+, 
MEDICARE COVERAGE OF

ENDOSCOPIC EXAMINATION OF THE

LOWER GASTROINTESTINAL TRACT

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OFFICE OF INSPECTOR GENERAL 
OFFICE OF ANALYSIS AND INSPECTIONS 
MAY 1989  MEDICARE COVERAGE OF

ENDOSCOPIC EXAMINATION OF THE

LOWER GASTROINTESTINAL TRACT

RICHARD P. KUSSEROW 
INSPECTOR GENERAL 
OAI-02-88-00090  MAY 1989 EXECUTIVE SUMMARY 
PURPOSE 
To determe the appropriateness of Medicar payments for examnations of the lower 
tract; in parcular, the extent to which physicians may be 
gastrointestial (01)  billng for can
cer screenig, a routie procedure which is not reimbursable under Medicare. 
BACKGROUND 
Colorecta examations serve to help physicians detect such conditions as cancer or polyps. 
Pror to the mid-1970' s, the instrments used by physicians for these examnations were of 
rigid design and did not lend themselves readily to examnation of the full length of the colon. 
For the past 15 years, fiberoptic technology and endoscopic instrment development has 
revolutionized examnation of the lower gastrointestial (01) tract. Fiberoptic endoscopic ex
amation is. a technique in which a long, flexible tube-like instrment with special optical 
propertes, is inserted via the rectum, permttg visual inspection of varable lengts of the 
rectu and colon. 
Tody, physicians have available diferent lengths of fiberoptic instrments for colorectal ex
amnations. They include two tyes of flexible fiberoptic sigmoidoscopy (FS) instrments 
which permt examation rangig to 65 centimeters (em), approximately 26 inches. The FFS, 
a relatively simple outpatient procedur, is readiy mastered by the physician, has high patient 
acceptance, represents low risk, and requires no sedation. Physicians who need to observe 
furer 
conditions  into the colon use a flexible colonoscope which permts examnation of the 
entie lengt of the colon (approximately 135 em). Flexible fiberoptic colonoscopy (FC), in 
contrst to FFS, involves more physician training and skil, more patient preparation and dis
comfort, sedation of the patient, and greater risk and cost. 
Endoscopic procedurs of the lower G1 trct are among the most frequently performed proce
dures paid for by Medicar. Over 80 percent of these procedurs are diagnostic; others 
done for therapeutic (removal of polyps) or specimen collection puroses. In 1985, 1.48 mil
lion diagnostic colorectal examnations were biled to Medicare with allowed charges of $175 
millon. Two year later, the number of examnations incrased by only 5.2 percent, but al
lowed charges increased by 44.9 percent to $253 millon. This increased cost is primarly at
trbutable to physicians' shiftig from less expensive, rigid-instrment exams to the more 
costly, flexible fiberoptic procedures. Durng the 3-year span, rigid instrment proctosig
moidoscopies decreased while FFS and FFC procedurs incrased. 
Under Medicare law, items and services which are not reasonable and necessar for the diag
nosis or treatment of ilness or injury are, in general, excluded from coverage. Specifically ex
cluded are expenses incurd for routine physical checkups, i.e., examations performed  without relationship to treatment or diagnosis for a specific ilness, symptom, complait or in
as screning examnations for cancer of the colon in the absence of symptoms or 
jur such 
laboratory test evidence. 
METHODOLOGY 
A statisticaly vald random sample of 294 Medicar reimbursed clais was selected. Copies 
of medical records contaning all penient pre- and post-endoscopy notes, related consultation 
repons, and laboratory test results were requested. The 010 contracted for a medical review 
of the records. 
The 35 caners responsible for adjudicatig the sample claims were asked for information on 
medical policy and clais processing procedures used by them to make coverage and pay
ment determations. These documents were analyzed to identiy caner practices designed to 
assur that payments ar made only for services that are covered and ar medicaly necessar. 
FINDINGS 
Twenty-seven Percent Of Claims For Endoscopic Examinations Of The Lower GI Tract 
Were Found Not Appropriate For Medicare Reimbursement 
Medical review determnations on 237 patients ' medical records found that 65 
procedures (27.4 percent) were not appropriate for Medicare reimbursement. These 
procedures were done for noncovered cancer screening 
puroses or for other
noncovered procedures. Other claims did not contain suffcient medical documentation 
by tratig physicians to make a coverage determnation. 
Projectig these findings to the 1.5 milion claims paid in 1986 indicates Medicare made inap
propriate payments of $39,249,000. 
Incorrect Payments Were Mad Because Of Inaccurate Diagnostic Information Provided 
On Claims 
The reliabilty of the diagnosis and medical condition information contained on the 
claim forms is questionable as determned by a review of the sample claims. It was 
found that if taken at face value, without furer medical information, 93 percent would 
appear to justify payment based on Medicare guidelines. This is in shar contrast to the 
medical review results reponed earlier which show that 27.4 percent of the' actual 
medical records did not suppon the decision to pay for these procedures. 
Only 9 of the 35 caners have specific prepayment claims processing instrctions for 
their claims examners ' use in determining coverage. 
Only 1 of 35 caners had provided educational materials to physicians regarding 
coverage of these procedures.  RECOMMENDATIONS 
The HCFA should alen its caners to the national inspection finding of substantial amounts of 
inappropriate payments being made. In addrssing corrective actions, HCFA should consider 
having its caners: 
provide inormation to the medical community though bulletins and other techniques 
regarding the limits of Medicar coverage for such procedures and the medical record 
documentation necessar to suppon payment; and

give increased attention to these procedures as pan of postpayment reviews. 
COMMENTS ON DRAFT REPORT 
Comments received from the Actig Admnistrator of HCFA indicate agrement with our 
recommendations for corrective actions to reduce inappropriate payments identied by this in
spection. The HCFA indicates that it wil: 
shar this repon with caner officials; 
discuss the topic with caner medical diectors at their next scheduled meeting; 
recommend to caners that they dissemiate information on limts of Medicare coverage 
for these services and medical documentation necessar to suppon payment; and 
encourage caners to give attention to these procedures in their postpayment process. 
The HCFA also expressed its primar reliance on education of the medical community to 
reduce these unnecessar payments. The time-consuming nature of postpayment medical 
review was noted in HCFA' s comments. The 010 is supportve of all the planned actions of 
HCFA but continues to emphasize the value of well-targeted postpayment review as an effec
tive safeguard.  ....................................... .. .. .. .. .. ...  ...  ...  ...  ...  ...  ... . .. . .. . ...  ...  ..   ...  ..  ..  ..
. . . . . . ..  ..  ...   ...   ...   ...   ...   ...   ...   ...   ...   ...   ...   ...   ...   ...   ...   ...   ....    ....    ....    ....    .....    .'....     .....     .....     .....     .....     .....     ....    ....    ....    ....    ....    ....    ...   ...   ...   ...   ...   ...   ...   ...   ...   ...   ...   ...   ...   ...   ...  ...
TABLE OF CONTENTS 
EXECUTIVE SU

INTRODUCTION . . . . 
FINDINGS . . . . 
Twenty-seven percent of clais for colorecta examations were found 
not appropriate for Medicar reimburement 
IncoITect payments were made because of inaccurte diagnostic 
inormation supplied on claims. . . . . . . 
RECOMMENDATIONS 
APPENDIX I 
......................................................... 1

Payment projections 
APPENDIX n  ll-
Comments on the draft report  INTRODUCTION 
Nature of Service 
Endoscopic examations of the lower gastrointestinal (01) tract are uncomfonable but impor
tant medical procedures. The purose of these procedures is to check for such conditions as 
polyps and cancer of the colon. 

Pror to the mid-1970' s the available instrments were of rigid design and did not alow for ex
amation of the entie length of the colon. One such item is the rigid proctosigmoidoscope 
which alows examnation up to 25 centimeters (cm) (approximately 10 inches). Fiberoptic 
technology and endoscopic instrment development has revolutionized examation of the 
lower gastrointestinal trct. Fiberoptic endoscopic examation is a technique in which a long, 
flexible tube-lie instrment, having special optical propertes, is insened via the rectum, per
mittg visual inspection of varable lengths of the rectum and colon. 
Today, physicians have available diferent lengths of fiberoptic instrments for colorectal ex
amnations. Two tyes of flexible fiberoptic sigmoidoscopy (FS) instrments permt ex
amnation raging to 65 cm (26 inches) in lengt. The shoner flexible scope permts 
visualization of slightly more distance than the rigid proctosigmoidoscope and is increasing in 
use due to better patient and physician acceptace of flexible instrments. The longer FFS is 
utilized to view the enti descending colon from the rectum to the splenic flexur. 
The FFS, a relatively simple outpatient procedur, is readily mastered by the physician, has 
high patient acceptance, represents low risk and requirs no sedation. Usual reasons for per
formg the procedur include: (a) evaluatig patients with symptoms of recta bleeding, 
chronic diarhea, constipation or abdominal pain; and (b) periodically checking asymptomatic 
patients over age 50 for early detection of colorectal polyps and cancer. 
Physicians who need to observe conditions beyond the descending colon use a eolonoseope 
which permts visualization up to 135 em in length. Flexible fiberoptic eolonoscopy (FC), in  .:  .:  .: 
contrst to FFS, involves more physician training and skil, more patient preparation and dis
comfon, sedation of the patient, and  cost. Uses for this procedure include: (a) 
grater risk and 
evaluation and treatment of abnormalties found on barum enema; (b) lower 01 bleeding; (c) 
evaluation and treatment of neoplastic polyps (tissue growth) and (d) sureilance of high-risk 
patients. 
Medicare Reimbursement 
Endoscopic procedurs of the lower 01 trct are among the most frequently performed proce
dures paid for by Medicar. Over 80 percent of these procedures are diagnostic; others are 
done for therapeutic (removal of polyps) or specimen collection puroses. As shown in figure 
, in 1985, 1.48 milion diagnostic colorecta examnations were biled to Medicare with al
lowed charges of $175 millon. Two year later, the number of examnations increased by 5. 
percent; however, alowed charges increased by 44.9 percent to $253 millon. 
FIGURE I 
Type Of  Frequency  Allowed Charges 
Service  (thousands)  (millons) 
Rigid  627  528  461  $25  $20  $20 
FFS*  615  703  758  $71  $86  $95 
FFC 
Total  1480  1504  1558  $175  $205  $253 
* Combined total of FFS formrly reported as two distinct procedures. 
Durg ths 3-year span, rigid instrment proctosigmoidoscopies decreased while FFS and 
FFC procedures incrased. These trends together with higher reimbursement allowances for 
priary 
flexible procedures  account for the signifcant increase in allowed charges. 
Reasonable charge reimbursement for rigid, FFS, and FFC is related to the visual distance of 
the colorecta examation; Four procedure codes were used though 1987 to repon the dis
tance of colorecta diagnostic examnations, two of which applied to 
flexible fiberoptic sig
moidoscopies. At the request of the  ndoscopy 
American Society for Oastrointestinal 
(ASOE), the American Medical Association (AMA) revised the 1988 version of the 
Physicians ' Curent Procedural Termnology (CPT-4) to establish a single procedur code for 
FFS. In turn, HCFA instrcted its caners to process and pay for FFS under one code, effec
tive Januar 1988.  Guidelines of Medical Professions 
In July 1987, testiony before the Physician Payment Review Commssion, the American 
Society for Oastrointestial Endoscopy (ASOE) stated: 
The primary reasonfor the numers of diagnostic colonoscopies relates to the health 
care problem of colon cancer in the United States Colonoscopy is the primary method 
for discovery and excision of colonic polyps that are either precancerous or cancerous. 
As we know, early detection and removal of the polyps can substantially aid in the 
prevention offuture problems for these patients. Routine screening of the colonfor 
people who are indicatedfor such screenings, such as the President of the United States, 
can have a signifcant impact on maintenance of health statu and prevention of further 
and more costly problems. 
Whe the ASOE statement specifcaly references "colonoscopies, " routine screning by sig
moidoscopy is more prevalent. 
The American Cancer Society espouses annual screening examnations via sigmoidoscopies at 
ages 50 and 51; after two successive negative fmdings, the procedure should be repeated 
every 3 to 5 years. 
Medicare Coverage Limitatons

Under Medicare law, items and services which ar not reasonable and necessar for the diag
nosis or tratment of illess or injur ar, in general, excluded from coverage. Specificallyex
cluded are expenses incurd for routie physical checkups, i.e. , examations performed 
without relationship to treatment or diagnosis for a specifc ilness, symptom, complaint or in-
Jur. 
Pror to the passage of the Medicare Catastrophic Coverage Act of 1988, no tyes of cancer 
screening exams were covered by Medicare. The catastrophic coverage legislation, however 
provided coverage of cancer screening mamography (subject to frquency limitations, 
qualty standards and special payment rules) effective Januar 1, 1990. This legislation also 
established a Biparsan Commssion on Comprehensive Health Car to make recommenda
tions to Congrss on other preventive health care services, among other items. . 
Medicare caners are requied to apply safeguards against unnecessar utilization of services 
furished by providers. They do this by conducting prepayment and postpayment reviews 
designed to detect inappropriate, noncovered, or excessive services and potentially frudulent 
progr 
practices. The review process leads to correctig inappropriate  payments by 
recovery of overpayments, preventing funher abuse by educating the individual provider and 
progr 
where similar issues of  abuse appear to be widespread among providers reviewed, is
suing bulletins to the medical community on acceptable 
biling practices.  PURPOSE 
This inspection was undenaken to determne the appropriateness of Medicare payments for 
colorectal examnations--in parcular the extent to which physicians may be billing for cancer 
screening examnations not covered by Medicare. 
SCOPE AND METHODOLOGY 
A statisticaly valid random sample of 294 Medicare-reimbured clais from around the 
countr, for the four levels of diagnostic endoscopic procedures, was selected from the 1986 
HCFA-BMA data base. Sixty-two of these records indicated that the procedure was per
formed at hospitas, with the remaining 232 reponed as being done by physicians in their of
medical records containing all pertnent pre- and post-endoscopy notes, 
fices. Copies of 
related consultation repons, and laboratory test results were requested for 
al patients in the 
sample. We were able to obtan records from 237 respondents (81 percent). The 010 con
tracted fora medical review of the records. A board-certfied gastroenterologist presently in 
clical 
practice and knowledgeable of curent practices and utilization guidelines, made and 
recorded review determnations. The oro was then provided with quantitative and nartive 
fmdigs. 
The prescribed review areas included patient status (referr, new or established), evidence to 
suppon endoscopy performance (clinical, laboratory and history), compatibilty of reason for 
the exam as noted in clinical records with the reason on the biling form, and medical neces
sity determnation for Medicar puroses. 
The 35 caners responsible for adjudicating the sample claims were asked for information on 
medical policy and clais processing procedures used by them to make coverage and pay
ment determations. These documents were analyzed to identiy caner practices designed to 
assure that payments ar made only for services that are covered and ar medically necessar. 
Hard copy and electronic media claims were evaluated to determe whether the caners had 
received adequate information on them regarding the nature of the patient s medical condition.  FINDINGS

Twenty-seven Percent Of Claims For Endoscopic Examinations Of The Lower GI Tract 
Were Found Not Appropriate For Medicare Reimbursement 
Medical review determations on 237 patients ' medical records found that 65 procedures 
(27.4 percent) were not appropriate for Medicar reimbursement. These procedures were 
done for noncovered cancer screening puroses or for other noncovered procedures. Other
clai 
did not contan sufficient medical record documentation by trating physicians to make 
a coverage determation. The breakdown of the 65 cases is as follows: 
- Thiny procedurs (12.7 percent) were determned to
Cancer screening examinations 

be noncovered for Medicare reimbursement due to clear indications in the medical 
record that the procedure was performed for cancer screening puroses. 
-Founeen procedures (5.9 percent) were determed to
Other noncovered procedures 

be noncovered for other reasons: 
Six procedures were not justied since results of previous procedures and/or tests 
were conclusive in the diagnosis and/or treatment of the patients ' condition. 
These included instances where the source of the medical problem had been 
identified or recent procedurs produced negative fidings. 
Procedures were performed on five patients who did not have any recent history, 
laboratory evidence or clinical symptoms indicating the necessity for the 
procedure. 
Thre procedures were performed without medical justification 6 to 12 months 
prior to the time which current practices and general guidelines call for in 
follow-up surveilance. 
-Twenty-one records (8.9 percent) did not contan suffi
Insufficient documentation 

cient medical documentation to enable the reviewer to make a determnation that the pro
cedure perforied was covered. In these cases there were no medical record notes of 
clinical symptoms, laboratory test results or medical history to indicate the necessity for 
performg the examation. 
Projectig these findings to the 1.5 milion claims paid in 1986 indicates Medicare made inap
propriate payments of $39,249,000.  Incorrect Payments Were Made Because Of Inaccurate Diagnostic Information Provided 
On Claims 
In attemptig to understand the caners ' role in reimbursing the sample cases, a review was 
made of the diagnoses and/or medical condition information contained on the claims forms 
themselves or an attachment. The intention was to determne whether this information alone, 
in the absence of the actual medical records, would have justified considering the services 
covered under Medicare s guidelines. 
The results indicate that the great majority contaied what would seem to be sufficient 
documentation. Of the 237 sample claims: 
221 claims (93 percent) contained diagnoses or medical conditions for which carers 
could presume that the endoscopic procedures were covered; 
16 clais (7 percent) should have been denied coverage or developed for additional 
inormation by caners to determne whether the procedurs were covered. Of these, 
clais 
five  clearly indicated that the procedur was for cancer screening puroses, thee 
clais did not contan any diagnostic or medical condition information and eight claims 
contaied medical conditions which, in and of themselves, did not indicate that the 
procedure could be presumed to be covered. 
In another attempt to understand why the latter 16 claims were not questioned by the caner 
an analysis was made of the documents descrbing internal claims processing procedures and 
policies of caners. Only 9 of the 35 caners were found to have specifc prepayment claims 
processing instrctions for their clais examers ' use in determing cov rage. Such caner 
instrctions tyically cite specifc diagnoses and medical conditions to allow a presumption of 
coverage; lackig these, examers are instrcted to deny payment. 
Our review of the caners ' response to our request for copies of provider bulletins they had is
sued with specific coverage information regarding these procedures indicates a paucity of at
tempts to provide educational material to the medical community regardig coverage issues 
identied in ths inspection. We found that only one of 35 caners had done so. This caner 
had prepared an anicle on colonoscopy clais. 
The main problem appears to be that roughly three-quaners of the questionable clais (49 
65) which were determned in the fIrst findig to be noncovered (based on a review of the ac
tual medical records). contained seemingly satisfactory information on physicians ' clais 
forms to allow payment 
A review of the sample claims forms and supponing documents indicates that vinually all of 
the diagnostic information was provided by the physician or his/her authorized representative. 
As such, responsibility for misrepresenting the reason for the procedure, which occurred in 
many of these cases, rests with the physicians.  The 010 did not seek to obtan explanations from physicians responsible for the content of the 
clai information, nor did the sample methodology permt an analysis of whether the 49 
physicians responsible for these claims routiely provide "suspect" information. It should be 
noted that the Medicare Pan B clai form (HCFA-1500) instrcts physicians that the services 
shown on the form should be medically indicated and necessar for the health of the patient 
and that misrepresentation of essential inormation to receive payment may be subject to fine 
and imprisonment.  RECOMMENDATIONS

The HCFA should alen caners to the substantial amounts of inappropriate payments being 
made. In addressing corrective action, HCFA should consider having its caners: 
provide inormation to the medical community, though bulletins and other techniques, 
regarding the limits of Medicar coverage for such procedures and the medical record 
documentation necessar to suppon payment; and

give increased attention to these procedures as pan of postpayment reviews. 
COMMENTS ON DRAFT REPORT 
Comments received from the Acting Admnistrator of HCFA indicate agreement with our 
recommendations for corrective actions to reduce inappropriate payments identified by this in
spection. The HCFA indicates that it wil: 
snar tnS repon with caner officials; 
discuss the topic with caner medical diectors at their next scheduled meeting; 
recommend to caners that they disseminate information on limits of Medicare coverage 
for these services and medical documentation necessar to suppon payment; and 
encourage caners to give attention to these procedures in their postpayment process. 
The HCFA also expressed its primar reliance on education of the medical community to 
reduce these unnecessar payments. The time-consuming nature of postpayment medical 
review was noted in HCFA' s comments. The 010 is supportve of all the planned actions of 
HCFA but continues to emphasize the value of well-targeted postpayment review as an effec
tive safeguard.  APPENDIX I 
PAYMENT PROJECTIONS 
The data for ths inspection consisted of 294 records drwn from the fourh quaner of the 
1986 BMA fie. These records represent a 0.08 percent sample of all Medicare Pan B bils 
for that quaner. The results of the review indicate that 65 of the 
bils represented by these 
records were inappropriately paid a total of $7,850.00 in alowed charges. The average 
amount inappropriately paid per record is $26.70 with a stadard error of 4. 572. This gives a 
90 percent confidence interval of $19. 18 to $34.22 per record. This sample represents ap
proxiately 367,500 records in the universe of the four quaner of 1986. The projections 
would indicate that $9,812 250.00 (standad error of 1,680,477) was inappropriately paid in al
lowed amounts in this universe. The 90 percent confidence interval runs from a lower cutoff 
point of $7 047,915 to an upper cutoff point of $12,576,585. 
Assumig that the other thee quaners of 1986 are identical to the four quaner, both in the 
distrbution of bils and in expected fmdings, then a I-year estiate of the potential inap
propriate payment would be $39,249 000.00 (stadard error of 6,721,908). The lower 90 per
cent confidence interval cutoff point would be $28,191 660.00 and the upper cutoff point 
would be $50,306,340.00. These figues give an overall precision of approximately 28 per
cent.  APPENDIX II

ll &. 
Healttl Care 
HUMAN SERVICES  Fln  nclng AdmInistration 
DEPARTMENT OF HEALTH 
Memorandum 
't.,... 
APR , 3 1989 
tl. A. II
Dale 
Louis B. Hays 

From  Acting Admini 
OIG Draft Report: Medicare Coverage of Endoscopic Examination of the

02-88-00090
Subject  Lower Gastrointestinal Tract - OAI-
The Inspector General

Offi ce of the Secretary 
We have reviewed the OIG draft report performed to determine the

appropriateness of Medicare payments for examinations of the lower

gastrointestinal tract, in particular the extent to which physicians may be

is not reimbursable under Medicare.

billing for cancer screening whic 
carriers, HCFA will

In order to bring this prob'em to the attention of the 

, and the top1 c will be placed on the agenda

share the OIG report with the  1 directors. t 
n 11 ne wi th 
of the May 23, 1989 meeting of the carr1 er medi ca 
li st  Carri ers Manual, section 7514 E), we 
the postpayment alert  (Medi care 
1 di rectors provi de i nformati on to the medi ca 1 
wi 11 recommend that medi ca 
community through bulletins and other techniques regarding the limits of

Medicare coverage for such procedures and the medical record documentation

necessary to support payment.

Although we will encourage the carriers to give their attention to this

procedure in their postpayment review psr. otcoe ss, we believe tchaa t1  tChOe l1beusntit yway

educate the medi 
to reduce these unnecessary payments 1 

post-payment medical review can be an

set out in the previous paragraph.  process. Medical 
effective tool, but it is a time-consuming and expensive 

' offices and reviewed by carrier

records must be obtained from physicians
medical staff. Costs for this activity can average $15 per claim and

to the anticipated

higher. These costs must be considered in' relation 
dollar return and within the context of the finite funding allocated for

this activity.

Thank you for 9iving us the opportunity to cOl1ent on this draft report.