Department  of Health  and Human  Services 
OFFICE OF 
INSPECTOR GENERAL 
MEDICARE  TESTS  OF  LOWER 
EXTREMITY  ARTERIES 
MAY  1993  OFFICE OF INSPE~OR  GENERAL 
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 three  OIG  operating  components:  the  Office of Audit  Services, the 
Office of Investigations,  and the  Office of Evaluation  and Inspections.  The  OIG  also informs 
the  Secretary  of HHS  of program  and management  problems  and recommends  courses  to 
correct  them. 
OFFICE OF AUDIT  SERVICES 
The  OIGS Office of Audit  Services  (OAS)  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 INVESTIGATIONS 
The  OIGS Office of Investigations  (01)  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 01  lead to criminal  convictions, 
administrative  sanctions,  or civil money  penalties.  The  01  also oversees  State  Medicaid  fraud 
control  units which investigate  and prosecute  fraud  and patient  abuse  in the Medicaid  program. 
OFFICE OF EVALUATION  AND  INSPECTIONS 
The  OIGS Office of Evaluation  and Inspections  (OEI)  conducts  short-term  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 these  inspection 
reports  generate  rapid,  accurate,  and up-to-date  information  on the  efficiency, vulnerability, 
and effectiveness  of departmental  programs. 
This report  was prepared  in the  Philadelphia  Regional  Office, under  the direction  of Joy Quill, 
Regional  Inspector  General  and Robert  A. Vito,  Deputy  Regional  Inspector  General. 
Participating  in this project  were:  .*  
Robert  Katz, Project  Leader  Penny  Thompson,  Headquarters 
Eileen  Silk, Lead  Analyst  Wayne  Powell,  Headquarters 
Cynthia  Hansford,  Administrative  Staff  W. Mark  Krushat,  SC.D., Headquarters 
Linda  Moscoe,  Headquarters 
To obtain a copy of this repo~  call the PhiladelphiaRegional Office at (215) 596-0607.  Department  of Health  and Human  Services 
OFFICE OF 
INSPECTOR GENERAL 
MEDICARE  TESTS  OF  LOWER 
EXTREMITY  ARTERIES 
MAY  1993  0EI-03-91-O0950  EXECUTIVE  SUMMARY 
PURPOSE 
To  review  Medicare  carriers  utilization  review  practices  for  noninvasive  tests  of lower 
extremity  arteries. 
BACKGROUND 
Peripheral  vascular  disease  (PVD)  is the  general  term  applied  to  a group  of distinct 
diseases  and  syndromes  involving  the  arteries,  veins,  connective  tissues,  and  vessels  of 
the  extremities.  Although  vascular  diseases  may  occur  in  any  body  part  containing 
blood  vessels,  many  victims  of PVD  experience  symptoms  in their  legs,  such  as pain, 
cramps,  numbness,  coldness,  and  weakness.  Physicians  use  a wide  array  of noninvasive 
techniques  to  diagnose  the  presence,  location,  and  extent  of conditions,  such  as 
atherosclerosis  (narrowing  of the  arteries),  which  interfere  with  the  flow  of blood  to  or 
from  the  extremities. 
Diagnostic  arterial  tests  of the  lower  limbs  have  increased  dramatically  in  recent  years. 
Medicare  Part  B  allowed  amounts  virtually  doubled  for  these  tests  in  all settings  and 
specialties  from  1987  to  1990.  In  1991,  total  allowed  dollars  exceeded  $71  million.  In 
terms  of total  Part  B billings, the  leading  specialties  include  general  surgeons,  thoracic 
surgeons,  and  internal  medicine  specialists.  These  3 groups  accounted  for more  than 
410,000 services  totaling  some  $34 million  in allowances. 
The  Health  Care  Financing  Administration  (HCFA)  recognizes  limb  arterial  studies 
(as well as other  related  noninvasive  vascular  tests)  as services where  abuses  have 
been  identified,  and  medical  review  should  be  undertaken.  Such  services  are  included 
as an alert  to carriers  in the  Medicare  Carriers  Manual.  The  alert  enables  carriers  to 
facilitate  the  identification  of aberrant  practice  patterns. 
In order  to determine  how Medicare  reviews  claims  for these  tests,  we contacted  36 
carriers  representing  58 geographical  jurisdictions  to obtain  their  coverage  guidelines 
and  pertinent  policies.  Responses  were  received  from  34 carriers  serving  56 
jurisdictions.  We  analyzed  the  criteria  and  methods  carriers  use to evaluate  and 
control  utilization.  We  obtained  statistical  information  from  HCFA. 
This is one  in a series  of Office  of Inspector  General  reports  on carriers  utilization 
review  efforts  in areas  that  appear  on HCFAS  Postpayment  Alert  List  (PAL)  of 
abusive  services. 
i  FINDINGS 
b  Over half the carriers have special utilization policies. 
Over  half  of the  carriers  responding  to our  inquiries  had  some  type  of 
utilization  review  safeguard  in place.  These  safeguards  consisted  of prepayment 
thresholds  or special  policies  related  to coverage,  documentation,  and/or 
equipment  requirements. 
b  Coverage  policies  could produce savings to the Medicare  program. 
Medicare  could  realize  savings nationally  by adopting  policies  such  as 
prepayment  threshold  policies.  Based  on the  experience  of four  carriers  which 
have  threshold  limits  of two tests  a year  per  physician  per  beneficiary,  Medicare 
would  save  about  $5.7  million  annually. 
RECOMMENDATION 
We believe  the  monetary  benefits  of tighter  uti ization  policies,  such as prepayment 
thresholds,  are  evident.  The HCFA  has  convened  a workgroup  to review  coverage 
policies  for these  tests.  They  plan  to issue new coverage  guidelines.  We  recommend 
that  HCFA  continue  to work  with carriers  to ensure  that  there  are  sufficient 
safeguards  to prevent  the  unnecessary  utilization  of lower  extremity  tests.  These 
safeguards  may include  the  policies  that  are  currently  utilized  by some  carriers. 
COMMENTS  AND  OIG RESPONSE 
The  HCFA  concurred  with  our  recommendation.  In HCFAS  view, a variety  of 
approaches  might  be  appropriate  to curtail  unnecessary  utilization  in addition  to 
prepayment  thresholds.  We  agree  that  various  approaches  could  result  in savings. 
Our  recommendation  contains  sufficient  flexibility to embrace  workable  monitoring 
techniques  at any phase  of utilization  review.  We  hope  the  examples  of carrier 
practices  which we have  described  in this report  will be  helpful  to the  Noninvasive 
Vascular  Testing  Work  Group,  which has been  convened  by HCFA  to address  such 
issues. 
We  have  refined  our  savings estimate  based  on more  recent  data,  and  made  minor 
changes  in the  report  based  on HCFAS technical  comments.  The  full text  of HCFA 
comments  are  contained  in Appendix  B. 
The  Assistant  Secretary  for Planning  and  Evaluation  reviewed  the  report  and 
expressed  concurrence. 
ii  TABLE  OF  CONTENTS

EXECUTIVE  SUMMARY

Introduction  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..1

FINDINGS

Carrier  Utilization  Policies  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  4

Coverage  Policies  Could  Produce  Savings  . . . . . . . . . . . . . . . . . . . . . . . . . . ...6

RECOMMENDATION  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..7

COMMENTS  AND  OIGRESPONSE.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

APPENDICES

Carriers  Other  Special  Utilization  Policies  . . . . . . . . . . . . . . . . . . . . . . . . . .  A-1

Comments  Received  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..B-1

Potential  Savings  Calculations.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..C-1
 INTRODUCTION 
PURPOSE 
To  review  Medicare  carriers  utilization  review  practices  for noninvasive  tests  of lower 
extremity  arteries. 
BACKGROUND 
Physicians  use  a wide  array  of noninvasive  techniques  to  diagnose  the  presence, 
location,  and  extent  of conditions,  such  as atherosclerosis  (narrowing  of the  arteries), 
which  interfere  with  the  flow of blood  to or from  the  extremities.  These  techniques 
include  Doppler  and  plethysmography  tests. 
  Doppler  tests:  Using  ultrasound  principles,  Doppler  devices  emit  high 
frequency  soundwaves  which  detect  the  flow of blood  or pinpoint  an  arterial 
irregularity,  such  as an obstruction. 
  Plethysmography:  Literally  meaning  to record  an increase,  this technique 
detects  vascular  obstructions  by temporarily  blocking  blood  flow circulation  and 
recording  and  measuring  any changes  which  result. 
Medicare  Coverage and Guidance 
The  HCFA  recognizes  limb  arterial  studies  (as well as other  related  noninvasive 
vascular  tests)  as services where  abuses  have  been  identified,  and  medical  review 
should  be  undertaken.  Such  services  are  included  as an alert  to carriers  in a special 
Postpayment  Alert  List  (PAL)  in Section  7514 of the  Medicare  Carriers  Manual. 
Carriers  use the  PAL  to facilitate  identification  of aberrant  practice  patterns. 
Practitioner  services  included  in the  PAL  are  not  limited  by physician  specialty. 
Based  on a special  review  by a medical  directors  workgroup,  HCFA  issued  these 
instructions  in 1989: 
The rapid  proliferation  of noninvasive  vascular  testing  modalities 
presents  a challenge  to third  party  payers  in determining  appropriate 
reimbursement  policies.  While  the  patient  clearly  benefits  from  escaping 
the  risks inherent  in angio/venography  (an  invasive  test),  the very  safety 
of the  noninvasive  tests  may encourage  overutilization.  Carrier  medical 
review  policies  must  therefore  be  clear  and  well developed  regarding 
these  tests. 
1  Carriers  can  utilize  a number  of medical  review  policies,  including  prepayment 
thresholds.  Prepayment  thresholds  (or  screens)  identifj  claims  that  merit  additional 
review  prior  to payment.  Carriers  frequently  review  the  billing histories  for providers 
and beneficiaries  identified  through  these  screens.  Sometimes  carriers  request 
additional  medical  information  before  these  claims  are  approved  for payment. 
Medicare Reirnbmement 
Diagnostic  arterial  tests  of the  lower  extremities  (also  referred  to as arterial  or 
vascular  tests  of the  lower  limbs)  have  increased  dramatically  in recent  years. 
Allowed  amounts  virtually  doubled  for all settings  and  specialties  from  1987 to  1990, 
according  to Part  B Medicare  Annual  Data  (BMAD)  statistics.  In  1991, total  dollars 
dropped  to $71,231,617  even  though  total  allowed  services  climbed  to  801,415, 
according  to the  Part  B Extract  Summary  System  (BESS)  file compiled  through 
June  1992. 
Section  4108 of the  Omnibus  Budget  Reconciliation  Act  of 1990, which mandated 
reductions  in reasonable  charges  in the  technical  components  of certain  high-volume 
diagnostic  tests,  including  arterial  tests  of the  lower  limbs, may have  caused  the  decline 
in total  dollars  allowed  in 1991. 
According  to BESS  statistics  for  1991, a wide variety  of specialties  conduct  diagnostic 
arterial  tests  of the  lower  limbs.  Three  of the  highest  specialties  (in terms  of total 
dollars  allowed)  are  general  surgeons  ($16 million),  thoracic  surgeons  ($9 million),  and 
internal  medicine  specialists  ($9 million).  These  groups  accounted  for more  than 
410,000 services  totaling  some  $34 million  in allowances. 
METHODOLOGY 
We  contacted  36 Medicare  carriers  representing  58 geographical  jurisdictions  to obtain 
coverage  guidelines  and  pertinent  policies.  Responses  were  received  from  34 carriers 
2
 representing  56 jurisdictions.  Because  the  policies  of an individual  carrier  may vary 
from jurisdiction  tojurisdiction,  inthisreport  werefer  toeach  jurisdictional  a carrier. 
Analysis  focused  on criteria  and  methods  carriers  use to evaluate  and  control 
utilization.  We obtained  statistical  information  from  HCFAS BMAD  and  BESS  files, 
and  obtained  technical  and  clinical  information  from  standard  medical  references  and 
the  Medicare  Carriers  Issues  Manual  (MCIM). 
We used  the  1991  Part  B sample  fi]el  to  calculate  national  savings  which  would  be 
realized  if all specialties  had  a threshold  of two  tests  per  year,  with  additional  tests 
requiring  medical  justification.  To  estimate  the  savings  resulting  if all  carriers  adopted 
a screening  threshold  of two  tests  a year  (per  physician,  per  beneficiary),  we  compared 
utilization  rates  in  the  four  carriers  with  this  threshold  to  utilization  rates  in the  other 
carriers. 
This inspection  was conducted  in accordance  with the  Quality Standards for 
Inspections  issued  by the  Presidents  Council  on Integrity  and  Efficiency. 
1 The  Part  B sample  is a one  percent  random  sample  selection  of Medicare 
beneficiaries  from  HCFAS  Common  Working  File.  It is maintained  by the  Office  of 
Inspector  General. 
3  FINDINGS 
Over half the carriers have special utilization policies. 
Many  carriers  responded  to HCFAS  warnings  about  the  abusive  nature  of arterial 
limb tests  by instituting  special  policies  to control  the  incidence  of inappropriate 
testing.  More  than  half  of the  responding  carriers  (32 of 56) had  some  type  of 
utilization  review  safeguard  in place.  These  safeguards  consisted  of prepayment 
thresholds  or special  policies  related  to coverage,  documentation,  and/or  equipment 
requirements. 
The  32 carriers  accounted  for approximately  $29.5 million  in allowances  in 1991 or 
about  46 percent  of the  total  allowances  for the  responding  56 carriers. 
Carrier  monitoring  efforts  vary widely.  Such  efforts  include  focused  techniques  as well 
as intensive,  periodic  reviews  of arterial  limb tests.  Some  carriers  are  heavily  involved 
in prepayment  monitoring  while  others  depend  solely on postpayment  reviews.  One 
carrier  reported  that  its utilization  review  section  evaluates  every vascular  test  billed  by 
podiatrists  because  of medical  necessity  concerns.  Another  carrier  characterized  these 
claims  as, Very hard  to monitor  except  manually.  Conversely,  another  carrier  said 
they never  do any prepayment  monitoring. 
The  HCFA  demonstrated  its continued  concern  when  it convened  a technical  advisory 
group  in June  1992 to reevaluate  coverage  policies  for these  tests.  They  expect  to 
issue new coverage  guidelines  in the  future. 
I?repayment lheshokis 
Thirteen  carriers  utilize  prepayment  thresholds  as a primary  means  of controlling 
unnecessary  or inappropriate  testing.  Because  of carrier  confidentiality  concerns,  we 
will not  identify  the  carriers.  A chart  depicting  the  threshold  policy for each  of the  13 
carriers  appears  on the  next  page. 
4  A  II  Physicians II  2 @ 365 Days 
Podiatrists  1 @ 180 Days 
B  All  1 @ 6 Months 
c  All  1 @ Year  Each  Leg; 
2 @ Year  if Vascular 
Surgery 
QJ 

 1 @ Year  Each  Leg; 
2 @ year if Vascular 
Surgery 
E  All  Preoperative/Non-
Surgery:  1 @ 12 
Months 
Postoperative:  1 compl 
Test  1st 12 months; 
Limited  Tests  @ 3 
Months  Thereafter 
II 
F  Podiatrists Vascular  Tests  Not 
II  Covered 
G  II  All  II  1 @ 12 months 
H  All  1 @ 12 Months 
I  II  Podiatrists  Vascular  Tests  Not 
II  Covered 
J  Podiatrists  Vascular  Tests  Not 
II  II  Covered 
K  II  Podiatrists  Vascular  Tests 
II  Not  Covered 
L  Podiatrists  1 Preoperative 
II  II  Test  a Year 
M  All  1 @ 365 Days; 
Postoperative: 
3 First  Year,  1 a Year 
Thereafter 
5
 Other special policies 
Nineteen  carriers  have  instituted  special  policy guidelines  stressing  coverage, 
documentation,  and/or  equipment  requirements.  Several  carriers  delineate  which 
symptoms  or diagnoses  would justify  reimbursement  for these  tests.  For  example,  one 
carrier  stipulates  which  symptoms  justi&  coverage,  such as intermittent  claudication 
or ulcer of lower  limbs.  Other  carriers  stipulate  what  constitutes  acceptable 
documentation;  for example,  one  carrier  requires  physicians  to use equipment  which 
produces  hard-copy  output.  (See  Appendix  A for a list of the  19 jurisdictions  and 
summaries  of their  special  policies.) 
Coverage  policies  could produce  savings. 
Medicare  could  realize  savings nationally  if carriers  used  prepayment  thresholds  as the 
basis for their  prepayment  review  safeguards  before  applying  other  coverage  criteria. 
Four  carriers  have  implemented  prepayment  thresholds  of two tests  a year  per 
physician  per  beneficiary.  Based  on the  experience  of the  4 jurisdictions  in 1991, we 
estimated  64,915 tests  would  not  have  been  performed  if this limit had  been  in place 
nationally.  Based  on the  average  cost of about  $892 per  test,  about  $5.7 million 
would  have  been  saved  annually.  Potential  savings over  the  next  5 years  exceeds  $28 
million.  (See  Appendix  C for further  details  of our  calculations.) 
The  unnecessary  utilization  of lower  extremity  tests  results  in unwarranted  Medicare 
expenditures.  According  to BMAD  statistics  for  1990, more  than  200,000 beneficiaries 
received  multiple  lower  extremity  tests.  Some  beneficiaries  received  as many  as 14 
tests  from  the  same  physician.  To use  one  of these  beneficiaries  as an  example,  a 
prepayment  threshold  of two tests  a year  per  physician  could  have  effected  potential 
savings of $1272 in allowances  just  for this one  beneficiary  if additional  tests  were 
deemed  unnecessa~  (12x  average  1990 allowance  of $106). 
Four  carriers  do not  cover vascular  tests  performed  by podiatrists.  If all vascular  tests 
performed  by podiatrists  were  not  covered,  Medicare  could  save about  $8.8 million 
annually  or $44 million  over  the  next  5 years.  This figure,  however,  does  not  take  into 
account  that  some  beneficiaries  currently  having  tests  done  by a podiatrist  may have 
the  test  done  by another  physician  specialty. 
2Based  on a one  percent  national  sample  of 1991 services  maintained  by the  Office 
of Inspector  General. 
6  RECOMMENDATION 
We believe  the  monetary  benefits  of tighter  utilization  policies,  such  as prepayment 
thresholds,  are  evident.  The  HCFA  has  convened  a workgroup  to  review  coverage 
policies  for  these  tests.  They  plan  to  issue  new  coverage  guidelines.  We  recommend 
that  HCFA  continue  to  work  with  carriers  to  ensure  that  there  are  sufficient 
safeguards  to  prevent  the  unnecessary  utilization  of lower  extremity  tests.  These 
safeguards  may  include  the  policies  that  are  currently  utilized  by some  carriers. 
7  COMMENTS 
Comments  and OIG Response 
The  HCFA  concurred  with  our  recommendation.  In HCFAS view, a variety  of 
approaches  might  be  appropriate  to curtail  unnecessary  utilization  in addition  to 
prepayment  thresholds.  We  agree  that  various  approaches  could  result  in savings. 
Our  recommendation  contains  sufficient  flexibility to embrace  workable  monitoring 
techniques  at any phase  of utilization  review.  We hope  the  examples  of carrier 
practices  which we have  described  in this report  will be  helpful  to the  Noninvasive 
Vascular  Testing  Work  Group,  which  has  been  convened  by HCFA  to  address  such 
issues. 
The  HCFA  suggested  that  the  technical  and/or  professional  components  of tests 
involving lower  extremity  arteries  may have  been  overvalued,  thus  resulting  in 
excessive  payments.  The  HCFA  felt  OIG  should  examine  this issue.  We will consider 
adding  this issue  to our workplan. 
The  Assistant  Secretary  for Planning  and  Evaluation  reviewed  the  report  and 
expressed  concurrence. 
Technical  comments 
The  HCFA  suggested  the  chart  on page  2 indicate  whether  the  figures  are  based  on a 
calendar  or fiscal year.  We  revised  the  chart  to reflect  that  the  figures  represent 
calendar  years. 
The  HCFA  questioned  our  cost projections  based  on more  than  517,000 tests.  This 
figure  should  have  read  51,797 tests.  However,  we have  revised  and  refined  our 
calculations  using complete  1991 data  recorded  through  June  1992.  The  revised 
estimate  rises  to an annual  savings of about  $5.7 million  (64,915 cases  with savings 
multiplied  by an average  payment  of $89 based  on the  one  percent  national  sample 
maintained  by our  office).  The  $89 figure  represents  the  average  payment  for lower 
extremity  tests  using complete  figures  recorded  through  June  1992.  The  previously 
cited  figure  of $98 reflected  figures  recorded  at the  close  of December  1991. 
Additional  information  may be  found  in Appendix  C. 
The  full text  of HCFA  comments  appears  in Appendix  B. 
8  APPENDIX  A 
Nineteen  carriers  implemented  special  policies  relating  to coverage,  documentation, 
and/or  equipment  requirements.  Because  of concerns  about  the  confidentiality  of 
carrier  policies,  we will not  identify  the  carriers. 
F 
Acceptable  symptoms  delineated. 
II 
B  Test  must produce  hard-copy  output  with a bidirectional 
flow. + 
II  c  Medical  necessity  review conducted  on all claims. 
D  Acceptable  diagnoses  delineated. 
II  E  Test  must produce  hard-copy  output  using bidirectional 
vascular  flow/imaging.
II  F  Acceptable  diagnoses  delineated. 
II  G  Test  must produce  hard-copy  output  signed by physician. 
II 
H  Defines  requirements  for limited  and complete  tests. 
II  I  Documentation  must  accompany  claims.
II  J  Acceptable  diagnoses  delineated.
II  K  Covered  only in cases of planned  surgical intervention.
II  L  Acceptable  symptoms  delineated.
II  M  Covered  only in cases of planned  surgical intervention.
II  N  Patient  record  must contain  hard-copy  output/imaging.
o  Claims must  include  a report  of clinical findings  and test 
II  results. + 
Acceptable  symptoms  delineated. 
Acceptable  symptoms  delineated. 
Acceptable  diagnoses  delineated. 
Medical  records  must contain  documentation. 
+  Applies specifically to podiatrists.
A -1  APPENDIX  B 
COMMENTS  ON THE  DRAFI  REPORT 
B-1  .-
W 
DEPARTMENT  OF HEALTH&  HUMAN  SERVICES 
Memorandum 
%iiiiifiiiiii!@2 
Acting  Administra  or

Office  of Inspector  General  (OIG)  Draft Report:  Medicare  Testsof Lower

Extremity  Arteries,  OEI-03-91-O0950

Bryan B. Mitchell

Principal  Deputy  Inspector  General

We  reviewed  the above-referenced  draft report concerning  the results  of 
OIGS review  of carriers use of special  policies  to combat  umecesary  and 
inappropriate  noninvasive  tests of lower extremity  arteries. 
We  agree  with OIGS recommen&tion  that the Health  Care Financing 
Administration  should  continue  to work with carriers to ensure  that sufficient 
payment  safeguards  are in place  for Medicare-covered  noninvasive  tests  of 
lower  extremity  arteries.  However,  we do not agree  with OIGS projected 
savings  for the  nationwide  implementation  of the use  of prepayment 
thresholds  prior to the application  of other coverage  criteria.  Our detailed 
comments  are  attached  for your consideration. 
Thank  you  for the opportunity  to review and comment  on this draft 
report.  Please  advise  us if you agree with our position  on the reports 
recommendation  at your earliest  convenience. 
Attachment 
z  on Office  of Inspector  General  (OIG)  Draft  Re~oti 
Medicare Tests  of Lower Extremity Arteries 
0EI-03-91-O0950 
Recommendation 
That  HCFA  continue  to work with carriers to ensure  that there  are sufficient 
safeguards  to prevent  the unnecessary  utilization  of lower  extremity  tests. 
These  safeguards  may include  the policies  that are currently  utilized  by some 
carxiers. 
JICFA  Remonse 
We  agree.  The  Noninvasive  Vascular  Testing  Work Group,  convened  by 
HCFA  and composed  of Medicare  carrier medical  directo~  is working  to 
develop  model  local  medical  review  policies  for tests of lower  -emity 
arteries  and transcranial dopplers. 
Although  OIG  focused  on prepayment  review, we believe  a variety  of policies 
and approaches  might be appropriate  and ought to be considered  by OIG 
when  reviewing  this area.  They  include  the following: 
- The  thrust of HCFA  utilization  review activities  is moving  to a 
postpayment  basis.  The  effectiveness  of prepayment  review versus 
targeted  postpayment  review  should  be evaluated.  Prepayment 
review  may not be cost-effective,  given  the relative  costs  of manual 
review  compared  with the payment  amount  for lower  extremity  and 
transcranial doppler  tests.  Reliance  on prepayment  review  without 
other  checks  also  runs the risk of increasing  utilization,  if physicians 
bemme  aware of screen  parameters  and take advantage  of the 
situation. 
- It may also be beneficial  to examine  payment  for these  tests. 
Specifically,  it has been  suggested  that the payment  amounts  for the 
technical  and/or professional  components  of these  tests  are too  high. 
The  rates could  be too  high given  the way that technical  components 
were  determined  or because  these  tests are in the low range  of the 
work scale  and physicians  responding  to the Hanmrd  Sumey may 
have overestimated  the value  of the services  at the  low end  of the 
work scale.  Page  2 
In addition,  OIG  found that special  utilization  policies  could  produce  savings 
to the Medicare  program, and used  as an example  tie  adoption  by four 
carriers of a screening  threshold  of two tests a ya,  per physician,  per 
beneficiary.  While  nationwide  implementation  of this policy  might  achieve 
some  savings,  OIG  does  not present  any rationale  for its selection  of this 
policy  (versus  more  or less stringent  policies)  as a baseline  policy.  OIG  also 
does  not address the appropriateness  of placing  emphasis  solely  on volume 
and COSLwithout  regard to a determination  of tie  appropriate  utilization  of 
the  test involved. 
Technical  Comments 
Backmound,  page 2- the chart and/or  the accompan~g  text should  indicate 
whether  the figures are based  on a calendar  or fiscal year. 
Findinml  page  6, second  paragraph  under Coverage  IJolkks  Could  Produce 
Savings  -the paragraph states  that $5 million  could  be saved  annually  based 
on the experience  of the four jurisdictions  which used  prepayment  thresholds 
in 1991.  This savings estimate  assumes  that near]y 518,000  tests would  not 
have been  performed  if the same  prepayment  threshold  had been  in place 
nationally  and is based  on the average  cost of about  $98 per test. 
This conflicts  with the chart on page  2 which indicates  that the  average 
allowed  amount  in 1991 was $89.  The  problem  may be as simple  as 
transposed  digits or it muld  be a case  of using calendar  year figures  in one 
instance  and fiscal year data in the other. 
Finally,  the estimated  $5 million  in annual  savings appears  to be incorrect 
based  on the data provided.  The  number  of tests  (518,000)  multiplied  by the 
average  cost per test ($98)  produces  savings totig  over  $50 million.  This 
figure  exceeds  the total dollars  allowed  in 1987 and 1988 for all  diagnostic 
testsof the lower  extremities.  Perhaps  OIG  means  to my  that  over  the entire 
5-year period  of  1987-91, 518,000  tests would  have been  performed.  Assuming 
20 percent  or roughly  104,000 fewer  tests would  have been  performed  in 1991, 
at an average  savings of $98 per tes~  savings for  1991 would  still  exceed 
$10 million.  APPENDIX  C 
ESTIMATED  SAVINGS  BASED  UPON  LIMITING 
THE  NUMBER  OF TESTS PER BENEFICIARY 
To  estimate  the  potential  savings attributable  to limiting  the  number  of tests,  we 
reviewed  the  1991 experience  of Medicare  carriers.  Four  carriers  implemented 
prepayment  thresholds  of two tests  a year  per  physician  per  beneficiary  prior  to  1991. 
Ushg a one  percent  sample  of Medicare  Part  B payments  for  1991 reflecting  data 
through  December  1991, we developed  the  following  distributions. 
AU Carriers  Four Carriers with Limitations 
(2/Year) 
Number  of  Number  Number  Number  Number 
Tests  per  of  of  of  of 
Beneficiary  Tests  Beneficiaries  Tests  Beneficiaries 
1 Test  477,700  477,700  71,800  71,800 
2 Tests  111,800  55,900  12,000  6,000 
3 Tests  59,700  19,900  5,100  1,700 
4+  Tests  50,400  12,600  2,400  600 
Average  Number  of Tests 
per  Beneficiary  1.24  1.14 
Based  upon  this data,  we determined  the  carrier  limitation  of two tests  per  beneficiary 
per  physican  would  produce  an 8.1 percent  reduction  in the  number  of tests 
performed.  At the  close  of June  1992, Part  B data  indicates  that  801,415 tests  were 
performed  for a total  allowed  amount  of approximately  $71,232,000.  Applying  this 8.1 
percent  reduction,  we estimated  that  approximately  $5,769,000  could  be  saved  in the 
amount  allowed  if this two-test  limit were  applied  nationwide. 
c-1  Bryan  B. Mitchell

Principal  Deputy  Inspector  General

OIG  Final  Report:  Medicare  Tests  of Lower  Extremity  Arteries,  OEI-03-91-00950

Gerald  H. Britten 
Acting  Assistant  Secretary  for 
Planning  and  Evaluation 
Attached  is a copy of our  final inspection  report  entitled,  Medicare  Tests  of Lower 
Extremity  Arteries. 
We  found  that  many  Medicare  carriers--over  half the  carriers  responding  to our 
queries--have  instituted  special  policies  to combat  unnecessa~  and  inappropriate 
noninvasive  tests  of lower  extremity  arteries.  Thirteen  carriers  implemented 
prepayment  thresholds  to curtail  utilization  improprieties.  The  HCFA  had  previously 
warned  carriers  about  abusive  billings  for these  kinds  of tests. 
We believe  the  monetary  benefits  of tighter  utilization  policies,  such as prepayment 
thresholds,  are  evident.  Based  on the  experience  of four  carriers  which  have  threshold 
limits  of two tests  a year  per  physician  per  beneficiary,  Medicare  would  save  about 
$5.7 million  annually. 
The  HCFA  has  convened  a workgroup  to review  coverage  policies  for these  tests. 
They  plan  to issue new coverage  guidelines.  We  recommend  that  HCFA  continue  to 
work  with carriers  to ensure  that  there  are  sufficient  safeguards  to prevent  the 
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 13. m-es-e  Sa?fqyfmfi  may  imiwtie  he 
policies  that  are  currently  utilized  by some  carriers. 
If you have  any questions  about  this report,  please  call me  or Michael  Mangano, 
Deputy  Inspector  General  for the  Office  of Evaluation  and  Inspections,  or have  your 
staff  contact  Penny  Thompson  at  (410)  966-3138. 
Attachment  Bryan  B. Mitchell

Principal  Deputy  Inspector  General

OIG  Final  Report:  Medicare  Tests  of Lower  Extremity  Arteries,  OEI-03-91-O0950

William  Toby,  Jr.

Acting  Administrator

Health  Care  Financing  Administration

Attached  is a copy of our  final  inspection  report  entitled,  Medicare  Tests  of Lower

Extremity  Arteries.

We  found  that  many  Medicare  carriers--over  half the  carriers  responding  to our

queries--have  instituted  special  policies  to combat  unnecessary  and  inappropriate

noninvasive  tests  of lower  extremity  arteries.  Thirteen  carriers  implemented

prepayment  thresholds  to curtail  utilization  improprieties.  The  HCFA  had  previously

warned  carriers  about  abusive  billings for these  kinds  of tests.

We believe  the  monetary  benefits  of tighter  utilization  policies,  such as prepayment

thresholds,  are  evident.  Based  on the  experience  of four  carriers  which have  threshold

limits  of two tests  a year  per  physician  per  beneficiary,  Medicare  would  save  about

$5.7 million  annually.

The  HCFA  has  convened  a workgroup  to review  coverage  policies  for these  tests.

They  plan  to issue new coverage  guidelines.  We  recommend  that  HCFA  continue  to

work with  carriers  to ensure  that  there  are  sufficient  safeguards  to prevent  the

unnecessary  utilization  of lower  extremity  tests.  These  safeguards  may include  the

policies  that  are  currently  utilized  by some  carriers.

The  HCFA  concurred  with  our  recommendation.  However,  they  felt  other

approaches  might  also be  effective  in addition  to prepayment  thresholds.  We  did not

examine  alternative  approaches.  However,  our  recommendation  contains  sufficient

flexibility to include  other  utilization  review  techniques.

If you have  any questions  about  this report,  please  call me  or Michael  Mangano,

Deputy  Inspector  General  for the  Office  of Evaluation  and  Inspections,  or have  your

staff  contact  Penny  Thompson  at  (410)  966-3138.

Attachment
 Morning Mail:  Yes x   No
Title:  Medicare  Tests  of Lower  Extremity  Arteries 
Reference:  OEI-03-91-O0950  Contact:  Penny  Thompson  (410)  966-3138 
We  have  released  a final inspection  report  entitled,  Medicare  Tests  of Lower 
Extremity  Arteries. 
In response  to warnings  from  the  Health  Care  Financing  Administration  (HCFA) 
about  abusive  billings for noninvasive  diagnostic  tests  of lower  extremity  arteries,  we 
found  that  many  Medicare  carriers--over  half the  carriers  responding  to our  queries-
have  instituted  special  policies  to combat  unnecessary  or inappropriate  tests.  Thirteen 
carriers  implemented  prepayment  thresholds  to combat  the  problem.  We believe  the 
monetary  benefits  of tighter  utilization  policies,  such as prepayment  thresholds,  are 
evident.  Based  on the  experience  of four  carriers  which have  threshold  limits  of two 
tests  a year  per  physician  per  beneficiary,  Medicare  would  save  about  $5.7 million 
annually.  The  HCFA  has  convened  a workgroup  to review  coverage  policies  for these 
tests.  They  plan  to issue new coverage  guidelines.  We  recommend  that  HCFA 
continue  to work  with  carriers  to ensure  that  there  are  sufficient  safeguards  to prevent 
the  unnecessary  utilization  of lower  extremity  tests.  The  HCFA  concurred  with  our 
recommendation.