Department of Health and Human Services
 
OFFICE OF 

INSPECTOR GENERAL 

A B
BERRANT  ILLING IN 

S F
OUTH  LORIDA FOR 

B W HIV/AIDS 

ENEFICIARIES  ITH 
Daniel R. Levinson
 
Inspector General 

September 2007 

OEI-09-07-00030 
 Office of Inspector General 

http://oig.hhs.gov 
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 the following operating components: 
Office of Audit Services 
The 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.  These assessments help reduce waste, 
abuse, and mismanagement and promote economy and efficiency throughout HHS. 
Office of Evaluation and Inspections 
The Office of Evaluation and Inspections (OEI) conducts national evaluations to provide 
HHS, Congress, and the public with timely, useful, and reliable information on 
significant issues.  Specifically, these evaluations focus on preventing fraud, waste, or 
abuse and promoting economy, efficiency, and effectiveness in departmental programs.  
To promote impact, the reports also present practical recommendations for improving 
program operations. 
Office of Investigations 
The Office of Investigations (OI) 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 OI lead to criminal 
convictions, administrative sanctions, or civil monetary penalties. 
Office of Counsel to the Inspector General 
The Office of Counsel to the Inspector General (OCIG) provides general legal services to 
OIG, rendering advice and opinions on HHS programs and operations and providing all 
legal support in OIG's internal operations. OCIG imposes program exclusions and civil 
monetary penalties on health care providers and litigates those actions within HHS. 
OCIG also represents OIG in the global settlement of cases arising under the Civil False 
Claims Act, develops and monitors corporate integrity agreements, develops compliance 
program guidances, renders advisory opinions on OIG sanctions to the health care 
community, and issues fraud alerts and other industry guidance.    E X E C U T I V E   S U M M A R Y
OBJECTIVE 
1. 	 To identify claims patterns associated with HIV/AIDS infusion 
therapy that may indicate fraudulent or abusive activity in three 
South Florida counties. 
2. 	 To assess the effectiveness of past and current efforts to control 
inappropriate payments to infusion therapy providers in three 
South Florida counties. 
BACKGROUND 
In June 2003, the program safeguard contractor alerted the Centers for 
Medicare & Medicaid Services (CMS) that providers in three South 
Florida counties (Miami-Dade, Broward, and Palm Beach) were billing 
aberrantly for infusion therapy services for beneficiaries with 
HIV/AIDS. Related investigations found that many of the services 
billed by these aberrant providers were not medically necessary or 
feasible. In May 2004, CMS issued a National Medicare Fraud Alert 
describing the infusion therapy scam.  By 2005, the three South 
Florida counties accounted for 72 percent of submitted charges for 
beneficiaries with HIV/AIDS nationwide, though only 8 percent of such 
beneficiaries lived there.  Most of these charges were for drugs used in 
infusion therapy. 
CMS is responsible for paying Medicare claims and ensuring the 
integrity of those payments.  The agency uses contractors to execute 
those responsibilities.  CMS and the contractors have a number of tools 
available to control aberrant billing, including payment suspensions and 
preenrollment provider site visits. 
We used Medicare Part B National Claims History data from 2006 to 
analyze beneficiary and provider claims patterns in South Florida.  In 
addition, we interviewed staff from CMS and its contractors and 
reviewed documents related to infusion fraud to assess the efforts to 
control aberrant billing. 
FINDINGS 
In the last half of 2006, three South Florida counties accounted for 
half the total amount, and 79 percent of the amount for drugs, billed 
nationally for Medicare beneficiaries with HIV/AIDS.  Most of the 
charges originating in these counties were for nonoral drugs; drug 
  OEI-09-07-00030  ABERRANT BILLING IN SOUTH FLORIDA FOR BENEFICIARIES WITH HIV/AIDS  i  E X E C U T I V E   S U M M A R Y  
claims represented just 16 percent of the submitted charges in other 
geographic areas.  Aberrant claims patterns differentiated South 
Florida providers and beneficiaries from those in the rest of the country. 
Other metropolitan areas exhibit patterns of billing similar to South 
Florida but to a lesser extent. CMS and its contractors have identified 
aberrant billers of infusion therapy outside of South Florida. Our data 
analysis shows that some metropolitan areas in other geographic 
regions have patterns of billing for beneficiaries with HIV/AIDS that are 
somewhat similar to those seen in South Florida. 
CMS has had limited success in controlling the aberrant billing 
practices of South Florida infusion therapy providers. CMS and its 
contractors have used multiple approaches, but none has proven effective 
over time. The most common tools include payment suspensions, 
revocations, and claims-processing edits.  CMS has taken limited action 
to strengthen the enrollment process for new providers.   
RECOMMENDATIONS 
CMS has had limited success controlling aberrant billing by infusion 
clinics in South Florida.  Therefore, we recommend that CMS: 
Mandate site visits for certain providers in high-risk jurisdictions. 
Site visits are essential in high-risk areas to confirm that providers 
have physical addresses and report accurate information in their 
applications.   
Afford contractors more time to review new applications from 
certain providers in high-risk jurisdictions.  Contractor standards 
require that 80 percent of new applications be processed within 60 days 
of receipt.  CMS should set alternative standards in high-risk 
jurisdictions for certain provider types and/or geographic areas that are  
vulnerable to fraud. 
Modify the Statement of Work for the jurisdiction that includes 
South Florida to require enhanced activities to fight fraud and 
abuse.  CMS intends to release the Statement of Work for the Medicare 
Administrative Contractor for Jurisdiction 9, which includes Florida, 
Puerto Rico, and the U.S. Virgin Islands, later this year.  The agency 
should require and fund the new contractor to conduct enhanced 
provider enrollment, data analysis, and claims-editing activities in the 
portion of this area identified as high-risk. 
  OEI-09-07-00030  ABERRANT BILLING IN SOUTH FLORIDA FOR BENEFICIARIES WITH HIV/AIDS  ii  E X E C U T I V E   S U M M A R Y  
Require extensive review of all reassignments in high-risk areas to 
confirm that they are legitimate.  To minimize the chances that a 
legitimate provider is associated with a fraudulent one, CMS should 
take steps to ensure that all reassignments in high-risk areas are 
legitimate and fund more extensive review of all new and existing 
reassignments in South Florida as well as other high-risk areas.  
Strengthen revocations to prevent further fraud and abuse.  CMS 
should consider shortening the 30-day notice period for revocations.  In 
addition, CMS should require prepayment review on all claims from 
providers that have effective or pending revocations. 
AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 
RESPONSE 
CMS generally concurred with our recommendations and stated that 
our analysis will be useful to its continued efforts to prevent fraudulent 
payments for infusion therapy.  CMS noted that our recommendations 
to mandate site visits and afford contractors more time to review new 
applications in high-risk jurisdictions have been incorporated into a new 
demonstration project. 
CMS stated that our recommendations demonstrate that CMSs current 
actions are working.  CMS also stated that the decline in Medicare 
payments in Florida from 2004 to 2006, despite increased amounts 
billed, demonstrates the effectiveness of corrective actions.  However, 
we find that the continued aberrant billing and payment patterns 
documented in our report demonstrate the need for improved provider 
enrollment controls to prevent the entry of unqualified providers into 
the Medicare program. CMS acknowledged the need for improvement 
in the provider enrollment process and described recent actions it has 
taken to strengthen this process. 
CMSs positive response to our recommendations, including its 
initiation of the new demonstration project, indicates that the agency is 
now moving toward strategies that should more effectively protect the 
integrity of Medicare payments in South Florida. 
  OEI-09-07-00030  ABERRANT BILLING IN SOUTH FLORIDA FOR BENEFICIARIES WITH HIV/AIDS  iii    T A B L E   O F   C O N T E N T S  
EXECUTIVE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i
  
I N T RO DUC T IO N  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  1
  
F I N D IN G S  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  12
  
Aberrant South Floridaclaims patterns  . . . . . . . . . . . . . . . . . . . .  12
  
Aberrationsin other geographic areas. . . . . . . . . . . . . . . . . . . . . .  15
  
Limited success in controlling billing. . . . . . . . . . . . . . . . . . . . . . .  16
  
R E C O MMEN D A T ION S  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  25
  
APPENDIXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  29
  
A:  DetailedMethodology forTable 3. . . . . . . . . . . . . . . . . . . . . . .  29
  
B:  AgencyComments  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  30
  
A C K NO WL E D G M E N T S  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  34
     I N T R O D U C T I O N  
OBJECTIVES 
1. 	 To identify claims patterns associated with HIV/AIDS infusion 
therapy that may indicate fraudulent or abusive activity in   
three South Florida counties. 
2. 	 To assess the effectiveness of past and current efforts to control 
inappropriate payments to infusion therapy providers in three 
South Florida counties. 
BACKGROUND 
Medicare Spending for Beneficiaries With HIV/AIDS 
Based on our analysis, Medicare paid approximately $1 billion in 
2005 for services for beneficiaries with a diagnosis of HIV or AIDS.  
Claims for nonoral drugs1 accounted for $610 million of this amount, 
while claims for other services, primarily evaluation and management 
services, accounted for the remainder.  Together, two codes generated 
about one-third of the reimbursement for drugs:  J9310 (Rituximab,   
100 milligrams) and J2353 (Ocreotide, depot form, 1 milligram).  
Medicare paid approximately $100 million for each of these codes in 
2005. 
In 2005, about 8 percent of Medicare beneficiaries with HIV/AIDS lived 
in three South Florida counties (Miami-Dade, Broward, and Palm 
Beach), but 72 percent of submitted charges for beneficiaries with 
HIV/AIDS appeared on claims originating there. Providers in the three 
counties submitted bills totaling $2.5 billion to Medicare (of which 
Medicare paid $653 million) on behalf of beneficiaries with HIV/AIDS 
more than twice the $978 million submitted ($311 million paid) by 
providers in all other areas of the country combined. 
As shown in Figure 1, most of the claims in South Florida were for 
nonoral drugs. South Florida providers submitted bills totaling more 
than $2.2 billion ($568 million paid) for nonoral drugs for beneficiaries 
with HIV/AIDS in 2005, about 22 times the $100 million submitted  
($42 million paid) for such claims in the rest of the country. 
1 As identified in the Current Procedural Terminology (2006 edition) or Healthcare 
Common Procedure Coding System (2006 edition). 
  OEI-09-07-00030  ABERRANT BILLING IN SOUTH FLORIDA FOR BENEFICIARIES WITH HIV/AIDS  1  I N T R O D U C T I O N
  
FIGURE 1 
Submitted charges 
for beneficiaries 
$2,500  Other Services 
with HIV/AIDS,   $258 
by location 
$2,000 
s  $1,500 
n
o
Milli $D2r,u2g1s0  
$1,000 
Other Services 
$878 
$500 
Drugs 
$100 
$0 
South Florida  Rest of Country 
Source:  Office of Inspector General analysis of a 1-percent sample of 2005 Medicare Part B National Claims 
History data, 2007. 
Infusion Therapy for HIV/AIDS Patients 
The National Institutes of Health defines AIDS as a disease of the 
bodys immune system caused by the human immunodeficiency virus 
(HIV). AIDS is characterized by the death of CD4 cells (an important 
part of the bodys immune system), which leaves the body vulnerable to 
life-threatening conditions, such as infections and cancers.2  According 
to the Kaiser Family Foundation, approximately 438,000 individuals in 
the United States and its territories were living with AIDS at the end of 
2005.3  Medicare claims data show that about 99,300 beneficiaries had 
at least one claim that referenced a diagnosis of HIV/AIDS in 2005.4 
2 Glossary of HIV/AIDS-Related Terms, 5th ed., October 2005.  Available online at 
http://aidsinfo.nih.gov/contentfiles/GlossaryHIV-relatedTerms_FifthEdition_en.pdf. 
Accessed June 6, 2007. 
3 The Henry J. Kaiser Family Foundation, Estimated Number of Persons Living with 
AIDS, All Ages, at the End of 2005.  Available online at http://www.statehealthfacts.org/cgi-
bin/healthfacts.cgi?action=compare&category=HIV%2fAIDS&subcategory=Persons+Living+with+AIDS 
&topic=Persons+Living+with+AIDS+All+Ages. Accessed March 14, 2007. 
4 Office of Inspector General analysis of a 1-percent sample of 2005 Medicare National 
Part B Claims History data. 
  OEI-09-07-00030  ABERRANT BILLING IN SOUTH FLORIDA FOR BENEFICIARIES WITH HIV/AIDS  2  I N T R O D U C T I O N  
Although no cure for AIDS exists, many treatments currently are 
available. At some point in their treatment, persons with AIDS may 
require intravenous infusion therapy:  the gradual administration of a 
drug or other solution into the body through a vein.  For AIDS patients, 
infusion therapy is most commonly used to provide antibiotics, antiviral 
or antifungal medications (such as those paid for by Medicare under 
Part B), parenteral (nonoral) nutrition, hydration, and electrolyte 
repletion. Patients usually receive infusion therapy in a hospital, but 
outpatient therapyat a clinic or at homeis appropriate for some 
patients. 
Medicare Administration and Oversight in South Florida 
The Centers for Medicare & Medicaid Services (CMS) is responsible for 
paying Medicare claims and ensuring the integrity of those payments. 
Contractors of different types perform these functions for CMS in 
defined geographic areas.  Medicare carriers process Part B physician 
claims and also handle provider enrollment, customer service, and 
education and training.  Program safeguard contractors (PSCs) conduct 
data analysis and other activities to help reduce fraud, waste, and 
abuse. First Coast Service Options (FCSO) is the Medicare carrier for 
Florida (and Connecticut).  Electronic Data Systems Corporation (EDS) 
became the PSC for Florida in March 2005 after taking over the 
contract from TriCenturion. 
CMSs Office of Financial Management (OFM) has the overall 
responsibility for ensuring the fiscal integrity of all CMS programs. As 
such, OFM manages contractors program integrity efforts through its 
Program Integrity Group.  The CMS Regional Offices, including the 
Atlanta Regional Office that covers Florida, also play a role in 
protecting Medicare from fraud, waste, and abuse.  Also, because of 
concerns about Medicare fraud in South Florida, CMS established the 
Miami Satellite Division in 1995. The Satellite Division reports to 
OFM; is responsible for community outreach regarding fraud, waste, 
and abuse; and provides support to law enforcement agencies in the 
area. 
Other Government agencies also have a role in protecting Medicare in 
South Florida. The Office of Inspector General (OIG) investigates cases 
of health care fraud and levies civil monetary penalties where 
appropriate and can exclude problem providers from Medicare. Often in 
coordination with OIG, the Department of Justice also investigates and 
  OEI-09-07-00030  ABERRANT BILLING IN SOUTH FLORIDA FOR BENEFICIARIES WITH HIV/AIDS  3  I N T R O D U C T I O N  
prosecutes health care fraud.  Floridas Agency for Health Care 
Administration licenses clinics and enforces statutes related to the 
provision of health care. 
Fraud Involving HIV/AIDS Patients in South Florida 
In June 2003, TriCenturion reported to CMS that it had identified a 
scheme in which providers in South Florida, mainly in Miami, billed for 
infusion therapy services that were not medically necessary or feasible 
for beneficiaries with HIV/AIDS.5  The PSC found that [p]roactive data 
analysis revealed that infusion therapy providers could quickly move 
from start-up to a high billing provider, and claims are being paid 
because these egregious providers are circumventing the system edits 
by submitting claims using allowable diagnosis codes and not the 
diagnosis found in the medical records.6  On June 27, 2003, staff from 
TriCenturion and CMSs Miami satellite office conducted the first of   
20 onsite visits to aberrantly billing infusion therapy providers to 
review records.  None of the services reviewed met Medicare payment 
requirements, and payments to the provider were suspended. 
Investigations of the remaining 19 providers also resulted in payment 
suspensions.7 
CMS issued a National Medicare Fraud Alert to its contractors, regional 
offices, and other government agencies on May 19, 2004, characterizing 
the South Florida situation as the infusion therapy scam.  According 
to this alert, medical record review and investigative findings identified 
the following characteristics of the scam, among others: 
	  services that are poorly documented or undocumented; 
	  documentation that indicates that patients received vitamin 
therapy, not infusion of the expensive drugs billed; 
	  multiple providers billing for the patients on the same date or on 
alternating dates; 
	  providers submitting bills for days when the clinic is closed for 
business; 
5 TriCenturion, LLC, June 2003 Monthly Status Report and Infusion Project Progress 
Report. September 9, 2004. 
6 Ibid. 
7 Ibid. 
  OEI-09-07-00030  ABERRANT BILLING IN SOUTH FLORIDA FOR BENEFICIARIES WITH HIV/AIDS  4  I N T R O D U C T I O N  
	  providers under prepay medical review circumventing the 
review by obtaining new provider numbers; and 
	  providers under payment suspension opening new clinics with 
new provider numbers. 
Federal and State authorities have investigated and prosecuted several 
cases involving infusion providers. The Chief Financial Officer of 
Florida cited a scam in which a Tampa man used offers of $100 cash and 
$50 grocery cards to recruit patients to seek treatment at a local clinic 
as 1 of the top 10 fraud cases in the State for 20052006.8 State and 
Federal law enforcement investigations have revealed similar schemes 
in which runners recruit patients with offers of cash to go to particular 
infusion clinics for treatment.  The clinic then bills for expensive drug 
infusion treatments for these patients that they do not receive.9 
Investigations by CMSs contractors and OIG revealed that perpetrators 
of infusion fraud schemes sometimes appropriate the identities of 
legitimate providers to submit claims to Medicare. 
Provider Enrollment and Sanction Authority 
Federal regulations and CMS policy define the process for enrolling 
providers in Medicare and enumerate the rights and responsibilities of 
participating providers.  Pursuant to 42 CFR  424.510(d)(1), 
prospective providers must submit completed application forms and 
supporting documentation to CMS to obtain billing privileges.  This 
form solicits identifying information about the applicant, any adverse 
legal history (such as felony convictions for financial crimes or the 
8 Florida Department of Financial Services, Annual Top 10 Fraud List, June 20, 2006.  
Available online at http://www.fldfs.com/PressOffice/ ViewConsumerAlert.asp?ID=2360. 
Accessed January 16, 2007. 
9 The United States Attorneys Office, Southern District of Florida, Miami Clinic Owner 
Convicted of Health Care Fraud Involving HIV Infusion Treatments, September 29, 2006.  
Available online at http://www.usdoj.gov/usao/fls/PressReleases/060929-01.html. Accessed 
October 25, 2006.  The United States Attorneys Office, Southern District of Florida, Jury 
Convicts Two in HIV-Clinic Fraud, October 2, 2006.  Available online at 
http://miami.fbi.gov/dojpressrel/pressrel06/mm20061002.htm. Accessed October 25, 2006. 
Office of the Attorney General of Florida, Miami Men Arrested for $1.4 Million Medicare 
Fraud Through Bogus HIV Clinic, September 6, 2006.  Available online at 
http://myfloridalegal.com/newsrel.nsf/newsreleases/E4CDEA6773BA9E3A852571E1006C66 
DE. Accessed October 25, 2006.  Meeting Minutes:  Medical Fraud Committee, Florida 
Board of Medicine, September 26, 2005.  Available online at 
http://www.doh.state.fl.us/mqa/medical/min_09-26-05Fraud.pdf.  Accessed June 6, 2007. 
  OEI-09-07-00030  ABERRANT BILLING IN SOUTH FLORIDA FOR BENEFICIARIES WITH HIV/AIDS  5  I N T R O D U C T I O N  
revocation of a Medicare billing number), the providers practice 
location, names of individuals having ownership or managing control of 
the business, and the billing agent for the provider, if one exists.  Clinics 
with multiple practice locations must identify each location on the 
application.  By signing and submitting the application form, the 
applicant agrees to follow all Medicare laws, regulations, and program 
instructions. The CMS Program Integrity Manual, Chapter 10,   
Section 2.1, stipulates that carriers must process 80 percent of new 
applications within 60 days, 90 percent within 120 days, and 99 percent 
within 180 days of receipt.  Pursuant to 42 CFR  424.80(b)(2), providers 
may reassign their billing privileges to certain other entities, such as 
clinics with which they have contractual relationships; providers 
request reassignment by submitting reassignment applications to CMS. 
In Florida, the carrier issues a separate billing number for each 
reassignment or clinic practice location. 
Preenrollment site visits can help protect the Medicare program from 
fraud and abuse.  Regulations at 42 CFR  424.510(d)(8) permit CMS to 
perform onsite inspections to verify that the information on the 
enrollment applications is correct and to determine whether the 
applicants comply with enrollment requirements; onsite visits are 
required for independent diagnostic testing facilities (IDTFs), Indian 
Health Service facilities that supply durable medical equipment under 
Part B, and community mental health centers.10  CMS stated in an 
April 25, 2003, proposed rule that in 1998 and 1999, it had funded    
320 site visits to various types of new and existing providers that 
carriers had identified as potentially problematic.11  About one-third of 
the providers visited had their applications denied or provider numbers 
revoked or were referred to contractor fraud units.  CMS cited this effort 
in the proposed rule and stated, [w]e believe that site visits are an 
important component of provider enrollment. In August 2005, CMS 
staff from the Miami and Los Angeles Satellite Divisions reported that 
contractors in their jurisdictions had terminated the billing privileges of 
87 of 180 providers based on recent site visits.  They estimated that the 
10 CMS, Program Integrity Manual, Chapter 10, sections 4.19.6, 11.9.2, and 12.1.1(B).  
11 Medicare Program: Requirements for Establishing and Maintaining Medicare Billing 
Privileges. 68 FR 22064, 22065 (proposed April 25, 2003). 
  OEI-09-07-00030  ABERRANT BILLING IN SOUTH FLORIDA FOR BENEFICIARIES WITH HIV/AIDS  6  I N T R O D U C T I O N
  
California visits had saved at 
least $9 for each $1 spent.12 
FIGURE 2 
From September through 
Empty office found 
December 2005, the California 
on a 2005 site visit. 
If not for the visit,  carrier, National Heritage 
this providers  Insurance Corporation (NHIC), 
application would 
conducted targeted 
have been approved. 
preenrollment site visits of  
95 non-IDTF providers; only 
28 of the applications were 
approved.13  As shown in Figure 
2, some of the visits revealed 
completely empty offices.  The 
carrier further noted that . . . 
these applications would have 
been approved and the provider 
could have submitted false 
Source:  NHIC CA Provider Enrollment On-Site Verification 
claims had it not been for the 
Program, 2007. 
site visits. 
Providers must comply with all Medicare laws and regulations as a 
condition of their continued enrollment; several authorities exist to 
remove noncompliant providers from the program if necessary.  The 
Social Security Act specifies circumstances under which the Secretary of 
the Department of Health and Human Services (HHS) must exclude 
certain entities from Medicare and others under which the Secretary 
may, at his or her discretion, exclude entities.14 In addition, 
42 CFR  424.535 gives five reasons CMS may revoke the billing 
privileges of a provider:  (1) noncompliance with enrollment 
requirements, (2) exclusion from Federal programs, (3) certain felony 
convictions, (4) submitting false or misleading information on an 
enrollment application, or (5) determination of the onsite review that 
12 Special Rules for Special Places, a position paper submitted by staff from CMSs 
Miami Satellite Division and Los Angeles Satellite and Regional Offices for Regions 2, 4, 
and 9 to the CMS central office in August 2005. 
13  NHIC, NHIC CA Provider Enrollment On-Site Verification Program, 2007. 
14 Social Security Act  1128.  The Secretary of HHS has delegated the exclusion 
authority to OIG. 
  OEI-09-07-00030  ABERRANT BILLING IN SOUTH FLORIDA FOR BENEFICIARIES WITH HIV/AIDS  7  II NN TT RR OO DD UU CC TT II OO NN
the provider is not operational or does not satisfy enrollment 
requirements. Providers must be given prior notice of exclusions or 
revocations and have the right to appeal. Providers may also submit 
plans of corrective action to avert pending revocations. 
In addition to the authority to revoke providers billing privileges, 
Federal regulations also define CMSs authority to suspend Medicare 
payments to providers. Pursuant to 42 CFR  405.371, CMS may 
suspend approved payments if it suspects that it has overpaid a 
provider or that a provider has engaged in fraud or willful 
misrepresentation of claims. Generally, CMS must inform the provider 
of the intent to suspend payments, explain the reasons for the action, 
and allow the provider to submit a rebuttal statement contesting the 
decision to suspend payments.15 In cases of suspected fraud or 
misrepresentation, or if it is likely to harm Medicare Trust Funds, CMS 
need not provide prior notice.16 In these cases, the provider may submit 
a rebuttal statement once the suspension is in effect.17 Providers may 
not appeal further if CMS upholds the suspension after considering a 
rebuttal.18 Suspensions last for an initial period of 180 days, which 
CMS may extend by another 180 days at the request of the carrier or a 
law enforcement agency.19 
Previous Studies 
In a 2006 report, the Government Accountability Office (GAO) assessed 
CMSs allocation of Medicare Integrity Program (MIP) funds between 
fiscal years 1997 and 2005 and concluded that the agencys funding 
approach is not geared to target MIP resources to the activities with the 
greatest impact on the program and to ensure that the contractors have 
funding commensurate with their relative workloads and risk of making 
improper payments.20 GAO also noted that one PSC received about 
4 cents for conducting benefit integrity work for each $100 in paid 
claims . . . in a jurisdiction that included Florida, which is at high risk 
15 42 CFR  405.372 (b)(1). 

16 42 CFR  405.372 (a)(3) . 

17 42 CFR  405.372 (b)(2). 

18 42 CFR  405.375 (c). 

19 42 CFR  405.372 (d). 

20 GAO, Medicare Integrity Program: Agency Approach for Allocating Funds Should Be 

Revised, September 2006, p. 21. 
OEI-09-07-00030  ABERRANT BILLING IN SOUTH FLORIDA FOR BENEFICIARIES WITH HIV/AIDS  8  I N T R O D U C T I O N  
for fraudulent billing. In contrast, PSCs received the same level of 
funding to conduct benefit integrity work in states at lower risk for 
fraudulent billing, including Iowa, Montana, Pennsylvania, and 
Wyoming. 
In March 2007, OIG published the results of 1,581 unannounced site 
visits to durable medical equipment suppliers in South Florida in a 
report entitled South Florida Suppliers Compliance With Medicare 
Standards (OEI-03-07-00150).  We found that 31 percent of the 
suppliers visited did not maintain a physical facility or were not open 
and staffed during business hours.  We recommended that CMS 
strengthen the enrollment process for durable medical equipment 
suppliers.  CMS concurred with most of our recommendations and 
stated that it will take several steps to improve provider enrollment, 
including conducting more unannounced site visits and more rigorous 
background checks of applicants. 
METHODOLOGY 
Claims Patterns Analysis 
To analyze beneficiary and provider claims patterns, we first defined 
the population from which to construct profiles as, respectively, 
beneficiaries with at least one claim referencing a diagnosis of 
HIV/AIDS (ICD-9 code 042) during a specified time period and providers 
that submitted at least one claim with an HIV/AIDS diagnosis during 
the same time period. During preliminary data analysis, we determined 
that the dollar amounts submitted and reimbursed for beneficiaries 
with HIV/AIDS in the three South Florida counties, especially for drugs, 
were significantly less in the second half of 2006 than in the first.  
Therefore, to concentrate on more current billing patterns, we defined 
our time period to be claims received in the third or fourth quarters of 
2006 (July through December).  We also learned from OIG investigators 
and from CMS contractors that although CMS adjusts claims data 
based on monies due from calculated overpayments, participants in 
infusion fraud rarely actually pay back any of the overpayment 
amounts.  Because we wanted to assess how much money CMS paid to 
providers, we limited our data set to the original actions that CMS took 
on the claims. 
  OEI-09-07-00030  ABERRANT BILLING IN SOUTH FLORIDA FOR BENEFICIARIES WITH HIV/AIDS  9  I N T R O D U C T I O N  
To create the profiles, we first obtained from CMS the Medicare Part B 
National Claims History data files containing all claims received in the 
third and fourth quarters of 2006.21  We then identified all beneficiaries 
and providers appearing on at least one claim referencing an HIV/AIDS 
diagnosis as either the principal diagnosis on the claim or the line item 
diagnosis for a particular service. Next, we matched these lists of 
beneficiaries and providers back to the data sets containing all Part B 
claims from the third and fourth quarters of 2006.  Thus, we created two 
analysis data sets of claims received in the third or fourth quarter of 
2006. The first contained all claims received for beneficiaries with at 
least one claim referencing HIV/AIDS in that period, and the second 
contained all claims received from providers that submitted at least one 
claim referencing HIV/AIDS during that period.  We then used the SAS 
statistical software package to analyze the data. 
Our analysis often compares the three South Florida counties to other 
areas of the country.  We defined a claim as originating from South 
Florida if the providers ZIP Code (as it appeared on the claim) was in 
Miami-Dade, Broward, or Palm Beach Counties in Florida.  We defined 
a beneficiary as a South Florida beneficiary if more than half of the 
beneficiarys claims originated from South Florida and a provider as a 
South Florida provider if more than half of the providers claims 
originated there. 
In addition to analyzing data from 2006, we examined historical trends 
from 2001 through 2005 using 1-percent samples of the Medicare Part B 
National Claims History data.  Since the 1-percent samples are 
compiled by the date of service rather than the date of receipt, we used 
a slightly different process to create our analysis sets.  First, we 
identified all beneficiaries and providers in a given year with at least 
one claim referencing a diagnosis of HIV/AIDS.  Then, we identified all 
claims submitted for those beneficiaries or by those providers.  We then 
summarized the combined claims data from the 5 years by the month in 
which the claim was received and by geographic location (the three 
South Florida counties, the rest of Florida, or the rest of the country). 
21 The data were taken from CMS weekly claims-processing cycles, so the dates do not 
correspond exactly to the starting and ending dates of the third and fourth quarters of 2006.  
Also, the data did not have the receipt date variable available, only the processing date.  
The claims in our set spanned processing dates from June 29 to December 28, 2006.  
  OEI-09-07-00030  ABERRANT BILLING IN SOUTH FLORIDA FOR BENEFICIARIES WITH HIV/AIDS  10  I N T R O D U C T I O N  
Assessment of Controls 
We interviewed staff from CMS and its contractors in South Florida 
(FCSO and EDS) about infusion fraud and actions taken to address it.  
We also obtained documents from CMS and its contractors pertaining to 
infusion fraud, including monthly reports the PSCs submitted to CMS 
from January 2003 through November 2006.  FCSO provided data on 
provider number revocations, and CMS, FCSO, and EDS provided data 
on overpayments.  We also interviewed staff and obtained documents 
from CMSs Part B carrier in California to learn about antifraud efforts 
in another vulnerable area, Southern California.  We did not 
independently verify the information obtained from these interviews 
and documents.  We reviewed applicable laws, regulations, and policies, 
as well as CMS provider enrollment applications and related materials. 
Standards 
This study was conducted in accordance with the Quality Standards for 
Inspections issued by the Presidents Council on Integrity and 
Efficiency and the Executive Council on Integrity and Efficiency. 
  OEI-09-07-00030  ABERRANT BILLING IN SOUTH FLORIDA FOR BENEFICIARIES WITH HIV/AIDS  11    F I N D I N G S
In the last half of 2006, three South Florida counties  Our analysis shows that Medicare 
accounted for half the total amount, and 79 percent  received bills totaling $976 million, 
of which it paid $240 million, for 
of the amount for drugs, billed nationally for 
services claimed for beneficiaries 
Medicare beneficiaries with HIV/AIDS 
with HIV/AIDS in the last half of 
2006. Although in the second half of 2006 about 10 percent of Medicare 
beneficiaries with HIV/AIDS lived there, claims originating in   
Miami-Dade, Broward, and Palm Beach Counties constituted 50 percent 
of the submitted charges and 37 percent of the paid amount. Nearly 
61 percent of the total charges originating in the three South Florida 
counties were for nonoral drugs; nonoral drug claims represented just 
16 percent of the submitted charges in other geographic areas.  Overall, 
the three counties accounted for 79 percent of the amount submitted to 
Medicare nationally for drug claims involving HIV/AIDS patients. 
Furthermore, as shown in Figure 3, the South Florida proportion was 
FIGURE 3 
The amount submitted for beneficiaries with HIV/AIDS in South Florida exceeded 
the amount submitted for beneficiaries in the rest of the country for 2 years 
$1,400 
South Florida Drugs  South Florida Other 
$1,200 
Rest of Country Drugs  Rest of Country Other 
$1,000 
$800 
s 
n
o
Milli$600 
$400 
$200 
$0 
JanJun  JulDec  JanJun  JulDec  JanJun  JulDec  JanJun  JulDec  JanJun  JulDec 
2002  2002  2003  2003  2004  2004  2005  2005  2006  2006 
Source:  OIG analysis of 1-percent samples of 2001 through 2005 Medicare Part B National Claims History data and 2006 Medicare Part B 
National Claims History data, 2007. 
  OEI-09-07-00030  ABERRANT BILLING IN SOUTH FLORIDA FOR BENEFICIARIES WITH HIV/AIDS  12  F I N D I N G S  
even higher in previous periods.  According to CMS staff who oversee 
the area, neither CMS nor its contractors have identified any clinical 
explanation for the high level of billing in South Florida. 
Aberrant claims patterns differentiate providers in South Florida from those 
in the rest of the country 
As displayed in Table 1, Medicare Part B claims data show that the 
claims patterns of providers that billed for HIV/AIDS services in the 
three South Florida counties in the last half of 2006 differed 
significantly from those of providers in the rest of Florida or in other 
States.22  For example, although the overall mean amount submitted to 
Medicare per provider was comparable in all locations, the mean 
amount submitted per provider specifically for beneficiaries with 
HIV/AIDS in the three counties was about 16 times higher than in the 
rest of Florida and 39 times higher than in all other States.  Even 
greater disparities existed among drug claims: the mean submitted per 
provider in the three counties for such claims was about 64 times higher 
than in the rest of Florida and about 518 times higher than the mean in 
all other States.  High billing for beneficiaries with HIV/AIDS was 
relatively widespread in the three countiesabout 5.9 percent of South 
Florida providers that billed for HIV/AIDS patients submitted more 
than $1 million each for those patients in the last half of 2006 compared 
to less than 0.5 percent in the rest of Florida or in all other States.  
Sixteen of the top twenty billers of services for beneficiaries with 
Table 1: Significant differences exist between South Florida providers and others 
Provider attribute 
 South Florida 
 Rest of Florida 
 Rest of country 

Mean amount submitted  
 $711,753 
 $614,679 
 $414,922 

Mean amount submitted for beneficiaries with HIV/AIDS  $267,653  $16,343  $6,878 
Mean amount submitted for drug codes for beneficiaries 
$197,453  $3,070  $381
with HIV/AIDS 
Percentage of submitted charges for beneficiaries with 
38%  2.7%  1.7%
HIV/AIDS 
Percentage of submitted charges for beneficiaries with 
74%  19%  6%
HIV/AIDS that are for drug codes 
Mean number of beneficiaries with HIV/AIDS  42  17  10 
Source:  OIG analysis of claims received in the third or fourth quarter 2006 in the Medicare Part B National Claims History data, 2007. 
22 In this finding, the term provider refers to any entity that submitted at least one 
Medicare Part B claim in the last half of 2006 that referenced an HIV/AIDS diagnosis. 
  OEI-09-07-00030  ABERRANT BILLING IN SOUTH FLORIDA FOR BENEFICIARIES WITH HIV/AIDS  13  F I N D I N G S  
HIV/AIDS were located in South Florida, and all of the top 40 billers for 
drugs for these patients were located there. 
In addition to mean billed amounts, two elements of the claims patterns 
of providers in the three South Florida counties were notable. First, 
38 percent of the total charges South Florida providers submitted to 
Medicare in the last half of 2006 were for AIDS patients; beneficiaries 
with HIV/AIDS accounted for less than 3 percent of providers 
submitted charges in the rest of Florida or in all other States.  Second, 
74 percent of the charges South Florida providers submitted for 
beneficiaries with HIV/AIDS were for drugs, compared with 19 percent 
in the rest of Florida and 6 percent in all other States.  Furthermore, of 
the 78 South Florida providers that billed more than $1 million for 
beneficiaries with HIV/AIDS, 58 (74 percent) submitted more than half 
of their charges for drugs for these patients.  Only two of the five 
providers that billed $1 million or more for beneficiaries with HIV/AIDS 
in the rest of Florida and none of the 23 in other States shared this 
billing pattern. 
More reimbursement, especially for drugs, is claimed for beneficiaries with 
HIV/AIDS in South Florida than for those in the rest of the country 
As with providers, the claims patterns of beneficiaries with HIV/AIDS 
in South Florida differed greatly from those of beneficiaries in other 
regions in the last half of 2006. For example, average submitted 
charges per beneficiary with HIV/AIDS in South Florida were about 
nine times those in the rest of Florida or in all other States. The 
greatest differences were for drugsSouth Florida beneficiaries were 
listed on drug claims more often, and for higher amounts, than those 
elsewhere. The average beneficiary in South Florida also was listed on 
claims for a greater number of unique drug codes and on claims from 
Table 2: South Florida beneficiaries with HIV/AIDS are associated with more and larger claims 
Beneficiary attribute  South Florida  Rest of Florida  Rest of country 
Mean amount submitted  $57,482  $6,532  $6,333 
Percentage of beneficiaries with at least one drug claim  66%  12%  10% 
Mean amount submitted for drug claims (all beneficiaries)  $34,412  $904  $1,024 
Mean amount submitted for drug claims (beneficiaries with 
$52,505  $7,463  $9,778
at least one drug claim) 

Mean number of different drugs for which the beneficiary
 
5.2  2.0  1.8
had claims (beneficiaries with at least one drug claim) 
Mean number of providers that submitted a claim per 
16  8.5  8.1
beneficiary (all beneficiaries) 
Source:   OIG analysis of claims received in the third or fourth quarter 2006 in the Medicare Part B National Claims History data, 2007. 
  OEI-09-07-00030  ABERRANT BILLING IN SOUTH FLORIDA FOR BENEFICIARIES WITH HIV/AIDS  14  FF II NN DD II NN GG SS  
more providers than those in other areas. Table 2 displays some of the 
attributes that differentiated South Florida beneficiaries from others. 
Other metropolitan areas exhibit patterns of  CMS satellite division staff and 
aberrant billing similar to South Florida but  contractors in South Florida reported 
concerns that as more controls are 
to a lesser extent 
instituted in that region, the aberrant 
billing patterns observed there may spread to other geographic areas. 
In October 2004, the PSC identified some aberrantly billing providers 
outside of South Florida and, in response, requested that existing drug 
code edits be extended to two Gulf Coast counties.23 FCSO carried out 
this request on January 4, 2005.24 In 2005, the Miami Satellite 
Divisions analysis showed that the patterns were spreading into 
northern and western areas of the State and also to venues outside 
Florida.25 In late March 2007, CMS issued a National Medicare Fraud 
Alert because several providers in the greater Detroit metropolitan area 
billed for infusion therapy in the aberrant manner characteristic of 
South Florida providers. The alert stated that many of the individuals 
associated with these providers had recently moved from Florida and 
Puerto Rico. 
Our data analysis suggests that although the aberrant billing patterns 
are not widespread outside of South Florida, some other metropolitan 
areas share some characteristics with the three counties. We identified 
four attributes that characterize Medicare claims patterns for 
beneficiaries with HIV/AIDS in South Florida: (1) the percentage of the 
total amount submitted for beneficiaries with HIV/AIDS that is for 
drugs, (2) the mean amount submitted per provider for beneficiaries 
with HIV/AIDS, (3) the percentage of beneficiaries with HIV/AIDS who 
have at least one drug claim, and (4) the mean amount submitted for 
drugs per beneficiary with at least one drug claim. Table 3 shows the 
six other geographic areas where at least two of these characteristics 
23 TriCenturion, LLC, October 2004 Monthly Status Report. 
24 TriCenturion, LLC, January 2005 Monthly Status Report. 
25 Special Rules for Special Places, a position paper submitted by staff from CMSs 
Miami Satellite Division and Los Angeles Satellite and Regional Offices for Regions 2, 4, 
and 9 to the CMS central office in August 2005. 
OEI-09-07-00030  ABERRANT BILLING IN SOUTH FLORIDA FOR BENEFICIARIES WITH HIV/AIDS  15  FFF III NNN DDD III NNN GGG SSS  
were at least twice the national level (excluding South Florida) and the 
total amount submitted for beneficiaries with HIV/AIDS was at least 
$1 million.26 
Table 3: Other areas share some of the claims characteristics of South Florida 
Mean amount 
Amount  Mean  Percentage of  submitted for 
submitted for  Percentage of  submitted per  beneficiaries  drugs per 
beneficiaries  submitted  provider for  with at least  beneficiary with 
with HIV/AIDS  amount for  beneficiaries  one drug  at least one 
Geographic area  (millions)  drugs  with HIV/AIDS  claim  drug claim 
All U.S. except South Florida  $489  16%  $7,482  11%  $9,520 
South Florida  $487  61%  $267,653  66%  $52,505 
Riverside-San Bernardino-
$14.3  73%  $6,202  28%  $4,223 
Ontario, CA 
Nashville-Davidson-
$5.9  60%  $7,852  30%  $13,023 
Murfreesboro, TN 
Providence-New Bedford-Fall 
$5.3  70%  $2,744  5%  $158,899 
River, RI-MA 
Nonmetropolitan Florida  $4.7  62%  $34,209  27%  $15,229 
Kansas City, MO-KS  $4.8  50%  $7,347  12%  $29,605 
Indianapolis, IN  $2.9  43%  $3,912  11%  $53,817 
Source: OIG analysis of claims received in the third or fourth quarter 2006 in the Medicare Part B National Claims History data, 2007. 
CMS has had limited success in controlling the  CMS and its contractors have 
aberrant billing practices of South Florida  used multiple approaches in 
South Florida to try to control 
infusion therapy providers 
aberrant billing for 
beneficiaries with HIV/AIDS, but based on our data analysis and review 
of CMS materials, none has yet proven effective in eliminating it. 
Recent efforts show promise, but their long-term effectiveness is 
unknown. The most common tools used include payment suspensions, 
prepayment review, provider number revocations, claims-processing 
edits, and onsite investigations of existing providers. 
Administrative actions on billing numbers have significant limitations 
Payment suspensions. Suspending payments gives CMS an immediate 
and long-lasting way to prevent Medicare from paying suspected false 
infusion claims from a particular provider number. Once approved, 
suspensions take effect immediately, thereby stopping payments to 
26 See Appendix A for complete details on how we constructed Table 3. 
OEI-09-07-00030  ABERRANT BILLING IN SOUTH FLORIDA FOR BENEFICIARIES WITH HIV/AIDS  16  F  I N  D I N G  S  
suspected fraudulent providers.  Because suspensions last a minimum 
of 180 days, and longer if extended, the payments remain stopped while 
the PSC and/or law enforcement investigates the provider.  For these 
reasons, EDSs benefit integrity staff described payment suspensions as 
the strongest tool available to them to deal with suspected fraudulent 
providers. 
Despite these strengths, administrative requirements limit the 
usefulness of suspensions in South Florida.  All suspensions must be 
approved by CMS, so although their effect is immediate, the approval 
process can delay implementation, according to contractor personnel. 
Also, although aberrant billers often control multiple provider numbers, 
investigations have also found that they sometimes use other providers 
identities to submit claims.  Hence, CMS will suspend provider numbers 
only when there is evidence of an overpayment or fraudulent activity 
involving those particular numbers, rather than all provider numbers 
associated with the aberrant biller. While this practice minimizes the 
chance of inadvertently suspending the billing number of a provider 
that is not involved in the aberrant billing, it also means that aberrant 
billers with multiple numbers can continue billing Medicare using 
unsuspended numbers. Lastly, because having a current payment 
suspension is not one of the reasons for which CMS may deny an 
enrollment application, a suspended provider that submits a new 
application that meets all requirements must be approved.27 
To address the last issue, in June 2006 CMSs Program Integrity and 
Medicare Contractor Management groups instructed FCSO to set aside 
applications for new provider numbers from providers with active 
payment suspensions until the suspensions are resolved.28 However, 
CMS also stated that this set-aside applied only if the new applicant 
had the same business structure as the suspended provider. Hence, 
corporate providers could bypass the restriction by changing any 
element of their board structure.  CMS staff told us that the agency 
verbally advised FCSO in late April 2007 that unless a suspended 
provider reapplies with a new tax identification number, any new 
application that lists, in any capacity, individuals that had ownership or 
27 42 CFR  424.510. 
28 CMS, Joint Signature Memorandum, JSM-TDL-06505, June 23, 2006. 
  OEI-09-07-00030  ABERRANT BILLING IN SOUTH FLORIDA FOR BENEFICIARIES WITH HIV/AIDS  17  F I N D I N G
  S  
management interest in the suspended provider also should be set 
aside. 
Prepayment review.  If the PSC identifies a provider it suspects is 
submitting false claims, but the amount billed is not high enough or the 
level of evidence is not sufficient to justify a suspension, it often places 
the provider on prepayment review. This means that the PSC requests 
and reviews documentation to support all claims submitted by the 
provider before payment is made.  Although prepayment review has 
fewer administrative requirements than payment suspension and has 
proven effective with individual providers, it has limitations.  For 
example, although contractor personnel say most infusion therapy 
providers under prepayment review do not respond to documentation 
requests, there is potentially a significant administrative burden if 
many providers do respond.  Also, prepayment medical review affects 
only future claims; unlike a suspension, it cannot stop payment on 
already-approved claims.  Furthermore, similar to a suspension, the 
prepayment review requirement is applied only to provider numbers on 
which the aberrant activity was observed. 
Revocations.  Revoking a billing number prevents a provider from 
submitting claims with that number, but administrative requirements 
limit the ability of revocations to control aberrant billing for infusion 
therapy. As such, PSC staff told us that they issue revocations as part 
of their normal investigative procedures, but do not use them as a 
primary tool.  One limitation is that, like suspensions and prepayment 
reviews, revocations are applied only to particular provider numbers, 
not to the individual or corporation associated with the problem.  CMS 
staff gave an example of one South Florida provider that had     
29 separate provider numbers; although 19 were revoked, the provider 
can still bill with the remaining numbers.  Even if all of a providers 
billing numbers are revoked, the provider can regain the ability to bill 
Medicare.  Pursuant to 42 CFR  424.535, providers that have their 
billing privileges revoked may reapply by submitting new applications.  
CMS and contractor staff told us that as long as the provider meets all 
requirements, they must approve the new application.  Our data 
analysis shows that CMS paid about $470,000 in 2006 to two South 
Florida providers that appear to have obtained new provider numbers 
after revocations. 
Requirements related to the effective dates of revocation also limit their 
value in controlling aberrant billing. Providers must be notified 30 days 
  OEI-09-07-00030  ABERRANT BILLING IN SOUTH FLORIDA FOR BENEFICIARIES WITH HIV/AIDS  18  F I N D I N G S  
prior to the effective date of the revocation, allowing extra time to 
submit additional claims.29  Also, revoked providers can continue to bill 
for service dates prior to the effective date of the revocation.30  Hence, 
. . . a fraudulent provider with a revocation date of September 1, 2005 
can continue to bill for dates of service going back to March 1, 2004.  It 
also means that the same provider has until March 1, 2006, to bill for 
services rendered on August 31, 2005.31  Although this is cited as 
vulnerability by several CMS and contractor staff, we did not find any 
payments made to infusion therapy providers in 2006 on claims received 
between the date of their revocation letters and the effective dates of the 
revocations. 
Claims-processing edits have been effective in the short term but have not 
had a lasting effect 
Service-level edits.  According to monthly reports from the PSC to CMS, 
starting in March 2004, CMS began approving edits on specific drug 
codes that were targets of abuse in the three counties in South Florida. 
The first such edit was a prepayment edit implemented on 
March 3, 2004. The PSC reported that in its first month of operation, 
nearly 5,000 claims triggered this edit.  Providers responded to the 
documentation requests for only about 26 percent of these claims, and 
more than 99 percent of reviewed services were denied.  A medically 
unbelievable edit, which screens claims for services that are not 
clinically feasible, for this code was added on April 30, 2004, and also 
resulted in numerous payment denials. Later edits also have resulted 
in numerous denials. 
Although edits have reduced payments for particular codes, the 
tendency of aberrant billers to switch to new codes has undermined the 
edits overall effectiveness. The PSC noted in a 2005 strategy document 
submitted to CMS that [a]s pre pay barriers have been erected, 
fraudulent providers have scurried in mass [sic] to other codes.  
Currently there are a number of new J codes which have been billed for 
29 42 CFR  424.535(f). 
30 42 CFR  424.535(b). 
31 Special Rules for Special Places, a position paper submitted by staff from CMSs 
Miami Satellite Division and Los Angeles Satellite and Regional Offices for Regions 2, 4, 
and 9 to the CMS central office in August 2005. 
  OEI-09-07-00030  ABERRANT BILLING IN SOUTH FLORIDA FOR BENEFICIARIES WITH HIV/AIDS  19  F I N D I N G S  
over $5 million in March 2005 by known aberrant providers.32 
Although the PSC used claims data analysis to detect new codes likely 
to be abused, this process was too slow to respond adequately; the 
August 2004 PSC report to CMS noted that the time span for us to 
identify a new code, draft an edit and have it implemented by [the 
carrier] allows weeks to go by while millions of dollars are paid out 
before the edits control the behavior.33  Figure 4, which appeared in a 
September 2004 report from the PSC to CMS, shows South Florida 
providers quick response to the first prepayment edit that was 
implemented, a pattern that generally continued with later edits. 
FIGURE 4 
South Florida providers responded quickly to the first prepayment edit implemented 
(Note that the allowed amount in other Florida counties for these codes remained nearly constant over 
the same period.) 
Allowed Amount for Infusion Drugs 
$35,000,000 
$30,000,000 
Edit 
implemented 
$25,000,000 
$20,000,000 
Code 3 
$15,000,000 
Code 2 
Code 1 
$10,000,000 
$5,000,000 
$0 
Jul-03  Aug-03  Sep-03  Oct-03  Nov-03  Dec-03  Jan-04  Feb-04  Mar-04  Apr-04  May-04  Jun-04  Jul-04 
Month of Paid Date  
Source:  TriCenturion LLC, Infusion Therapy Project Report, September 9, 2004, 2004.  Modified to delete lines showing activity outside of 
South Florida, to add explanatory text, and to redact the codes involved.  Note that the data underlying this chart are not limited to billings for 
beneficiaries with HIV/AIDS and include Miami-Dade and Broward Counties only. 
32 EDS, Comprehensive Plan by EDS To Stop Infusion Fraud in South Florida, 
submitted to CMS in early 2005. 
33 TriCenturion, LLC, August 2004 Monthly Status Report. 
  OEI-09-07-00030  ABERRANT BILLING IN SOUTH FLORIDA FOR BENEFICIARIES WITH HIV/AIDS  20  FFF III NNN DDD III NNN GGG SSS  
According to reports by TriCenturion, investigations conducted in 
2004 confirmed providers swift reactions to claims-level edits and their 
intent to defraud Medicare. In the summer of 2004, TriCenturion 
identified the 25 top aberrantly billing providers, including those that 
had switched codes after edits were implemented, and targeted them for 
site visits. The purpose of the visits was to apprise the providers of 
their aberrant billing activity and to determine possible reasons for the 
activity. Some providers claimed ignorance of their billing activity, but 
others admitted that they had switched not due to medical necessity 
but due to Medicare not paying for the other code.34 
As CMS contractors implemented new edits for drug codes, South 
Florida providers shifted their billing to other services. A new claims 
edit implemented in July 2006 appears to have limited the overall 
amount reimbursed for services claimed on behalf of beneficiaries with 
HIV/AIDS; based on our analysis, reimbursement for these beneficiaries 
Table 4: Increase in payments for nondrug services claimed for beneficiaries with HIV/AIDS 
HCPCS  Payment  Payment  Percent 
Service  code  1st half 2006  2nd half 2006  change 
Injection procedure for sacroiliac joint, arthrography, and/or 
27096  $6,324  $580,111  9,073% 
anesthetic/steroid 
Transluminal balloon angioplasty, percutaneous; renal/visceral 
35471  $0  $196,671  -
artery 
Endovenous ablation therapy of incompetent vein, extremity  36475  $4,167  $894,496  21,368% 
Injection, anesthetic agent and/or steroid, facet joint or facet joint 
64475  $275,566  $3,182,247  1,055% 
nerve; lumbar or sacral, single level 
Injection, anesthetic agent and/or steroid, facet joint or facet joint 
64476  $209,789  $2,623,809  1,151% 
nerve; lumbar or sacral, additional level 
Injection, anesthetic agent and/or steroid, transforaminal epidural; 
64479  $1,252  $103,024  8,126% 
cervical or thoracic, single level 
Destruction by neurolytic agent, paravertebral facet joint nerve; 
64622  $17,477  $105,026  501% 
lumbar or sacral, single level 
Destruction by neurolytic agent, paravertebral facet joint nerve; 
64623  $17,195  $528,337  2,973% 
lumbar or sacral, additional level 
Ultrasonic guidance for needle placement  76942  $9,688  $536,636  5,439% 
Combined right/retrograde left heart catheterization, for congenital 
93531  $0  $121,023  -
cardiac anomalies 
Source: OIG analysis of 2006 Medicare Part B National Claims History data, 2007. 
Note: Although some of these codes also had significant growth in areas outside of South Florida, the growth rate in South Florida for each of these 
codes was at least three times that in the rest of the country. 
34 Ibid. and TriCenturion, LLC, November 2004 Monthly Status Report. 
OEI-09-07-00030  ABERRANT BILLING IN SOUTH FLORIDA FOR BENEFICIARIES WITH HIV/AIDS  21  F I N D I N G
  S  
decreased by about 42 percent and reimbursement for drugs by    
73 percent from the first half of 2006 to the second half.  Meanwhile, 
payments for services other than drugs increased 54 percent in the 
second half of 2006 compared to the first, growing from $37 million to 
$57 million.  Ten service codes had particularly significant growth, as 
shown in Table 4; South Florida payment on behalf of beneficiaries with 
HIV/AIDS for each of these codes was greater than that for the rest of 
the country combined in the latter half of 2006.    
Beneficiary-level edits. In addition to claims-based edits, Medicare has 
employed beneficiary-based edits to combat fraud in South Florida.  In 
June 2004, the PSC began another antifraud effort called the High 
Volume Claim Beneficiary Project. This automated edit denied all 
claims except for certain services, such as emergency services, beyond a 
certain dollar threshold for a group of 500 beneficiaries. However, most 
beneficiaries involved in aberrant billing for infusion therapy were not 
affected because beneficiaries with HIV/AIDS diagnoses were excluded. 
CMS later approved a separate project specifically targeted toward 
infusion beneficiaries called the High Volume Infusion Beneficiary 
Project (HVIBP).  The HVIBP was implemented on January 3, 2005, 
and immediately resulted in many denialsthe PSC claimed savings of 
$31 million in the edits first month of operation.  Our analysis of 
Medicare claims data shows that overall reimbursement for South 
Florida beneficiaries with HIV/AIDS fell from about $51 million in 
December 2004 to $39 million in January 2005, and the mean 
reimbursement per beneficiary with HIV/AIDS was cut significantly, 
from $8,000 to $5,000. As with the claims-based edits, these effects 
were temporary; by April 2005, total reimbursement for beneficiaries 
with HIV/AIDS topped $150 million in South Florida, and the mean 
reimbursement per beneficiary surpassed $18,000. 
Onsite investigations of existing providers are effective in uncovering 
fraudulent activity but are relatively infrequent 
According to their monthly reports to CMS, the PSCs have 
intermittently used onsite visits to investigate suspicious infusion 
providers in South Florida.  Between June and December 2003, the PSC 
visited 20 providers it had identified as aberrant billers of infusion 
therapy services.  Payments to all 20 were suspended, and 5 were 
  OEI-09-07-00030  ABERRANT BILLING IN SOUTH FLORIDA FOR BENEFICIARIES WITH HIV/AIDS  22  F I N D I N G S  
referred to law enforcement.35  Other targeted site visit efforts in 
October 2004 and September 2005 produced similar results. Apart from 
these larger efforts, PSC site visits to infusion providers generally have 
been limited to one or two a month, according to the PSC reports.  By 
way of reference, our analysis indicated that about 1,300 South Florida 
providers billed at least one claim in the last half of 2006 that listed an 
HIV/AIDS diagnosis. 
CMS has taken limited action to strengthen the enrollment process for new 
infusion therapy providers 
Although CMS recognized in 2003 that . . . in many cases site visits are 
the only method we have to ensure that providers and suppliers actually 
exist and meet the requirements to participate in [Medicare] . . . ,36 it 
did not act on numerous contractor suggestions to implement 
preenrollment site visits for South Florida infusion therapy providers 
until mid-2006.  In September 2004, TriCenturion submitted an 
Infusion Project Progress Report to CMS.  The report stated that the 
continued fraud and abuse in South Florida requires more drastic action 
to stop the abuse being perpetrated against the Medicare Trust Fund 
and recommended that CMS contract for inspections of all new clinics 
in South Florida prior to issuing a provider number.  The Infusion 
Stopgap Plan that EDS submitted to CMS in May 2005 also described 
an enhanced provider enrollment process that included onsite visits. In 
September 2005, EDS submitted a concept paper outlining the duties 
and responsibilities of a Special Investigative Team that would conduct 
in-depth investigations, including preenrollment site visits.37  In May 
2006, FCSO submitted a paper to CMS entitled Medicare Fraud and 
CERT (Comprehensive Error Rate Testing Program) Scores:  The Same 
Challenge in Fraud-Infected Areas?  In it, FCSO proposed establishing 
a pilot project to strengthen its prepayment activities, including 
enhanced provider enrollment.  According to FCSO, it identified 
35 TriCenturion, LLC, Infusion Project Progress Report, September 9, 2004. 
36 Medicare Program: Requirements for Establishing and Maintaining Medicare Billing 
Privileges. 68 FR 2206522066 (proposed April 25, 2003). 
37 EDS, September 2005 Monthly Status Report. 
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unspent funds in its contract to finance the estimated $1 million, 
18-month initiative.38 
CMS approved the FCSO pilot project starting on July 12, 2006; it is 
scheduled to end on January 11, 2008.39 As part of the enhanced 
provider enrollment activity under the pilot, FCSO now conducts site 
visits of all new clinic applicants in South Florida. These site visits are 
performed by one individual working under contract to FCSO, who 
sends a letter to each provider ahead of time announcing the date of the 
visit and requesting the presence of medical personnel. According to 
FCSO, each site visit costs $75; the total budget for the site visits, 
including resources to review and process the findings, is $300,000. 
Although FCSO had projected that it would conduct 30 to 50 site visits 
of new applicants per month, only 59 had been conducted by 
December 2006 because fewer clinics applied for billing privileges than 
had been anticipated. FCSO plans to conduct unannounced visits later 
in 2007 because it suspects that some fraudulent providers put on false 
fronts during an announced visit. FCSO also anticipates expanding the 
pilot to include site visits of existing Medicare providers. 
38 For reference, according to FCSO, its total budget (including activities in both 
Connecticut and Florida) for fiscal year 2007 is approximately $76 million. 
39 FCSO, Statement of Work, First Coast Service Options, South Florida Pilot Project. 
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CMS has had limited success in controlling aberrant billing by infusion 
clinics in South Florida.  The aberrant billing patterns discussed in this 
report raise concerns about the integrity of the Medicare program. 
Controls implemented to date have had limited effect.  Therefore, we 
recommend that CMS: 
Mandate Site Visits for Certain Providers in High-Risk Jurisdictions 
Medicare currently requires site visits before carriers issue provider 
numbers to independent diagnostic testing facilities. The carrier in 
Southern California expanded these visits to other providers to great 
effect at little additional cost, but only for a limited time. (See page 7.) 
Because the normal provider enrollment process is a desk review of 
paperwork, both announced and unannounced site visits are essential in 
high-risk areas to confirm that providers have physical addresses and 
report accurate information in their applications.  CMS could fund these 
site visits out of carriers program management budgets, which already 
support current provider enrollment activities. 
Afford Contractors More Time To Review New Applications From Certain 
Providers in High-Risk Jurisdictions 
Contractor standards require that 80 percent of new applications be 
processed within 60 days of receipt.  In South Florida, this rule may 
hinder FCSOs ability to ensure that only legitimate providers obtain 
billing privileges.  CMS should set alternative standards in high-risk 
jurisdictions for certain provider types and/or geographic areas 
vulnerable to fraud.  CMS also should allow contractors to exempt 
applications from providers that have had recent revocations or 
payment suspensions from the timeliness standard, even if the 
corporate structures of the providers have changed or providers apply 
under new tax identification numbers. 
Modify the Statement of Work for the Jurisdiction That Includes South 
Florida To Require Enhanced Activities To Fight Fraud and Abuse 
CMS intends to release the Statement of Work for the Medicare 
Administrative Contractor for Jurisdiction 9, which includes Florida, 
Puerto Rico, and the U.S. Virgin Islands, later this year.  The agency 
should require and fund the new contractor to conduct enhanced 
provider enrollment, data analysis, and claims-editing activities in the 
portion of this area identified as high-risk. 
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Require Extensive Review of All Reassignments in High-Risk Areas To 
Confirm That They Are Legitimate  
OIG investigators and CMS contractor personnel told us that fraudulent 
infusion clinics in South Florida sometimes appropriate the identities of 
legitimate providers to obtain billing privileges.  For this reason, CMS 
and the contractors said that they are reluctant to use sanctions such as 
revocations and suspensions on all of the provider numbers associated 
with a particular clinic when it revokes or suspends one, which 
potentially leaves Medicare open to further abuse.  To minimize the 
chances of a legitimate provider being associated with a fraudulent one, 
CMS should take steps to ensure that all reassignments in high-risk 
areas are legitimate.  The FCSO pilot project partially addresses this by 
funding the carrier to conduct a more extensive review when it receives 
a sixth reassignment application for a particular provider.  For example, 
contractors are directed to send the physician a letter to verify the 
reassignment and to deactivate the provider identification number and 
deny the application if the physician does not respond.  CMS should 
extend this policy by funding carriers to conduct this level of review for 
all new and existing reassignments that meet the criteria specified in 
the pilot, both in South Florida and in other high-risk geographic areas.  
Strengthen Revocations To Prevent Further Fraud and Abuse 
Currently, because providers may use revoked numbers to continue to 
submit potentially fraudulent claims for service dates prior to the 
effective date of the action, revocations do not adequately protect 
Medicare funds.  Similarly, in cases when fraudulent activity is evident, 
the requirement to provide 30 days notice prior to the effective date of 
the revocation may expose Medicare to additional potentially fraudulent 
claims. CMS should consider shortening the notice period for 
revocations. In addition, CMS should require prepayment review on all 
claims from providers that have effective or pending revocations.  CMS 
also should develop a strategy for minimizing the risk to Medicare from 
providers with multiple billing numbers, perhaps automatically placing 
all numbers associated with a revoked number on prepayment review 
pending further investigation. 
AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 
RESPONSE 
CMS generally concurred with our recommendations.  CMS stated that 
our analysis will be useful to its continued efforts to prevent fraudulent 
payments for infusion therapy and that the agency will be contacting 
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OIG for details about additional metropolitan areas exhibiting aberrant 
billing patterns.  CMS also stated that our recommendations to 
mandate site visits and afford contractors more time to review new 
applications in high-risk jurisdictions have been incorporated into a new 
demonstration project. 
CMS stated that our recommendations demonstrate that CMSs current 
actions are working.  CMS also stated that the decline in Medicare 
payments in Florida from 2004 to 2006, despite increased amounts 
billed, demonstrates the effectiveness of corrective actions.  However, 
we found that in the last half of 2006, approximately 10 percent of 
beneficiaries with HIV/AIDS lived in the three South Florida counties, 
but claims originating in those counties constituted 50 percent of 
submitted charges and 37 percent of the Medicare paid amount.  The 
continued aberrant billing and payment patterns documented in our 
report demonstrate the need for improved provider enrollment controls 
to prevent the entry of unqualified providers into the Medicare program. 
CMS acknowledged the need for improvement in the provider 
enrollment process and described recent actions it has taken to 
strengthen this process. 
In response to our recommendation to modify the Statement of Work for 
the jurisdiction including South Florida to require enhanced activities to 
fight fraud and abuse, CMS concurred and stated that it has added 
language to the Statement of Work to indicate that Florida is a  
high-risk area and special actions are needed to deal with fraud. We 
recommend that CMS require and fund enhanced provider enrollment, 
data analysis, and claims-editing activities in this area. 
In response to our recommendation that CMS review all reassignments 
in high-risk areas, CMS concurred and stated that Medicare contractors 
are currently required to review such reassignments.  We have revised 
our recommendation to clarify that CMS should conduct a more 
extensive review sufficient to confirm the legitimacy of such 
reassignments. For example, CMS could require contractors to send the 
physician a letter to verify the reassignment and to deactivate the 
provider identification number and deny the application if the physician 
does not respond.  This level of review is required and funded by the 
FCSO pilot project only when the contractor receives a sixth 
reassignment application for a particular provider.  We recommend that 
CMS extend this policy by funding carriers to conduct this level of 
review for all new and existing reassignments that meet the criteria 
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specified in the pilot, both in South Florida and in other high-risk 
geographic areas. 
CMS also concurred with our recommendation to strengthen 
revocations.  CMS states that it will consider enhancements to this 
section of the regulations.40 
While we recognize that traditional CMS program integrity actions form 
an integral part of any antifraud strategy, they have proven insufficient 
to control aberrant billing in South Florida.  Our report shows that 
while claims edits depress infusion claims activity for a time, providers 
respond by changing billing patterns; this pattern of action and 
response produces payment denials but few long-term savings to 
Medicare as providers circumvent the controls. Payment suspensions, 
revocations, and investigations eliminate particular problem providers 
or provider numbers from the program, but have limited scope.  
Additional efforts are needed to prevent unscrupulous individuals from 
becoming Medicare providers. 
CMSs positive response to our recommendations, including its 
initiation of the new demonstration project, indicates that the agency is 
now moving toward strategies that should more effectively protect the 
integrity of Medicare payments in South Florida.   
The full text of CMSs comments is available in Appendix B. 
40 We note a technical correctionCMSs comments cited 42 CFR 434.535; the 
regulations listing the reasons a Medicare contractor may use to revoke billing privileges 
are found at 42 CFR 424.535. 
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DETAILED METHODOLOGY FOR TABLE 3 
To produce Table 3, we first determined the Metropolitan Statistical 
Area (MSA) in which each service was claimed to have been provided.  
To do so, we matched the Medicare Part B National Claims History data 
to the Office of Management and Budgets MSA data by the providers 
ZIP Code.  If a ZIP Code did not match any MSA, we considered the 
claim to originate from a nonmetropolitan area of the State in which the 
ZIP Code was located. Next, we summarized the claims data by 
beneficiary, adding up the number of claims from each MSA in which 
the beneficiary had a service. If any MSA was the source of more than 
50 percent of a beneficiarys claims, we considered the beneficiary as 
belonging to that MSA. If not, we considered the beneficiary as 
belonging to no MSA.  We used the same process to determine to which 
MSA, if any, each provider belonged.  We then matched the beneficiary 
and provider MSA data back to the claims data so that each claim 
record contained three geographic indicators:  the MSA from which the 
claim originated, the MSA to which the beneficiary belonged, and the 
MSA to which the provider belonged. 
Next we calculated the four characteristics we had identified as 
representative of aberrant billing in South Florida for each MSA.  We 
calculated the percentage of the submitted amount that was for drugs 
by dividing the amount submitted for drugs in each MSA by the total 
amount submitted in that MSA.  We calculated the mean submitted per 
provider for beneficiaries with HIV/AIDS for each MSA by dividing the 
total submitted for beneficiaries with HIV/AIDS by providers with at 
least one claim referencing an HIV/AIDS diagnosis belonging to that 
MSA by the number of such providers.  We found the percentage of 
beneficiaries with at least one drug claim in each MSA by dividing the 
number of beneficiaries belonging to the MSA that had at least one drug 
claim by the total number of beneficiaries belonging to that MSA.  
Lastly, we calculated the mean amount submitted for drugs among 
beneficiaries with at least one drug claim in each MSA by dividing the 
total amount submitted for drugs for beneficiaries belonging to each 
MSA by the number of beneficiaries belonging to the MSA that had at 
least one drug claim. We calculated the same values for the entire 
nation excluding South Florida using the same methodology.  We 
included all MSAs (or nonmetropolitan areas) that had at least two 
characteristics that were at least twice the national level in Table 3. 
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This report was prepared under the direction of Timothy S. Brady, 
Regional Inspector General for Evaluation and Inspections in the San 
Francisco regional office, and Deborah W. Harvey, Deputy Regional 
Inspector General. 
Scott Hutchison and Cindy Lemesh conducted this study.  Central office 
staff who contributed include Scott Manley, Linda Abbott, and Robert 
Gibbons. 
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