proposal, we plan to include a national payment rate for the 
portable x-ray transportation codes ROO70-one patient and RO075-multiple patients, 
effective with the 1998 physician fee schedule. 
We made a p~&y decision that it was appropriate to pay a setup fee with every portable 
x-ray procedure fbmished because there was no question tbat Medicare had historically 
paid higher amounts for the technical component of x-ray services furnished by portable 
suppliers vis-a-vis procedures performed by stationary entities.  The setup fee reflects the 
historic national average difference between carrier payments for x-rays furnished by 
portable suppliers v&a-vls payments made for the procedures furnished by other 
facilities.  We continue to believe these payments are appropriate. Further, it would be 
inappropriate to bundle setup fees with transportation payments since carriers pay a 
single transportation payment per trip, but would pay multiple setup fees when an 
individual beneficiary receives several x-ray procedures during a session. 
A-4 
 4 
Separate codes, describing situations in which one patient is seen and those in which 
multiple patients are seen, clearly indicate that carriers should have different payment 
amounts.  Further, a discussion of the required proration when multiple patients are seen 
was included in a Medicare Carriers Manual revision published in June 1996, trausmittal 
number 1546, citation section 15022.G.3. 
OIG Draft Renort OEI-09-9500091- Portable Imaainu Services: Nursing Facilitv 
Persnectives 
OIG Recommendation 
HCFA should eliminate the requirement that physicians justify the use of portable 
x-ray services for nursing facility patients. 
HCFA Resuonse 
We do not concur. We believe the current requirement in 42 CFR 486.106(a) should be 
maintained, even though it may not be enforced effectively at this time.  We recently 
proposed and adopted a new rule requiring that the physician who orders a diagnostic test 
must be a physician who is responsible for some aspect of the beneficiarys care. One of 
the primary reasons we took tbis action was to give the carriers an additional tool to use 
in determining whether diagnostic tests performed in musing facilities are medically 
necessary.  We believe any action taken the following year to relax the ordering 
requirements for a category of diagnostic tests that is usually done in musing facilities 
would be poorly timed. Further, we believe, since x-ray procedures furnished on a 
portable basis are more expensive, more extensive justification  of the necessity for the 
procedure is re+mable.  Fhmlly, since relaxing the ordering oriteria could not possibly 
save the program any money, we can not see any benefit arising from making such a 
change. 
Furthermore, section 483.75(k) of The Reuuirements for Lonn-Term Care Facilities 
requires a SNF to provide or obtain radiology and other diagnostic services to meet the 
needs of its residents.  In so doing, the facility must assist the resident in making 
transportation arrangements to and &om the source of services, if the resident needs 
assistance.  As stated in your report, 88 percent of the facilities in your sample note that 
beneficiaries routinely travel to medical appointments outside the facility by taking 
wheelchair vans, and 38 percent of the facilities note tbat family members sometimes 
A-5 
 5 
take patients to medical appointments outside the facility.  This would indicate the use of 

more costly portable x-ray services performed in the SNP may not always be reasonable 

and necessary in those instances where the use of available outside resources is feasible. 

There is no requirement that an aide be sent witb a resident when obtaining services 

outside the facility.  We recognize in some instances an aide may be necessary to ensure 

the safety of the resident. In those cases, the SNF may charge the resident for this service. 

Furthermore, under Title 3, Part B, section 321(a) of the Older Americans Act, grants are 

provided to state tits  on aging to provide supportive services, including transportation 

(i.e., wheelchair vans), that are utilized by all long-tetm care (LTC) facility residents in 

order to attend medical appointments outside the facility.  These services are provided at 

no cost to the facility.  Also, under the Medicaid program, nursing facilities (NFs) are 

reimbursed for transportation charges as part of the daily rate. 

OIG Recommendation 

HCFA should remind NFs that suppliers should not have access to patient records. 

HCFA Resuonse 

We concur.  HCFA is preparing to release a program memorandum that addresses 

medical necessity and confidentiaIity of medical records for all services provided in LTC 

facilities. 

The term nejrrg  facility utilized throughout tbis report is misleading.  Current Federal 

regulations distinguish between two types of LTC facilities: an NF under the Medicaid 

program, and a SNP under the Medicare program. We suggest that the term long-term 

care faciliv  replace the words hursing facility throughout ibis report when referring to 

a generic mu&g  home. If a policy or concern specifically relates to Medicare SNFs or 

Medicaid NFs, it should be so noted. 

The definition of SNF coverage under Part A that appears in the Background is too 

general. We suggest it be more specific. Section 1861(h) of the Social Security Act 

provides for coverage of extended care services furnished to an inpatient of a SNF.  Such 

coverage includes: (1) nursing care provided by, or under the supervision of a registered  * 

professional nurse; (2) bed and board in connection with the fmnishing of such musing 

A-6 
 6 
care; (3) physical or occupational therapy or speech-lsnguage pathology services 
furnished by the SNP or others under arrangements with them made by the facility; (4) 
medical social services; (5) such drugs, biologicals, supplies, appliances, and equipment 
furnished for use in the SNP, as are ordinarily furnished by such facility for care and 
treatment of inpatients; (6) medical services provided by an intern or resident-in-training 
of a hospital with which the facility has in effect a transfer agreement, under an approved 
teaching program of such hospital, and other diagnostic, or therapeutic services provided 
by a hospital with which the facility has such an agreement in effect; and (7) such other 
services necessary to the health of the patients as are generally provided by SNPs. 
Additionally, the definition of the SNP benefit .that appears in the Background is too 
general.  We suggest it be more specific. The SNP benefit is referred to as post-hospital 
extended care services. It is designed to assist persons who have had a 3-day quahfying 
hospital stay, and require skilled services on a daily basis to recuperate from an acute 
episode.  Coverage, if approved, is limited to a total of 100 days per benefit period.  On 
the 21st day the beneficiary becomes responsible for a daily coinsurance amount equal to 
one-eighth of the inpatient hospital deductible, as prescribed by law. 
A statement is made on page 3 of the Introduction that Nursing facilities may bill 
under arraugement even for patients who are not in Part A-covered stays. ln these cases, 
the musing facility submits an outpatient claim to the fiscal iutermediary.  Although the 
first sentence is technically correct, the second sentence is incorrect and needs 
clarification.  We suggest the following language: Payment may be made for a limited 
range of services mder Part B when furnished by a participating SNP to an inpatient of 
the SNP, if payment cannot be made uuder Part A, e.g., the beneficiary exhausted his 
allowed days of inpatient SNP coverage under Part A in his current spell of ilhtess.  In 
these cases, the SNP submits a claim to the PIs for those inpatient services rendered. 
--. 
A-7 
 APPENDIX  B 
CONFIDENCE  INTERVALS FOR SELECTED STATISTICS 
The following  table  shows the point  estimates  and 95 percent  confidence  intervals  for 
(1) two statistics  that appear on page 6 of the report  and (2) one statistic that appears  in 
appendix  C (bottom  of page C-l). 
Statistic 
Point  estimate  95 percent 
confidence  interval 
Of 1994 portable  chest x-rays for nursing  home residents,  percent  in which the medical  record 
did not contain  a physician  order for the portable  service 
31.8 percent  19.9 percent  - 43.6 percent 
Of 1994 portable  chest x-rays for nursing  home residents,  percent  in which the medical  record 
did not indicate  that the patient was not ambulatory 
53.7 percent  4 1.1 percent  - 66.3 percent 
Amount  Medicare paid during  1994 for transportation  and setup for nursing  home residents 
portable  chest x-rays, in which the medical records  did not indicate that the patient was not 
ambulatory 
$3 1.4 million  $19.9 million  to $42.9 million 
B-l  APPENDIX  C 
CALCULATION  OF ESTIMATED  SAVINGS TO THE MEDICARE  PROGRAM 
The calculation  of estimated  savings involved  (1) estimating  the amount  that Medicare 
would have  saved during  1994 if HCFA  had disallowed  the transportation  and setup 
charges  for portable  x-ray  services when the patient  could have been transported  and 
(2) projecting  these savings to a 5-year period  from  1997 through  2001. 
1994  portable  x-rays for  paiients  who could have been  transported 
We calculated  this estimate  through  a four-step  process,  as described  below.  We cannot 
calculate  a confidence  interval  for this estimate,  because only  chest x-rays  were part of 
our sample. 
1. 	 Using  a 1 percent  sample of  1994 part B claims,  we calculated  the amounts  that 
Medicare  paid to suppliers  for portable  x-ray transportation  and setup claims  that 
were billed  directly  to the Medicare  carrier,  as shown in the table below. 
1994  amount  paid  for 
Service  (billed  directly  to carrier) 
transport  and  setup 
Portable  x-ray service that included  $50,504,123 
a chest x-ray 
Portable  x-ray service that did not  $31,367,549 
include  a chest x-ray 
Cannot  determine  (no x-ray  $1,777,298 
technical  component  billed) 
TOTAL  $83,648,970 
As illustrated  below,  the ratio  of (1) payments  for services that did not include  chest 
x-rays  to (2) payments  for services that included  chest x-rays  is 0.621. 
II
Calculation:  Ratio of services  that did not
include  chest x-rays to services that included  $31,367,549  +  $50,504,123  =  0.621 
11chest x-ravs  I 
2. 	 From  our review  of medical  necessity,  we estimated  that Medicare  paid 
$31.43  million  during  1994 for portable  chest x-ray transportation  and setup,  in 
which  the medical  records did not indicate  that the patient  was not ambulatory. 
C-l  3. 	 As illustrated  below,  we multiplied  the estimate  from  step 2 by the ratio  from 
step 1. 
$31,431,239  * 0.621  =  $19.52  million 
4. 	 By adding the amounts  from  steps 2 and 3, we estimated  that,  during  1994, 
Medicare  paid $50.95  million  for portable  x-ray transportation  and setup,  in which 
the medical  records  did not indicate  that the patient  was not ambulatory. 
Estimated  savings for  1997  through  2001 
We used a three-step  process to estimate how much Medicare  will  save from  1997 through 
2001 if HCFA  disallows  transportation  and setup charges when a patient  could have been 
transported. 
1. 	 Using  1 percent  sample data for each year  from  1992 through  1995, we calculated 
the total  amount  that Medicare  paid for portable  x-ray transportation  and the 
associated  setup charges.  Next,  we calculated  the annual percent  changes  for each 
year.  We selected  the smallest  of these annual percent  changes  (a 7.74 percent 
increase)  to use in the step 3 calculations. 
2. 	 As calculated  in step 4 above,  Medicare  would have saved $50.95  million  during 
1994 by disallowing  transportation  and setup charges when a patient  could have 
been transported. 
3. 	 Starting  with the  1994 estimated  savings from  step 2, we calculated  the savings  in 
each subsequent year by increasing  the previous  years  savings by 7.74 percent. 
The results  of these calculations  are displayed  on the following  page. 
For  example,  the table below  illustrates  how we calculated  the  1997 savings. 
Starting  point:  1994 savings  $50,952,832 

Smallest  percent  increase  in payments  for 

7.74 percent 

x-ray  transportation  and setup,  1992 - 1995 
1995 savings  calculation  $50,952,832  * 1.0774  =  $54,896,399 

1996 savings calculation  $54,896,399  * 1.0774  =  $59,145,184 

1997 savings  calculation  I  $59,145,184  * 1.0774  =  $63,722,810 

The precise number usedfor these calculationswas 1.07739642383 
c-2  STATISTICS  FROM  1 PERCENT  SAMPLE  DATA 
7 
Amount paid for directly billed 
Percent  change  from
Year  portable x-ray transportation  and 
previous year 
associated setup 
$66,100,078 
 Not applicable 
$77,639,918 
 17.46% 
$83,648,970 
 7.74% 
$90,378,681 
 8.05% 
Data for  1996 were not available 
 at the time of this report. 
5-YEAR SAVINGS ESTIMATES 
Estimated savings if HCFA disallows 
Year  transportation  and setup charges when 
a patient could have been transported 
1997  $63,722,810 
1998  $68,654,727 
1999  $73,968,357 
2000  $79,693,244 
2001  $85,861,216 
TOTAL  $371,900,354 
c-3