. '
Department of Health and Human Servces

OFFICE OF

INSPECTOR GENERAL

SURGERY: 
. OUTPATIENT 
MEDICAR' E PAYMENTS FOR  UNNgCESSARY 
AND POOR QUALITY CATARACT SURGERIES 
MANAGEMENT ADVISORY REPORT  . ' : '
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OFFICE OF INSPECfOR GENERA

The mission of the Office of Inspector General (GIG), ,as man(:ated by Public Law 95-452, as 
amended, is to protect the integrity of the Department of Healtband HUJ1an 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, investiMtjbhS, and 
inspections conducted by thieeOIG operating cOJ1poneO,ts: the Office of Audit Services, the 
Office ofInvestigation$, and the Office of Evaluation and Inspections- The OIGalso informs 
the Secretary of HHS of program and management problems and recommeildscburses t6 
correct them. 
AlJlT SER.VlCE
ICE  OF 
The OIG's Office of Audit Servi es (OAS) proyjdesallatiditing servces for HH$, eith7rby 
condticting audits with its own audit resourc sor by, overseeing audit work done by others, 
Audits examine the peiformanceofHHS prograInS' alld/orits gfimtees' and contractors)n 
responsibilitiesand: areintended to provide ind~penden! 
carryingo1Jt their respective 
assessments cifHHS programsandoperatioQs in Ofqer to reduce waste, apuse  aI)d ' 
mismanagement and to promote ,economY, and effcienCY throughout the' DepartmeDt. 
OFFIcE OPINTIGATIONS 
The 0 IG's OfficeoL Inyestigations (01) conducts Griminal, , civil ' anqadIIinistrative:jIlvestigations' 
wrongdoing in HHSpr6graInsbrto IIHS herieficia  sand of llnjpst . 
of allegCitjons of 
enrichment byprovidets.  jnvestigativeeffortsofOl lead tocriWinalconvictigns 
, or eiVIlInoriey' penalties. The 01also oversees State Medicaid fraud 
administrative sanctions
control units whichinvestigateaf.d prosecute fraud and patient abllse in the Medicaid progranL 
OFFICEOFEVALUATIONANINSPECTONS 
1'l1eQIG' s Offce6(E\l9Iu  ti()l1andlnspectioris(OEI)c9ndUc;tsshort  rm l1an  IT2nt and 
program ev()luations' (c~Uedinspe~tions)' ' that focuspnissuesofcbncerIltolpeD  rth1erlt  the 
Congress, and thepllblic; ;1Pefindingsand'  nscQritainedinth  lnspecti()p 
teport& , generate rapid  curate  ancluIHo  te iI1,fqrn1()tionon' tbeeffcienc.y;.v,Jn~r lJIitYj: anq' 
lpI'ograms. 
effectivenessQfdyparlInent 
OEI-09-88-01005
 EXECUTIVE  SUMMAR 

PUROSE 
Ths report estimates the amount Medicare paid for beneficiaries who underwent 
cataract surgery with intraocular lens implant (1) that was deemed to be medically 
unnecessary or (2) whose quality did not meet professionally recogned 
standards of 
care. This report also estimates the amount Medicare paid for preoperative tests 
that were medically unnecessary.

BACKGROUN 
Section 1862(a)(1)(A) of the Social Security Act states that Medicare wil not pay for 
servces that are not reasonable and necessary under Part A or Part B. We recently 
completed an inspection in which we examined 802 Medicare outpatient cataract 
surgeries performed in ambulatory surgical centers (ASCs) and hospital outpatient 
departments (OPDs). For the sampled cataract surgeries with adequate 
documentation, the independent medical review contractor found that 1.7 percent of 
the surgeries were unnecessary and 1.8 percent of the beneficiaries received poor 
quality care. By reviewing the beneficiary histories and claims obtained from the 
Medicare carrers and fiscal intermediaries, we determined the payments for the 
unnecessary and poor quality cataract surgeries. 
FIINGS 
MEDICA 
SPENT: 
$29.4 millon in 1988 for medically unnecessary cataract surgeries 
$41.7 millon in 1988 for poor care rendered to cataract patients, and 
approxiately $245 700 in 1988 for medicaly unnecessary B-scans and 
endothelial cell counts. 
RECOMMNDATIONS 
CA 
THE HEATH  FINANCING ADMINSTRTION SHOUL: 
reduce the incidence of payments for medically unnecessary and poor quality 
cataract surgeries and 
reemphasize medical and postpayment review of cataract providers who 
routinely bil for B-scans and endothelial cell counts and postpayment review.  . . . . . . . . . . ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  . . . . . . . . . . 
TABLE OF CONTENTS

SUMY 
EXECUTIV 
BACKGROUND. . . . . . . . . . . . . . . . . . . . 
. . . . . . . . . . . . . . . . . . . . . . . . . . . 1 
FININGS 
. . . . . . . . . . . . . . . . 4 
Medicare spent $29.4 milion in 1988 for medically unncessary

cataract surgery.

Medicare spent $41.7 milion in 1988 for poor care rendered to

cataract patients.

Medicare spent approxiately $245 700 in 1988 for medically

unnecessary B-scans and endothelial cell counts. 
RECOMMNDATIONS 
. . . . . . 5 
APPENDIX  OUTATINT SURGERY: 
MEDICAR PAYMNT FOR UNCEARY AN POOR QUALIT
CATARCf SURGERI 
OEI-09-881005 
PUROSE 
Ths report estimates the amount Medicare paid for beneficiaries who underwent 
cataract surgery with intraocular lens implant (1) that was deemed to be medically 
unnecessary or (2) whose quality did not meet professionally recogned 
standards of 
care. This report also estimates the amount Medicare paid for preoperative tests 
that were medically unnecessary.

BACKGROUN 
Medicare regulations do not specifically define medical necessity or quality 
of care. 
The concepts are characterized by the practices in local medical communities. 
Section 1862(a)(1)(A) of the Social Security Act states that Medicare will not pay for 
servces that are not reasonable and necessary under Part A or Part B. In recent

years, many professional organizations, such as the American Academy of 
Ophthalmology, have issued guidelines to their members outlining medical necessity 
criteria and suggesting standards of care. 
PRO Responsibilties 
Prior to 1985, the peer review organizations (PROs) were not responsible for 
reviewig outpatient quality of care. Since then, several legislative bils, including the 
Consolidated Omnibus Reconciliation Act (COBRA) of 1985 and the Sixh Omnibus 
Budget Reconcilation Act (SOBRA) of 1986, expanded the PRO authority. The 
COBRA authorized PROs to deny payment for questionable care whie SOBRA 
mandated PROs to review quality of care in postacute and ambulatory care settings. 
In April 1989, PROs implemented 100 percent preprocedure review of at least 
10 nonemergency inpatient or outpatient surgical procedures. The PROs were given 
this authority under Section 9401 of Public Law 99-272. Currently, cataract 
extraction is one of two mandatory PRO review procedures. The PROs 
retrospectively review 5 percent of their preprocedure approvals on a quarterly basis. 
They can deny payment based on this review. Under the upcoming scope of work 
the Health Care Financing Administration (HCFA) has eliminated mandatory review 
of non emergency inpatient or outpatient surgical procedures. The PROs would be 
authorized to focus their resources on surgical or nonsurgical procedures and other 
servces which appear to be overutilzed or substandard. The PROs will 
retrospectively review 3 percent of their preprocedure approvals.  Medicare Carrier Responsibilities 
In addition to processing Medicare claims for payment, Section 1842(a)(2)(B) of the 
Social Security Act requires Medicare carriers to apply "safeguards against 
unnecessary utilization of servces furnished by providers." Carrer responsibilities are 
detailed in the Medicare Carrer s Manual (MCM). The carrers are responsible for 
identifyng providers, by locality and specialty, whose utiliation patterns are different 
from medically recognized community standards and norms. The carrers are 
required to monitor claims data to develop profies on providers and their specialty 
groups. The carriers also conduct studies to identify areas of special concern. 
The RCF A periodically alerts Medicare fiscal agents of current abusive practices 
through intermediary letters or carrer bulletins. In this way, the carriers can refocus 
their monitoring activities while the MCM is updated. 
Prior Office of Inspector General Studies 
We recently completed an inspection in which we examined Medicare outpatient 
surgery performed in ambulatory surgical centers (ASCs) and hospital outpatient 
departments (OPDs). In February 1991, we released the medical outcome analysis in 
a final report entitled " Medical Necessity and Quality of Care 
Outpatient Surgery--
(OEI-09-88-01000). The independent medical review contractor found that 
1. 7 percent of cataract surgeries were medically unnecessary and 1.8 percent of the 
beneficiaries received poor quality care. The medical outcome report discusses the 
most common reasons why the cases were deemed 
medically unnecessary or the 
beneficiaries received poor care. 
Ths management advisory report is limited to a discussion of the costs associated 
cataract surgeries and poor care rendered to 
with the medically unnecessary 
Medicare beneficiaries. The sampled surgeries were completed before the national 
implementation of PRO preprocedure review. 
MEllODOLOGY 
Our random sample of 1 170 Medicare beneficiaries included 802 cataract surgeries. 
Half of the surgeries were completed in ASCs, half in OPDs. The surgeries were 
performed in the 10 States with the highest number of Medicare-certifed ASCs in 
February 1988: Arzona, California, Florida, Illois, Louisiana, Maryland, North 
Carolina, Ohio, Pennsylvania, and Texas. The surgeries were completed durig the 
fist quarter of calendar year 1988. 
Mter collecting the medical records from the ophthalmologists, ASCs, and OPDs, we 
used an independent medical review contractor to examine the records. The 
contractor used physician specialists to develop the procedure-specifc criteria. The 
physicians then reviewed each record for medical necessity, appropriateness of the  , we intervewed representatives of 
outpatient setting, and quality of care. In addition
the American Academy of Ophthalmology and a sample of ASC and OPD 
ophthalmologists to identify currently acceptable standards for medical necessity and 
quality of care.

We determed OPD and ASC payments by reviewig the beneficiary histories and 
claims obtained from the Medicare carriers and fiscal intermediaries. For OPDs, the 
payments represent the interi payments. These interi payments are subject to 
adjustment based on the intermediary s audit of the hospital cost report for the fiscal 
year in which the servces were rendered. For 
cataract surgeries, our analysis 
included the ophthalmologist's surgical fees, ASC and OPD facility payments 
preoperative tests (e.  , A-scans, B-scans, and endothelial cell counts), offce visits 
within 90 days after surgery, and IOL payments. 
In order to gain a national perspective, we made two nonstatistical projections for 
the data. First, we projected the 10 States' quarterly costs to annual costs. Second 
since the number of procedures in our sample represents 49 percent of the Medicare 
procedures performed nationally, we calculated the national costs by dividing the 
sampled costs by 0.49. Ths methodology assumes the 10 sampled States are 
representative of the nation as a whole.  FIINGS 
MION 
MEDICAR SPENT $29.4  IN 1988 FOR MEDICALY 
SURGERI. 
UNCEARY  CATARCT 
The medical review contractor found that (a) 96.9 percent of our sample (777 of 
802 cases) had documentation for determining medical necessity and (b) 1.7 percent 
of these (13 of 777) were not medically necessary. Table 1 in the appendix details 
the $29.4 milion national cost projection for these medically unnecessary cataract 
surgeries. 
MEDICAR SPEN $41.7 MION IN 1988 FOR POOR CAR REERD 
PATI. 
TO  CATARCT 
The medical review contractor found that 92.8 percent of our sample (744 of 
802 cases) had adequate documentation to determine quality of care. Of these 
1.8 percent of the cataract beneficiaries (13 of 744) received poor care. Table 2 in 
the appendix details the $41.7 milion cost projection for poor 
quality care. 
MEDICAR SPENT APPROXITELY $245 700 IN 1988 FOR MEDICALY 
UNCEARY B-CANS AN ENDOTHLI CEIL COUN. 
Ophthalmologists intervewed as part of our study indicated that B-scans and 
endothelial cell counts are rarely necessary for cataract surgery. Whe these tests 
are not routine, physicians administer them if a patient s condition warrants it. 
A physician may perform an ophthalmic ultrasound, called a B-scan, when the 
density of the cataract precludes him from viewing the back of the patient' 
s eye. 
The B-scan will rule out serious conditions, such as tumors or a partially or totally 
detached retina. Endothelial cells, which line the inside of the cornea, keep the 
cornea clear and healthy by preventing eye fluid from entering the area. Once the 
cells are lost, the cornea does not easily generate new cells to repair itself. The 
endothelial cell count can determine the corneal health and predict how well it 
tolerate cataract surgery. If the cell count is low, the physician can take precautions 
durig surgery to lessen endothelial cell loss. 
In our sample, Medicare paid $13 729 for the optional tests--
746 for 32 B-scans 
and $9 983 for 133 endothelial cell counts. (Some patients received more than one 
test.) Projected nationally, Medicare paid $14.4 milion for these tests-
$4.4 million for B-scans and $10.0 millon for endothelial cell counts. Since the 
medical reviewers determed  were 
that 1.7 percent of the cataract surgeries 
medically unnecessary, Medicare could have saved approxiately $245 748 for the 
tests--$75 337 for B-scans and $170 411 for endothelial cell counts. Tables 3 and 4 in 
the appendix show the cost projections.  Questions about physicians' practice patterns may arise if they routinely submit 
claims for additional tests. Some sampled providers biled routinely for B-scans and 
endothelial cell counts. We found that 86 percent of the physicians who biled for 
all of their sampled patients. The other 14 percent 
endothelial cell counts did so for 

performed these tests on most of their patients (e.  , 13 of 14 sampled patients). In 
addition, we found that one physician accounted for almost 16 percent of all B-scans 
in our sample. This evidence suggests that practice patterns
, not medical exigencies 
may account for the additional tests. 
RECOMMNDATIONS 
TI 
HCFA SHOUL: 
TI  PAYM 
(1)	 REDUCE  INCIDENCE OF  FOR MEDICALY 
UNCEARY AN 
POOR QUALIT CATARCf SURGERI. 
This recommendation could be accomplished through a combination of efforts 
by both the PROs and carriers who can target their reviews on providers 
whose practice profies indicate a higher than 
average likeliood of 
unnecessary or poor quality care. In this way, HCFA could save as much as 
$71.1 millon in medically unnecessary and poor quality cataract surgeries. 
(2)	 REMPHAIZ MEICAL AN POSTPAYM REVIW 
ROUTY BIL 
CATARCf PROVIERS WHO  FOR B-CANS 
ENDOTILI CEIL COUN AN POSTPAYMNT REVIW. 
The HCFA could issue a carrer bulletin to reemphasize the need for 
Medicare carrers to follow MCM Sections 7500-7514 regarding medical review 
controls and postpayment review. The postpayment alert list in 
MCM Section 7514(E) states that carrers should monitor 
excessive cataract 
preoperative visual acuity tests such as B-scans and endothelial cell counts. 
The HCFA could save as much as $247 500 for unnecessary preoperative 
tests.  APPENDIX: METHODOLOGY 
The tables on the following pages represent the cost savings for medically 
unnecessary cataract surgeries (table 1), poor care (table 2), 
unnecessary B-scans 
(table 3) and unnecessary endothelial cell counts (table 4).  STIMATED
ANNUAL
SAVI NGS
 $0. $0.  $0. 551. 575  $0. 652. tB24  $0. $0.  $0. $0.  to. $0.  $0. $0.  $0. 496. $676  $0. $0.  874. $2, 197, 378. 118  953. 392 14  AtED NAtioNAL L SAViNGS:  373. 373 29 
E $ MA $
U
TiN
SN
EA
D E  8 7  8 0  0 4  2 2  4 0  9  3 0  8 8  4 1  0 4  9 
USTEVERS 146219 522828 1547733 326326 39088 175 263153 73897 80397 1326651 9441
DJN I 
AU 0 '  4 
RGERIES  VERAGE ANNUAL AYMENTS  $0. $0.  $0. 540. 3  $0.
445.
9,  $0. $0.  to. $0. 0 $0. $0.  $0. $0.  $0. 375. 0;  to. $0.  762. 2 1 , 648 . 8 773. 7 
U A P 1 $ 1 11 5
S $ $ $$ $
T  *  be

AC 0  3  o 
CATAR RAGE TERLY ENTS  $0. $0.  $0. 385.  $0. 361.  $0. $0.  $0. to. 0 $0. $0.  $0. $0.  $0. 593.  $0. $0.  190. 7912.  443.  ton t
Y  VEARYM 4  at
R AUA 1 m
SA QP $ or
NECESATED ANNUAL SAVINGS FOR MEDICALLY U  PERCENT MED I CALL Y I CAlly SiTE UNNECESSARY MED SAMPLE CASES CASES UNNECESSARY  00% OPD qO% ASC  0 . 00% OPD 76% ASC  opb 0 . 00% 19% ASC	 00% OPO 00% ASC  0 . 00% OPO 0 . 00% ASC  00% OPD O. 00% ASC	 0 . 00% OPD 00% ASC  00% OPO 67% ASC  0 . 00% OPD 0 . 00% ASC  2 . 60% OPD 11% ASC  777	NfA TOTALS:  * One case did not have adequate paid tn/included in calculations.

M a 
I n
EST a	 o l i  nl a	
1:  a	 rni a	 i s	 ana	 nd	 Car l va
TABLE  ST ATE  Ar i lon Califo Florid I II i no  Louisi Maryla Nor th  ohio	 pennsy Texas	 0, 
TED AL GS  $0. 0$0.  $0. 065. 2  454. 2 $0.  $0. 932. 3  $0. $0.  $0. $0.  $0. $0.  $0. 663. 1  $0. $0.  838. 0 457. 4  5 411 .  ATIONAL
NGS:  329. 5 
ESTIMAANNUSAVIN 35 24 64 $75 3807 $20 44 ATED Nr L SA V  72$41 
MA
IU
TN
SN
EA
D E  8 7  8 0  0 4  2 2  4 0  9  3 0  8 8  4 1  0 4  9 
ES 69 28 73 66 08 5 33 87 37 61 1
TR 41 22 43 22 98 7 65 39 09 25 4
SE 12 58 57 33 3 1 21 7 8 36 4
UV 1 1 9
DJN I
AU
2  2 
GE AL NTS  o. 0.  0. 4.  1. 0.  0. 7.  0. 0.  0. 0.  0. 0.  0. 5 . 7 o. 0.  4. 0. 1 3. 
AVERAANNUPAYME t$ $7613  7411 $ $6013  $$ $$ $$ $, 371 0 t$ 2613, 11 , 17 9273, 
  $ $ $ $ $$ $
S
E
RI 3  0  9 
RGE GE RLY TS  0. 0.  0. 1.1 5. 0.  0. 1.  0. 0.  0. 0.  0. 0.  0. 3.  0. 0 . 0 6. 12.  0. 
U AEN $$ $4 3$ $0 $$ $$ $$ $9 $$ 19 8
T S VERARTYME 4 9 4 5 3 , 37 48 
C AUA $ 1
A QP $
R
CATAITY  RCENT OOR ALITY  00% 00%  ' O. 00% 94%  1.23% 00%  00% 70%  0 . 00% 0 . 00%  0 . 00% 00%  00% 00%  0 . 00% 41%  00% 00%  33% 23%  N/A 
L EPU
A P Q
U
Q
 
R  
O Y
O TS 
P R IE
OR  POOUAL CAS
F Q
 
S
G
N 4	
I E S  4
V LE 7
A PS
S MA
  AC
L S
A
U
N
ATED AN SITE  OPD ASC  OPD ASC  OPD ASC  OPO ASC  OPO ASC  OPO ASC  OPO ASC  OPO ASC  OPD ASC  OPO ASC  TOTALS: 
M  
I a
T n
S i a	
E a	 ol nl 
i a	 r a
TABLE 2:  STATE  Arizona	 Californ Florida	 I II I no I s	 Loul s I an Maryland	 North Ca Ohio	 pennsyl v Texas	    
= =
   
9 2
ESTIMATED
ANNUAL
PAYMENTS
 $0.
$0.
 626.
$36 727.
$85  650.
$504 437.
$79  $0. 797. $479  $0. $0.  571. $78 $0.  $0. $0.  946. $54 $0.  739.$552 012. $47  $251, 967. $0.  475. 171  75. 24 / 0.4 431,582.  582. 431 4 1 336. $75 
4 $
1,  x 
7  
ADJUSTED UN I VERSE  1468 2197  5228 8280  15470 7334  3262 3262  3904 880  1759  2633 1530  7388 978  8034 971  13260 6514  94419  1 NTS:  7% GS: 
AVERAGE ANNUAL PAYMENTS  $0. $0.  $525. $383.  $300. $454.  $0. 92, $710.  $0. $0.  $446. $0.  $0. $0.  $215. $0.  $533. $516.  $487. $0.  574.  NUAL PAYME NUAL SAVIN
N N
A A
L  L 
AVERAGE QUARTERLY PA YMENTS  $0. $0.  $131.36 $95.  $75. $113.  $0. $177.  $0. $0.  $111.67 $0.  $0. $0.  $53. $0.  $133. $129. 11  $121. 93 $0.  $1 , 143.  TED NATIONA TED NATIONA
A A
CENT CANS  0 . 00% 00%  1.33% 70%  10. 84% 38%  00% 20. 69%  0 . 00% 00%  10. 00% 00%  0 . 00% 0 . 00%  45% 00%  12. 90% 38%  90% 00%  N/A  ESTIM ESTIM
RS
S  PEB-
N
A
-SC NS 
B A
R  C
O S
F P-
S 
G
N
AVI PLE SES  777	
S MA
L  AC
A S
U
N
N
A S: 
MATED  SITE  OPD ASC  OPD ASC  OPD ASC  OPD ASC  OPD ASC  OPD ASC   OPD ASC  OPD ASC	 OPD ASC  OPD ASC  TOTAL
I a
T n
TABLE 3: ES STATE  Ar i zona  Cal ifornja  Florida  III i no i s	 Louisiana	 Maryland	 North Carol i Ohio	 pennsyl vani a	 Texas	  
= =
EST! MATED
ANNUAL
' SAVINGS  $0. 534. $107  $0. 746. $433  600. $800 848. $293  944.
$117 , 875.
$419  612.
$383 457.
$50  $0. 864.  870. $68 736. $202  $621, 121. 90 060. $57  996. $161, $0.  249. $339 $850 317 . 93  837. 911, 4,  837. 88 / o. 49  0 158.024  024	158. 0 94  $170 , 4 1 0 . 70 
DJUSTED N I VERSE  1468 2197  5228 8280  15470 7334  3262 3262  3904 880  1759  2633 1530  7388 978  8034 971  13260 6514  94419 $ $4 , 911 ,  NTS: $1 1. 7" x $1 GS: 
AU E N
M VI
VERAGE ANNUAL AYMENTS  $0. $416.  $0. $215.  $286. $240.  $349. $373.  $368. $305.  $0. $142.  $150. $190.  $304. $291.  $208. $0. 00  $394. $529.  766.  NUAL PAY NUAL SA
A P N N
A A
OUNTS  AVERAGE QUARTERLY PAYMENTS  $0. $1 04 . 01  $0. 84 * $53.  $71. $60. 10  $87. $93.  $92. 12 $76.  $0. $35 . 63  $37. $47.  $76. $72.  $52. $0.  $98. $132.  191. 72  ATED NATIONAL  ATED NATIONAL 
L CELL C RCENT  COUNTS  00% 11. 76%  00% 68% 25 .  18. 07" 16. 67"  10. 34% 34. 48%  26. 67% 18. 75%  00% 30. 00%  17. 39% 69. 5  27. 59% 20. 00%  68% 00%  49% 66% 24 .  N/A  ESTIM ESTIM
A EL
I PL
L E
E C
H  
T S
ENDO OUNT 133  on 
  C i
R   t
O L e	a
F L vm
  E ar
S C ho
G  f
MATEP ANNUAL SAVIN SJTE SAMPLE CASES	 OPO ASC  OPO ASC  OPO ASC  OPO ASC  OPO ASC  OPD ASC   OPD ASC  OPO ASC  OPO ASC	 OPO ASC  777 TOTALS:	 * One case did notadequate paid into be included ions. ca l cua l t 
f a
T n
ES a	 l i nia 
TABLE 4:  STATE  Ar i zona	 Californi Florida	 Illf no ,S  loui s i ana  Maryland	 North Caro ohio	 Pennsylva Texas