Department  of  Health  and Human  Services 
OFFICE  OF 
INSPECTOR  GENERAL 
CARRIER  ASSIGNMENT  OF  MEDICARE 

PROVIDER  NUMBERS 

. 
Richard  P.  Kusserow 
INSPECTOR  GENERAL 
APRIL  1992  OFFICE  OF INSPECTOR  GENERAL 
The mission of the Office of Inspector General (OIG), as mandated by Public Law  95452,  as 
amended, is to protect the integrity of the Department of Health and Human Services* (HHS) 
programs as well  as the health and welfare of beneficiaries served by those programs.  This statutory 
mission is carried out through a nationwide network of audits, investigations, and inspections 
conducted by three OIG operating components:  the Office of Audit  Services, the Office of 
Investigations, and the Office of Evaluation and Inspections.  The OIG also informs the Secretary of 
HHS of program and managementproblems, and recommends courses to correct them. 
OFFICE  OF AUDIT  SERVICES 
The OIGs Offtce 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 assessmentsof HHS programs and 
operations in order to reduce waste, abuse and mismanagementand to promote economy and 
efficiency throughout the Department. 
OFFICE  OF INVESTIGATIONS 
The OIGs Office of Investigations (01) conducts criminal,  civil,  and administrative investigations of 
allegations of wrongdoing  in HHS programs or to HHS beneficiaries and of unjust enrichment by 
providers.  The investigative efforts of 01 lead to criminal convictions, administrative sanctions, or 
civil money penalties.  The 01 also oversees State Medicaid fraud control units which  investigate and 
prosecute fraud and patient abuse in the Medicaid program. 
OFFICE  OF EVALUATION  AND  INSPECTIONS 
The OIGs Office of Evaluation and Inspections (OEI) conducts short-term management and program 
evaluations (called inspections) that focus on issues of concern to the Department, the Congress, and 
the public.  The findings and recommendations contained in the inspections reports generate rapid, 
accurate, and up-to-date information on the efficiency, vulnerability,  and effectiveness of departmental 
programs. 
Entitled  Carrier  Assignment of Medicare Provider Numbers, this report describes and assessesthe 
process by which Medicare carriers assign provider numbers.  This report was prepared under the 
direction of Ralph Tunnell,  Regional Inspector General of Region VI,  Office of Evaluation and 
Inspections, and Chester B. Slaughter, Deputy Regional Inspector General.  Participating  in this 
project were the following  OIG personnel: 
Region VI,  OEI  Headquarters,  OEI 
Kevin Golladay  Wayne Powell 
Leah Bostick 
Douglas Lauver  Department  of  Health  and Human  Services 
OFFICE  OF 
INSPECTOR  GENERAL 
CARRIER  ASSIGNMENT  OF  MEDICARE 

PROVIDER  NUMBERS 

Richard  P.  Kusserow 
INSPECTOR  GENERAL 
OEI-0643940871  EXECUTIVE  SUMMARY 
PURPOSE 
This report describes and assessesthe process by which Medicare carriers assign provider 
numbers. 
Medicare carriers assign provider numbers to qualified providers of Part B services who 
furnish services or supplies to Medicare beneficiaries.  The numbers are used in processing 
claims and establishing Medicare pricing and utilization  profiles.  To obtain a provider 
number from a carrier, providers typically  complete the carriers provider number application 
form and meet criteria specified by Medicare regulations.  Carriers are responsible for 
determining if providers meet Medicare criteria through its number assignment process. 
METHODOLOGY 
This inspection consisted of several phases. First,  we conducted a review of relevant Health 
Care Financing Administration  (HCFA)  policies and Medicare laws and discussions with 
HCFA  staff.  Next, we requestedcopies of all application forms used by carriers to obtain 
information  prior  to assigning a number to a provider.  To test assignment procedures, we 
reviewed carrier documentation supporting the recent assignment of numbers to more than 
240 providers.  Specifically,  40 carriers were asked to supply file documentation for the most 
recent applicant assigned a provider number for seven different types of providers (solo 
physician, physician group or clinic,  chiropractor,  durable medical equipment supplier, 
ambulance, certified  registered nurse anesthetist, and physician assistant). Next, we 
surveyed 38 carrier personnel responsible for assigning numbers.  Additionally,  we discussed 
provider number assignment vulnerabilities  with carrier program integrity  staff (25 
respondents) and reviewed files of providers with  overpayments selected from the 12/01/89 
HCFA  Physician/Supplier Overpayment Report.  Finally,  we reviewed Management 
Implication  Reports (MIRs) prepared by the Office of Inspector Generals Office of 
Investigations (01) suggesting provider number assignment problems and concerns.  We 
contacted each of the eight 01 regional offices to obtain case experience and perspectives and 
to discuss prior  MIRs. 
FINDINGS 
HCFAs  Direction  and  Oversight  of  Carrier  Provider  Number  Assignment  Procedures 
are  Inadequate. 
The HCFA  provides insufficient  practical direction to carriers concerning the provider 
number assignment function.  Specifically,  HCFA  has not clearly defined the methods 
or depth of understanding and testing to ensure adequate knowledge about a provider 
before a number is assigned.  Our review of carrier instructions in the Medicare 
i  Carrier Manual (MCM)  identified  several issuesnot adequately addressed. For 
example, what is a carriers responsibility to understandand determine legal 
authorization to practice?  This lack of direction and oversight contributes to carrier 
provider number assignment weaknessesand vulnerabilities. 
Carrier  Provider  Number  Assignment  Weaknesses  and  Vulnerabilities  Exist. 
0  Many  cartiers do not adequately document provider  number assignment procedures. 
0  Cartiers  obtain or maintain  too little provider  infomration. 
Application  forms often do not obtain sufficient information  from providers. 
Little  or no businessownership information  is required by carriers. 
Ironically,  the least regulated providers (e.g., durable medical equipment) are 
the least scrutinized by carriers when applying for a provider number. 
Carrier application forms are often missing or not readily retrievable. 
0 	 Some carriers fail  to verkif provider  qualifications  prior  to assignment of a prwider 
number. 
Some carriers do not validate provider credentials (e.g., State license). 
Many carriers allow reassignmentof benefits without determining if the 
reassignment meets Medicare legal requirements. 
0  Weak provider  number assignment procedures contribute to progmm  vulnembilities. 
Carrier methods or practice to identify  all numbers assigned to a provider are 
inadequate. 
Providers can manipulate multiple numbers and jurisdiction  rules to increase 
reimbursement or avoid detection of abusive practices. 
Most carriers do not uniquely identify  physician assistantsand thus, cannot 
perform adequateutilization  review. 
Carrier computer records maintained on providers need improvement. 
Specifically,  provider name irregularities exist and provider State license 
numbers are missing or inaccurately entered. 
0 	 Many  carriers assign additional  provider  numbers solely for  a providers 
bookkeeping convenience.  OIG  Recommendations  and  HCFA  Action  Plan 
In  our  draft  report,  we  made specific  recommendations  to correct  the weaknesses  cited 
above.  (They  are included  verbatim  on page 20 of this  final  report.)  The  HCFA  provided 
written  comments  on the draft  report.  More  importantly,  however,  HCFA  itself  has 
undertaken  several  major  initiatives  to address these problems  and related  issues raised  in a 
prior  OIG  report  entitled  Carrier  Maintenance  of Medicare  Provider  Numbers.  We and 
HCFA,  therefore,  worked  together  to reach agreement  on an action  plan  to improve  the 
provider  number  process.  In light  of this,  we are no longer  designating  the problems  cited  in 
this and the prior  report  as a material  weakness.  The  following  is the agreed  upon  action 
plan: 
MEDICARE  PROVIDER  NUMBERS 
ACTION  PLAN 
HCFA  will  issue a modification  to the Medicare  Carrier  Manual  which  will: 
Clearly  state that carriers  have a responsibility  to ensure the integrity  of 
provider  numbers and to ensure that only those practitioners  and providers 
with  legal  authority  to  practice  are  given  and  may  retain  provider 
numbers. 
Require carriers to stay abreast of changes in relevant laws and regulations 
concerning  medical practice  requirements. 
Require  carriers  to make every reasonable effort  to receive on an ongoing 
basis information  from  State licensing  authorities  and other  appropriate 
bodies about the currency  of licenses. 
Require  carriers  to maintain provider  number  applications  for at least six 
years  after  deactivation  of  the  number  (the period  needed to  facilitate 
investigations,  prosecutions,  and sanctions).  This requirement  pertains to 
applications  from both health professionals and provider  entities which  are 
discussed separately below. 
Require carriers to periodically  purge from their lists of approved numbers 
those that  have been  inactive  and  for  professionals  or  entities  who  no 
longer  have valid  licenses required  by the State. 
HEALTH  PROFESSIONALS 
HCFA  will  continue  to vigorously  implement  and enforce  compliance  with  the 
provisions  of  the  recently  established  UPIN  system  for  Medicare  physicians 
.. . 
Ill  (which  includes medical doctors,  osteopaths, dentists,  chiropractors,  podiatrists, 
and optometrists). 
HCFA  will  explore the extension of the UPIN  system to cover all limited  licensed 
professionals  that can bill  Medicare  directly.  HCFA  will  provide  a schedule for 
doing  so.  This would  include  clinical  psychologists,  clinical  social workers,  and 
certified  registered nurse anesthetists. 
All  registry  data will  be made readily available to all carriers on January 1. 1992. 
(Procedures prior  to that date only  allowed  carriers  to obtain  information  about 
professionals  within  their  own jurisdiction.) 
HCFA  will  monitor  and ensure compliance of the carriers with  their responsibili
ties regarding provider  numbers as set forth in the Medicare  Carrier  Manual.  (See 
GENERQL section above.) 
HCFA  will  implement  a major  reform  of the carrier  process  for  dealing  with 
certain  suppliers.  (Here,  the term is meant to include  entities which  provide: 
durable  medical  equipment,  routine  and readily  available  supplies,  prosthetics, 
orthotics,  immunosuppressant  drugs,  and ESRD  services.) 
Some of the more important  features of this initiative  are: 
Four regional carriers will  be responsible for establishing supplier numbers 
and processing  all Medicare  claims for the above mentioned  supplies. 
A  clearinghouse  which  will  contain  information  from  supplier  number 
applications  and whose data will  be accessible to all of these carriers. 
A  standard  application  form  which  includes  information  to  enable  the 
carriers  to identify  each unique  entity,  their  ownership,  related entities, 
and sanctions. 
The  application  form  will  contain  a signed  statement of  the  applicant 
attesting  to the veracity  of  all  information  provided  and acknowledging 
responsibility  for false or misleading  statements. 
The  carriers  will  be responsible  for  processing  all  claims  for  supplies 
furnished  to beneficiaries  who reside within  their jurisdiction. 
HCFA  plans to implement  this major reform  within  the next two  years. 
The statement of work  for the contract  under which  these carriers  will  function 
will  include  a clear  statement of  responsibilities  concerning  supplier  numbers 
similar  to those listed in the GENERAL. section above. 
iv  These carriers  will  be required  to  use the  information  in  the clearinghouse  to 
screen  applicants  for  supplier  numbers  for  such  things  as  relationships  to 
sanctioned individuals  or business or to businesses suspected of fraud or abuse. 
The  carriers  will  verify  the  accuracy  and  completeness  of  the  information 
contained  in  supplier  number  applications  and files,  and will  identify  and take 
appropriate  action against problem  suppliers. 
HCFA  will  vigorously  monitor  compliance of these carriers with  those contractual 
provisions  related to the application  for,  granting  of, and maintenance of supplier 
numbers.  HCFA  is determining  how  the performance  of these carriers  will  be 
evaluated. 
HCFA  will  require carriers to reenroll  all suppliers every two years to insure that 
the ownership  and operating  information  remains current. 
In the future,  HCFA  will  extend this system to cover other supplier  entities such 
as independent  physiological  labs, magnetic  resonance imagers,  and ambulance 
companies.  In  the  meantime,  however,  these other  supplier  entities  will  be 
required  to  use  a  standard  application  form  with  provisions  for  identifying 
ownership  and sanctions, and including  the signed veracity  certification. 
V  TABLEOFCONTENTS 
EXECUTIVE  SUMMARY 
INTRODUCTION  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  1 

Purpose.  ....................................................  1  

Background.  .................................................  1 

Methodology.  ................................................  4 

FINDINGS  ,...,................a........................  6 

HCFAs  Direction  and  Oversight  of  Carrier  Provider  Number  Assignment 

Procedures  are  Inadequate  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  6 

Carrier  Provider  Number  Assignment  Weaknesses  and  Vulnerabilities  Exist  . . . . . .  7 

Many  carriers  do  not  document  provider  number  assignment  procedures  . . . . .  7 

Carriers  obtain  or maintain  too  little  provider  information  . . . . . . . . . . . . . . . .  7 

Some  carriers  fail  to  verify  provider  qualifications  . . . . . . . . . . . . . . . . . . . .  10 

Weak  provider  number  assignment  procedures  contribute  to  program 
vulnerabilities  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  12 

Many  carriers  assign  additional  provider  numbers  solely  for  a providers 

bookkeeping  convenience  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  17 

RECOMMENDATIONS  . . , . , . , . . . , . . , . . . . . . . . . . . . . . . . . . . . . . .  20 

HCFA  RESPONSE  AND  ACTION  PLAN  . . . . . . . . . . . . . . . . . . . . . . . . . .  22 

APPENDICES  . . . . . . . . . . . . . . . . . . . . . ..a..................  24 

Appendix  A:  Part  B Providers 
Appendix  B:  Carrier  Respondents  and  State  Jurisdictions 
Appendix  C: 	 Examples  of  Information  Requested  on  Application  Forms  for 
DME  and  Physicians 
Appendix  D:  Claim  Jurisdiction  Rules  Simplified 
Appendix  E:  Examples  of  Carrier  Methods  of  Processing  PA Claims 

Appendix  F:  Physician  Registry  Activity  by  Carrier 

Appendix  G:  Carrier  Provider  Number  Assignment  Activity 

Appendix  H:  Carrier  Supplied  Counts  of Various  Types  of  Providers 
 INTRODUCTION 
PURPOSE 
This report reviews the processby which Medicare carriers assign provider numbers. 
Specific objectives were to: 
1)  describe and assesscarrier provider number assignment procedures and 
2)  discuss vulnerabilities in these procedures. 
A recently released report,  Carrier  Maintenance of Medicare Provider Numbers (OEI-06-
89-00870), prepared in conjunction with this inspection, describes and assesseshow carriers 
maintain provider numbers once assigned. 
BACKGROUND 
Carriers are private insurance companies acting under contract with  the Health Care 
Financing Administration  (HCFA)  to processclaims by beneficiaries and providers for 
services or supplies covered under Medicare Part B.  While most Stateshave jurisdiction  for 
one State, a few carriers handle more than one State.  The HCFA  provides direction to the 
carriers on payment matters and is ultimately  responsible for ensuring carriers adhere to 
applicable program policies and procedures. 
In fiscal year 1989, Part B covered approximately 32 million  enrollees and paid benefits of 
about $37 billion  for over 407 million  claims.  With  such an enormous expenditure of 
government funds and volume of claims to process, it is imperative carriers ensure payments 
are 1) made only for services covered under the Medicare program, 2) medically necessary 
under recognized standardsof medical care, 3) actually rendered to eligible  Medicare 
beneficiaries, 4) reimbursed at appropriate payment levels, and 5) delivered by providers 
meeting standardsrequired by State and Federal law. 
State Licensure and Certification 
Licensing and certifying  providers are primarily  State functions.  Individuals  or entities must 
meet State criteria  to obtain and maintain a license or certification.  The States are 
responsible for regulating the practice of those they have licensed or certified.  Statesare 
also responsible for ensuring these providers meet standardsof professional competence and 
personal integrity  considered necessaryto protect the public. 
The State license or certificate demonstratesthe provider satisfies the States established 
standardsin such areas as education, experience, and ethics.  Once licensed or certified,  the 
provider  must then comply with  the States prescribed standards for the practice of the 
profession and any other specified criteria for maintaining a license or certification.  Failure to meet these requirements may result in the State suspendingor restricting the 
license or certificate to provide services. When a provider loses the legal authority to 
practice, no seNices of the provider are covered by Medicare. 
Fedeml Interest in Medical Provider Qual$htions 
The Federal government has shown a strong interest in ensuring medical providers have 
adequatequalifications.  The Consolidated Omnibus Budget Reconciliation Act of  1985 
mandated a physician registry and the use of a unique practitioner identifier  number (UPIN) 
to prevent duplicate payments for hospital-basedphysicians and interns under the Medicare 
program and to more accurately track Federally-sanctioned physicians.  The HCFA  oversees 
the registry. 
Another database,the National Practitioner Data Bank, recently began operation monitoring 
State licensed health practitioners.  This data bank maintains records of all adverseactions 
(e.g., license revocation, malpractice) taken against medical providers and entities after the 
opening of the data bank.  The data bank was authorized by the Health Care Quality 
Improvement Act of 1986 (P.L.  99-660, title IV)  and the Medicare and Medicaid Patient and 
Program Protection Act of 1987 (P.L.  100-93, section 5).  This databank is monitored by the 
Public Health Service (PHS). 
These two databasesenhancethe Federal governments ability  to monitor providers. 
However, responsibility for ensuring Medicare providers meet licensing and other 
requirements specified by State and Federal law rests ultimately  with carriers. 
Carrier  Ptvvider  Number Assignment 
Carriers assign unique identification  numbers (hereafter referred to as provider numbers) to 
providers of Medicare Part B reimbursable servicesor supplies.  Provider numbers are used 
in processing claims for services rendered to Medicare beneficiaries.  The number is also 
used in establishing Medicare pricing and utilization  profiles.  If  the provider of services 
does not have a provider number, payment probably will  not be made for services. To 
obtain a provider number from a carrier, providers must follow  the carriers application 
procedures.  This generally involves completion of the carriers provider number application 
form.  Additionally,  the provider must meet Medicare requirements.  Carriers assumeall 
costs for assigning and maintaining provider numbers. 
The accuracy and effectiveness of a carrier in meeting applicable Medicare responsibilities is 
dependent in large measure upon its provider  number assignmentprocess.  As described thus 
far, the provider number assignment processappearsto be relatively  simple.  However, its 
simplicity  disguises its importance; failure to adequately determine a providers qualifications 
and payment variables can have significant consequencesfor the Medicare program in fraud, 
abuse, or error.  Prudence and common sensedictate provider numbers should be guarded 
with  every reasonablediligence.  &ledicare Reouirements 

Prior to the issuanceof a provider number, carriers need to establish the following: 

Provider  What  provider(s)  renders  services  or supplies? 
Identification 
Credential  Does  the  provider  meet  Medicare  qualifications  (e.g.,  legally  authorized  by  the 
Verification  State  where  services  are  rendered)? 
Exclusion  from  Is the  provider  prohibited  from  participating  in the  Medicare  program? 
Participation 
Carrier  Claim  What  carrier  has jurisdiction  for  claims  submitted  by  the  provider7 
Jurisdiction 
Carrier  Pricing  What  method  of  reimbursement  applies  (e.g.,  fee  schedule)?  What  is the 
Rules  correct  customary  and  prevailing  charge  to  use?  What  is the  specialty  of the 
provider7  Is the  provider  Medicare  participating  or not? 
Reassignment  Will  the  payment  go to  the  provider  of  services  or to  another  (e.g.,  employer)? 
Limitations  If so,  will  the  recipient  of  monies  meet  Medicare  reassignment  limitations? 
Reporting  What  information  is required  for  submission  of  a record  by  carriers  to  the 
Requirements  Physician  Registry  and  to  HCFA? 
Utilization  Review  What  review  and  profiling  parameters  should  apply  to  this  provider7 
Further, Medicare law and policy  differentiates between two very different types of 
applicants for Medicare provider numbers: 
0 	 Providers  of services or supplies - entities and individuals actually performing 
services or nrovidinp  sun&es to beneficiariq. 
Carriers are responsible for verification  of any prerequisite credentials 
(e.g., license, equipment, sellers permit,  etc.) specified by State, local, or 
Federal law.  Medicare law and policy place differing  requirements on 
different types of providers.  Generally, a provider of services must be legally 
authorized to provide the services by the State where services are rendered. 
For example, Medicare law requires covered physician services be rendered by 
licensed physicians who are legally  authorized to practice  (Social Security 
Act,  Section 1861) by the State where the services are rendered. 
Although qualifications for other Medicare provider types may include State 
licensure or certification,  some providers (e.g., ambulance companies) are 
required to meet additional education, work experience, staff, or equipment 
needs in order to participate in the Medicare program.  However, this is not to say every provider type must meet specified criteria. 
Some providers, such as durable medical equipment @ME),  generally do not 
have to meet any criteria except to possessa Social Security number or an 
employer identification  number. 
Beyond the need to determine applicant qualifications, there are a variety of 
payment and program integrity responsibilities tied to data collection and 
computer analysis of the service providers Medicare experience. 
0 	 Billers  of services and supplies - entities and organizations billin?  for the 
services or sunnlies nrovided. 
Carriers must determine if the entity requesting payment meets Medicare 
requirements.  If  the individual or entity (partnership, professional association, 
clinic,  etc.) billing  and receiving payment did not actually provide the service 
or supply, carriers must establish the relationship between the biller  and 
performer of services.  Also, Medicare requires carriers to ensure payment is 
not made to entities or individuals excluded from participation in Medicare. 
Finally,  carriers should have sufficient information  about the billing  entity 
(owners, agents, officers, etc.) in the event questions arise concerning payment 
or if overpayments need to be recovered from liable individuals or entities. 
In addition to the concern over provider number assignment, the areasaddressedin this 
report are considered especially timely in light of physician payment reforms, establishment 
of the Physician Registry, and HCFAs  interest in ensuring the quality of providers of 
Medicare services. 
METHODOLOGY 
This inspection consisted of several phases. First,  we conducted a review of relevant HCFA 
policies and Medicare laws and discussionswith HCFA  staff.  Next, we requestedcopies of 
all application forms used by carriers to obtain information  prior  to assigning a number to a 
provider.  To test assignment procedures, we reviewed carrier documentation supporting the 
recent assignment of numbers to more than 240 providers.  Specifically,  40 carriers were 
asked to supply file documentation for the most recent applicant assigneda provider number 
in the following  categories: 
Solo-practice physician 

0 
0  Physician group or clinic 

0  Chiropractor 

0  Ambulance 

0  Durable medical equipment 

0  Physician assistant (PA) 

0  Certified  registered nurse anesthetist (CRNA) 

For this inspection, we excluded any review of providers certified by HCFA  for 

participation  in Medicare.  This was done to limit  the scope of work.  Additionally, 

4  this was done in recognition of State survey and certification  agency review of the 
providers  credentials and HCFAs  assignmentof provider numbers rather than carrier 
assignment of provider numbers to many of these types of providers.  (See Appendix 
A for a list of Part B providers and those certified by HCFA.) 
Next, we visited three carriers and mailed surveys, with telephone followup,  to 35 others. 
(See Appendix B for a complete list of carrier respondentsand Statejurisdictions.)  The 38 
respondentswere carrier personnel responsible for assigning numbers. 
Additionally,  we discussednumber assignmentvulnerabilities with carrier program integrity 
staff (25 respondents)and reviewed files of providers with overpayments selected from the 
12/01/89 HCFA  Physician/Supplier Overpayment Report. 
Finally,  we reviewed Management Implication  Reports (MJRs) prepared by the Office of 
Inspector Generals Office of Investigations (01) suggestingprovider number assignment 
problems and concerns.  We contacted the eight 01 regional offices to obtain caseexperience 
and perspectives and to discussprior  MIRs.  FINDINGS 

HCFAs  Direction  and  Oversight  of  Carrier  Provider  Number  Assignment  Procedures 
are  Inadequate. 
The HCFA  provides insufficient practical direction to carriers concerning the provider 
number assignment function.  Specifically, HCFA  has not clearly defined the methods or 
depth of understanding and testing to insure adequateknowledge about a provider before a 
number is assigned (e.g., DME).  Our review of carrier instructions in the Medicare Carrier 
Manual (MCM)  identified  several issuesnot adequately addressed. Among them are: 
How are carriers to determine legal authorization to practice? 
What is the minimum information to be obtainedfrom  providers  by carriers? 
What identifying provider  information should be maintained in the carriers  computer system?  _ 
How is a physician s specialty to be determined? 
Should providers  complete carrier  application forms?  Should they be maintained? 
When is it appropriate  to assign multiple provider  numbers to the sameprovider? 
What carrier  controls should existfor  the utilization review of providers having multiple 
numbers? 
Insufficient  direction and oversight has contributed to carrier assignment vulnerabilities. 
Twenty of the carrier provider number assignmentpersonnel contacted recognize weaknesses 
and believe HCFA  should play a prominent role by providing  more guidance concerning 
number assignment policies.  Some areas noted by carriers include the need for: 
More  policy  issued regarding  suppliers - establishing guidelines for  qualifying as a 
DME  supplier,  ownership questions, etc.  
More specific guidance on  jurisdiction,  multiple ojfice settings, and clinics.  
National standards for  non-physicians (e.g., DME).  
Clearer guidelines regarding physicians under contract with groups/clinics  and 
other physicians meeting employee status requirements.  
Certification  guidelines for  physiological  laboratories. * 
Guidance when it is appropriate  to have more than one number.   A critical  and fundamental point of control for correct payment and detection of abusive 
providers occurs during the provider number assignmentprocess.  While the Physician 
Registry is certainly a step in the right direction,  many weaknessesand vulnerabilities still 
exist in provider number assignment procedures.  These weaknessesor vulnerabilities could 
result in adverse monetary or quality of care consequencesfor the Medicare program or 
beneficiaries. 
Carrier  Provider  Number  Assignment  Weaknesses  and  Vulnerabilities  Exist. 
Many  caniers  do not adequately document provider  number assignment pnwdures. 
Nearly 50 percent of carriers (18) have no formal written internal procedures for number 
assignment.  A lack of written instructions on provider number assignment may complicate 
training of new staff and may promote inconsistency in the provider number assignment 
process.  Additionally,  a lack of documented procedures may complicate review by HCFA 
to determine carrier implementation of manual instructions affecting provider number 
assignment. 
Cbniers  obtain or main&in  too little provider  infotmation. 
0  Application  forms often do not obtain sufficient information  from providers. 
Carrier applications represent the minimal  information  required to determine who the 
provider is and what pricing parameters apply (locality,  specialty, hospital based, etc.).  The 
applications used by carriers raise concern about the rigor  with  which carriers scrutinize 
providers.  This concern is based on the fact that many carrier provider number application 
forms obtain little  information  from provider number applicants.  (See Appendix C for a 
listing  of the types of questions being asked on application forms for DME  and physicians). 
Many carriers limit  applications to a few basic claims questions (name, tax number, address, 
type of provider,  and license number); few ask for additional information.  (See Figure  1 for 
examples of questions asked by carriers.)  By not asking questions beyond basic claims 
information,  a carrier may make incorrect assumptions about the providers  situation. 
Additionally,  several carrier application forms lack professionalism.  Specifically,  the 
application form  may not be professional in appearance(i.e.,  typeset or desktop published). 
Also,  questions may not be 1) presented in a logical sequenceor 2) clear in meaning.  Carriers  Require  Little  Information  From  Providers 
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I Owners name? 
I  a,  I
?r earner unsdlctlons?  al  3 
Figure  1 
0  Little  or no businessownership information is required by carriers. 
Over one-third of carriers reviewed (15) do not routinely  ask for DME  ownership 
information  on the application for assignment of a provider number.  A slightly  higher
number (22) of carriers do not routinely  ask ambulance companies to identify  owners. 
Only 
one carrier requires ownership information  from clinics or professional associations. 
A lack of ownership information  leaves the carrier in a position of not being able to 
determine if the company is controlled or owned by an individual,  group of individuals,  or a 
8  businessentity who has been convicted of a criminal  or sanctionable offense related to 
participation in Medicare and Medicaid. 
Also,  failure to obtain ownership allows providers the opportunity to escapecarrier review of 
provider numbers not identified with the owner(s).  For example, 12 carriers noted instances 
during the past year where businessentities with overpayments or who were on prepayment 
or postpayment review simply ceasedusing the provider number for the troubled business 
and obtained a new provider number from the same or other carriers.  Some providers may 
even use the same employer identification  number @IN),  social security number (SW),  or 
addressbut simply change their name on the new application for a new provider number. 
Without ownership information,  alteration of any identifying  information  (name, EIN, 
address)can disguise the provider enough to obtain a new provider number.  Thus, a 
provider may easily escapecarrier controls. 
Even when ownership information  is required, many carriers limit  ownership questions to a 
single owners name.  Very few carriers require the supplier to identify  all owners, 
individuals with financial interest, directors, and/or officers. 
Carriers have long been criticized for not requiring businessesto disclose ownership.  In 
responseto this weakness, Congresshas passedlegislation (Omnibus Budget Reconciliation 
Act of  1990, P.L.  101-508) providing  the authority for carriers to obtain ownership and 
financial interest information  from suppliers and mobile labs.  Although implementing 
regulations are not yet written by HCFA,  ownership information  should enhancecarrier 
efforts to track problem suppliers.  However, carriers must be required to obtain and use 
ownership information  if the gathering of such information  is to have a real impact on 
deterring fraud and abuse. 
0 	 Ironically,  the least regulated providers are the least scrutinized by carriers when 
applying for a provider number. 
Some nonphysician suppliers are essentially unregulated by State and Federal agencies. 
These entities provide such products as DME,  oxygen*, prosthetics, and other similar types 
of supplies.  The HCFA  does not require carriers to obtain specific information  from these 
providers.  As a consequence,only a few carriers ask for additional application information 
beyond basic information  (e.g., name, address, tax number, phone number) to ensure a 
carriers understanding of the providers request and situation.  Additional  information  may 
be neededto correctly determine payment or utilization  review parameters. 
Some areas not fully  explored by all carriers involve ownership, carrier jurisdiction,  and the 
providers  present and past Medicare activity.  Such information  is crucial as a first  step in 
deterring providers from  gaming  the program (a providers  efforts to maximize 
reimbursement through fraudulent or abusive practices). 
0  Carrier application forms are often missing or not readily retrievable. 
While  few (5) carriers reported not requiring completed applications prior  to provider 
number assignment, many carriers requiring completed applications do not have applications 
9  (hardcopy or microfiche) for many active providers.  For example, Aetna of Georgia 
estimates only 20 percent of providers have applications on file.  The carrier reports, during 
the transition from the prior  carrier to Aetna (1989), files were received incomplete. 
Equicor (North Carolina) estimates from  15 to 20 percent of applications are missing.  Like 
Aetna, Equicor attributes this to the previous carrier which did not always require completed 
applications.  Another carrier, Blue Cross and Blue Shield of Alabama, estimates 15 to 25 
percent of applications are missing becausethe carriers  application process has been in 
place for only 3 years. 
The application document acts as a source record if any questions arise concerning possible 
misrepresentation on the part of the provider.  According to 01 investigators and HCFA, 
such a record is often very important to criminal casesand civil  recovery by the carrier and 
HCFA. 
Additionally,  in our review of documentation supporting providers recently assignedprovider 
numbers, we found some key documentation was lacking.  For example, the carrier may 
have reported verification  of the providers license was done by requesting a copy of the 
license from the provider; however, no license was present in the file documentation. 
Additionally,  if telephone contact with the licensing board was made, most carriers failed to 
document the call.  Our review of documentation for physicians recently assigneda provider 
number, revealed only  19 carriers had adequately documented their method of licensure 
verification, 
Some caniem fail  to Ye@,&pmvider  q@ficahns  prior  to assi@unent of a provider 
number. 
0  Some carriers do not validate provider credentials. 
Several carriers do not validate or document the credentials of Part B providers prior  to 
provider number assignment.  (SeeFigure 2.)  In direct contradiction to Part 4 of the MCM, 
six carriers make no attempt to validate a solo practice physicians license.  The MCM 
(1001.3) specifically states, at a minimum,  carriers wilI  verify  all physician submitted data 
with  the appropriate State licensing board to determine if the physician is registered and 
licensed to practice.  An additional three carriers do not validate credentials of a physician 
in a group or clinic.  Again,  these carriers are not in compliance with MCM  instructions 
which specifically require credential verification  regardless of whether the physician has a 
solo or group practice.  
Carriers report validation is not done primarily  becauseof a lack of resourcesor funding for 
this activity.  None of the carriers attributed their failure to validate a medical physicians 
license to lack of cooperativenessby the applicable State medical board.  During our 
discussions with these State medical boards, each reported it could and would respond in a 
timely  manner to carrier attempts to verify  a license. 
The MCM  does not specify the methods by which carriers must verify  provider credentials. 
As a consequence,the methods used differ  between carriers.  Most carriers verify  a 
providers  license and registration from a board listing of licensed providers.  Other carriers 
10  either contact boards directly or request a copy of the license or registration from the 
provider.  (See Figure 2.) 
Provider 
I Two caniera  requimd  no nwihttion  since  State does  not recognke  PAS  Source:  Camw  Survey  (37 respondents) 
Figure  2 
The MCM  (2070.2) requires carriers to obtain listings from boards for some provider types. 
For example, carriers are required to secure from the State licensing agency a current 
listing  of psychologists holding the required credentials.  We found several carriers not 
maintaining such a listing.  They either contact the board for verification,  accept a copy of 
the license from the provider,  or do not validate the license.  Further, the MCM  does not 
specify how often the listing  must be updated. 
0  Many carriers allow reassignmentof benefits without determining if  the reassignment 
meets Medicare legal requirements. 
Carriers are limited  by Medicare law in paying assignedbenefits.  Payment is made only to 
the physician or other supplier who furnished the service and may not be made to any other 
person or organization under a reassignment, or power of attorney, or under any other 
arrangement where the other person or organization receives the payment directly.  Payment 
is considered to be made directly to an ineligible  person or organization if the person or 
organization can convert the payment to its own use and control without  the payment first 
passing through the control of the physician or other supplier or a party eligible  to receive 
the payment under reassignment exceptions.3 (See Figure 3.) 
11  Reassignment  Exceptions 
1) 	 Payment  to  Employer  - The  Medicare  program  may  pay  the  employer  of the 
physician  or other  supplier  if the  physician  or other  supplier  is required,  as a 
condition  of  his  employment,  to  turn  over  to  his  employer  the  fees  for  this 
services. 
2) 	 Payment  to  Facility  - The  Medicare  program  may  pay  the  facility  in  which  the 
service  was  furnished  if there  is a contractual  arrangement  between  the  facility 
and  the  physician  or other  supplier  under  which  the  facility  bills  for  the 
physicians  or other  suppliers  service. 
3) 	 Payment  to  Organized  Health  Care  Delivery  System  - The  Medicare  program 
may  pay  an organized  health  care  delivery  system  if there  is a contractual 
arrangement  between  the  organization  and  the  physician  or other  supplier 
under  which  the  organization  bills  for  the  physician  or other  suppliers  services. 
4) 	 Payment  to  a Governmental  Agency  - Medicare  law  does  not  preclude 
reassignment  to  a governmental  agency  or entity  which  qualifies  for  payment 
under  1, 2 or 3 above  as an employer,  facility,  or organization. 
5) 	 Payment  Pursuant  to  a Court  Order  - Payment  may  be made  provided  the 
conditions  set  forth  in the  Medicare  Carriers  Manual,  Part  II,  5304  are satisfied. 
6) 	 Payment  to  an Agent  - The  Medicare  program  may  make  payment  in the  name 
of  the  provider  to  an agent  who  furnishes  billing  or collection  services  for  a 
provider  or entity  authorized  to  receive  payment. 
Figure  3 
Although reassignment exceptions should be testedprior  to the assignment of a provider 
number, many of the carrier application forms reviewed do not question the provider 
concerning which reassignment exceptions are met.  Only  15 carrier application forms 
attempt to test the reassignment exception.  For example, Texas Blue Cross and Blue Shield 
requests the applicant to specify if an employee-employer relationship exists.  (A W-2 would 
indicate such a relationship, whereas a 1099 indicates a contractor relationship.) 
Additionally,  11 carrier group/clinic  application forms involving  reassignment do not provide 
a signed acknowledgement of reassignmentby group or clinic  members. 
Weak ptvvider  number assi@tmentpmcedum  contribute to pmgmm  vdnembilities. 
0 	 Carrier methods or practices to identify  all provider numbers assigned to a provider 
are inadequate. 
Carrier controls to identify  all provider numbers assigned to the same entity are insufficient. 
Most carriers make little  effort  to link  related provider numbers.  Only five carriers link 
related provider numbers with a computer linking  tag and only sevenother carriers link 
provider numbers through their process of building  off of a base number (modifiers added to 
12  base number).  These linking  procedures make determination of a providers  numbers a 
relatively  simple matter in most cases. However, in order for the linking  process to be 
complete, the carrier must determine all provider numbers related to a provider at the time of 
provider number assignment. 
Other carriers rely on manual and/or computer searching for related provider numbers for 
the same provider.  Searching may be done by name, SSN or EIN,  license number, 
ownership, UPIN,  or address(or a combination of these).  However, carriers typically  do 
not employ all available searchcriteria to identify  related provider numbers.  Such limited 
searchesallow  for the possibility  of missing a related provider number.  For example, a 
name search on a businessmight not identify  a supplier with  several provider numbers under 
differing  names (e.g., Allied  Medical Supply, AMS,  Allied  Supply).  Additionally,  although 
the provider number department may routinely conduct adequatesearchesfor provider 
numbers, other carrier departments (e.g., overpayment recovery, medical review) may not. 
Requesting on the application all additional provider numbers the provider number applicant 
now has or has had with w  carrier is a good practice.  Many (24) carriers reported 
requiring providers to identify  any other provider numbers issued by their carrier.  However, 
only  12 carriers report asking for any numbers providers have with other carriers. 
There was no indication in provider files reviewed of searchesfor additional provider 
numbers.  Consequently, we have no documentation of the extent of review effort employed 
by carriers.  We do lmow,  from talking to carrier personnel, at least one carrier makes no 
effort to check for additional provider numbers, relying  solely on the provider to list on the 
application any existing provider numbers. 
0  Providers can manipulate multiple provider numbers and jurisdiction  rules to increase 
reimbursement or avoid detection of abusive practices. 
Medicare utilizes a system of provider payment based on historical fee patterns and carriers 
discretionary definitions of geographic pay localities, provider specialty, and other payment 
variables.  This process results in payment differentials among types of procedures, carrier 
pricing  localities,  specialties, and sites of care.  Additionally,  differences exist in carrier UR 
policies.  Combined, these factors create an environment where incentives exist for providers 
to misrepresent themselvesor take advantageof regulatory or carrier loopholes in order to 
maximize reimbursement or avoid detection of abusive practices.  Two areas especially 
vulnerable to abuse are manipulation of provider numbers to avoid program integrity  review 
and manipulation of claim jurisdiction  rules. 
Providers with  multinle Drovider numbers can weaken a carriers oroaram inter&v  activities. 
Many of the program integrity  staff interviewed report usageof multiple  provider numbers 
make medical and utilization  reviews (MRKJR) more difficult.  A provider  with  multiple 
provider numbers can knowingly  or unknowingly,  evade some utilization  screens(e.g., initial 
office visits) and possible prepayment or postpayment reviews if all of the providers 
numbers are not identified  for review and used in the review process. 
13  One of the primary purposes of postpayment UR is to compare the pattern of practice of 
individual  providers with that of their peers in several separatecategories of services, such as 
office and hospital visits.  This review involves the computer generation of the previous 
calendar years paid claims data for all providers in the carriers service area.  Since the 
profiles make comparisons to other like providers and predefine4 limits,  the failure of the 
carrier to assemblea providers fulI  service history through its computer could produce 
misleading results.  Specifically,  the UR report may not reveal an existing aberrant practice. 
For example, a provider with  several provider numbers may spreadbillings  among the 
provider numbers so that any one provider number will  not exceed a UR screen threshold; 
yet, when combined, may exceed the threshold. 
Complicating the adequacyof program integrity activity as well as provider number 
assignment may be a lack of knowledge of each departments concerns and activities.  Only 
four carrier program integrity  respondentsstatedthey were more than somewhat familiar 
with assignmentprocedures.  Additionally,  nearly all program integrity  respondentsstated 
more information  should be obtained from providers.  However, provider assignment 
departments may not be informed of or respond to suggestionsby program integrity  staff. 
As one program integrity  respondent stated, they rarely utilize  our suggestionsfor change. 
A lack of communication and coordination may lesson the effectivenessof both program 
integrity  functions and the adequacyof provider number assignment.  Since each area may 
encounter different problems where improvements in the assignmentprocesscould alleviate, 
both should maintain close ties.  Additionally,  this should apply to other areasaffected by 
provider number assignmentpolicies (e.g., overpayment recovery). 
Carrier nrovider number aonlication inadeouaciesand weak euidelines allow  manipulation 
and abuse of carrier claim iurisdiction, 
Carrier claim jurisdiction  issues, addressedin the MCM  section 3100, apply to 1) a carriers 
determination whether this or another carrier is responsible for processing the providers 
claims and 2) what pricing locality  within  the carrier should be used.  (See Appendix D for a 
simplified  view of jurisdiction  rules.) 
Many carrier provider number applications do not ask sufficient questions to fully  test 
jurisdiction  rules.  As an example, only  12 carriers determine through their application forms 
if durable medical equipment suppliers have salesrepresentativesin the State.  This is just 
one of many questions which could help a carrier determine proper claim jurisdiction. 
Failure to ask such questions could causethe carrier to make an incorrect claim jurisdiction 
decision which,  in turn, could result in payments from carriers with  higher reimbursement 
allowances or less stringent UR policies. 
Carriers indicate concern some providers (e.g., DME)  misrepresent themselveswhen 
obtaining provider numbers or manipulate the jurisdiction  rules (e.g., point of sale through 
use of  l-800  numbers or call forwarding)  in order to game the system.  Specifically,  some 
providers forum  shop to find the carrier paying the most for specific procedures or 
supplies and/or has the most lenient utilization  review policy.  Several casesof manipulation 
or abuse have been documented by carriers and 01 investigators. 
14  Manipulation  of  Jurisdiction  Rules 
Use  of  l-800  numbers  typically  involves  a company  in one  state  establishing  a 
l-800  number  in another  State  for  the  sole  purpose  of  obtaining  a higher 
reimbursement  from  the  other  carrier  and/or  avoiding  UR limits.  For example,  an 
Oklahoma  supplier  providing  supplies  to  Oklahoma  residents  may  find  that  California 
has  a higher  reimbursement  rate  per  item.  To  get  around  the  jurisdiction  rules  which 
state  that  the  carrier  for  the  jurisdiction  where  the  order  was  taken  is responsible  for 
processing  the  claim  (point  of  sale),  the  provider  gets  a l-800  number  in  California. 
Instead  of  making  a call  to  the  Oklahoma  supplier  using  a local  number,  beneficiaries 
are directed  to  use  the  l-800  number.  Since  the  point  of  sale  is now  California,  the 
California  carrier  makes  payment. 
An example of DME jurisdiction  abuseunderscoresa lack of carrier controls regarding 
a claim jurisdiction  determination: 
Jurisdiction  Abuse:  A  Case  Example 
This  case  involves  Medicare  Carrier  A.  Carrier  A did  not  recognize  through  its 
application  process,  that  a company  (Company  A)  seeking  a number  was  essentially 
a billing  entity  and  not  a supplier.  Company  A  had  entered  into  a business 
arrangement  with  an ostomy  supply  company  (Company  8) operating  in another 
state  and  carriers  jurisdiction.  Company  A agreed  to  buy  all  invoices  for  supplies 
sold  and  delivered  from  or at  Company  B.  Company  A  pays  Company  B 125%  of 
the  face  value  of  the  retail  price  on the  invoice.  Company  A then  bills  Carrier  A for 
the  supplies  as if they  had  supplied  them  in the  first  place.  Also,  Company  A  is 
alleged  to  be fragmenting  purchased  supplies  in order  to  maximize  reimbursement. 
Both  companies  are  now  under  investigation  by  the  OIG. 
The  carriers  application  process  did  not  identify  whether  Company  A  was  actually  a 
supplier.  Had  the  carrier  scrutinized  the  company  to  a greater  degree,  the  intentions 
of  the  supplier  might  have  been  discovered  during  the  application  process,  rather 
than  after  significant  overpayments  had  occurred. 
Correct determination of claim jurisdiction  may also be an issue with physicians.  For 
example, the definition  of a physicians office for purposes of determining the correct locality 
prevailing charge is vague when the physician provides services in multiple pricing  localities 
with  no clearly defined offices or an office which is primarily  just a billing  office. 
Claim jurisdiction  can be confusing and could be manipulated by providers unless carriers 
carefully  scrutinize provider applications to determine the applicants situation.  Yet,  most 
carrier applications do not request sufficient information  from providers to test for unusual 
jurisdictional  situations.  Consequently, it is possible a carrier would not recognize an 
unusual situation and make an incorrect jurisdiction  decision resulting in overpayments. 
15  0 	 Most carriers do not uniquely identify physician assistantsand thus, cannot perform 
adequateutilization  reviews. 
Only five carriers assign provider numbers to PAS.  Those not assigning PAS a unique 
identifier  number do not have a meansof conducting utilization  review.  Although carriers 
are required to develop charge profiles for PAS, PAS are not subject to the same UR 
monitoring activity on an individual  basis except for a tangential review under the employing 
group or physician. 
While relatively small, the number of PAS has increased the last few years at a rate of over 
2,000 per year nationally.  As of the beginning of this year, there were approximately 
23,500 PAS. 
Dependenceon the supervising physician - PA relationship, the small number of PAS, and 
the requirement that PA servicesbe billed by the physician may explain why many carriers 
have devised provider number assignment schemeswhich do not recognize the PA 
independently (PA given a separateprovider number).  Although many carriers do require or 
verify  a PAs certification or license, 11 carriers do not.  (See Appendix E for a description 
of some carrier methods for processing PA claims.) 
While some carriers do not validate the credentials of a PA,  several more do not determine if 
the physician billing  the Medicare service is in fact the supervising physician pursuant to 
State registration requirements.  An example of such registration requirements exist in Ohio. 
An Ohio PA is only allowed to practice as an employee and under the direction of a 
supervising physician or group of physicians.  Further, PAS must be registered with  the 
applicable State board.  Section 4730.02(f) of the Ohio Revised Code states, when the 
assistantceasesto be employed by the physician or physicians to whom his certifkate  of 
registration is issued, his registration is immediately suspended. 
0  Carrier computer records maintained on providers need improvement. 
Especially in the caseof computer matcheswith State medical boards to determine legal 
authorization to practice, certain carrier records must be entered accurately.  Two fields are 
especially important - provider name and license number. 
Provider name irregularities  exist. 
Review of carrier provider files at the three carriers visited revealed carriers enter the name 
as given by the provider on the application.  For example, one provider might be listed as 
Robert Stanley Smith Jr. on his license, while the carrier might have entered the name as 
Rob Smith or R. Smith on the carriers file.  Additionally,  we saw many providers with 
multiple provider numbers having different name variations for the same provider. 
Another problem,  noted by the Physician Registry, involves hyphenated names.  Some 
carriers have entered hyphenated names in their computer system in a manner complicating 
16  matching with  the Registry.  As an example, a carrier might submit records having 

hyphenated names where the fust part of the hyphenated name is in the last name field while 

the rest of the name is in the suffix field.  This makes computer matching of the name fields 

very difficult  according to the Registry. 

The situations mentioned above create unwarranted confusion not only for computer matching 

but for anyone reviewing provider records. 

Provider license numbers are missing or inaccuratelv entered, 

License numbers facilitate communication with licensing agenciesconcerning providers who 

have lost the legal authority to practice.  Specifically, it is a crucial data element for 

computer or manual matching which might occur with data supplied by a State licensing 

agency or board. 

While few carriers do not record provider license numbers in the providers computer 

record, a considerable number of carriers have only recently begun this activity. 

Additionally,  several carriers do not enter the license number for all types of providers.  For 

example, 13 carriers do not enter the license number of an independent clinical psychologist. 

This compares to only two carriers not entering the license number of a doctor of medicine. 

Even if  the license number is entered, carriers may not be ensuring the accuracy of the 

number.  To illustrate,  in the three carrier provider Nes reviewed, we encountered error and 

inconsistency in the recording of license numbers.  Transposing digits of the number was the 

most frequently encountered error.  To a lesser extent, some license numbers were 

incomplete, had too many digits, or included inappropriate prefixes. 

Many  caniers  assign adZtional  provider  numbers solely for  a ptwiders  bookkeeping 

convenience. 

Several situations can allow a provider to legitimately  have more than one provider number 

(or modifier  to a base number).  Carriers give a physician who practices in both a group and 

a solo practice a number for each.  If  a provider has a practice in more than one reasonable 

charge locality,  carriers assign the provider different provider numbers or modifiers to an 

existing provider number for each of these localities. 

However, a solo provider with  the same specialty and practice in the same pay locality  can 

have only one customary charge profile  regardless of the number of offices maintained 

@KM  5209).  Some carriers interpret this to mean the solo provider may have only one 

provider number per pricing  locality.  To give the provider more provider numbers would 

perform only a bookkeeping purpose for the provider since payment would be the same if an 

additional provider number were given. 

On the other hand, some carriers appear to have fewer limits  on the number of provider 

numbers or modifiers given to a provider.  For example, a physician with  multiple  office 

17  settings in the samepricing locality  could be given an additional provider number or a new 
modifier  to a base number for each unique address. Also, if the payee or tax identification 
number under which payments are recorded is different, the carrier assignsdifferent provider 
numbers. 
As one carrier medical director stated, it appearswe are being asked to act as a bookkeeper 
by providing  multiple provider numbers.  One example cited by the director involves 
multiple provider numbers assignedto a radiologist in order to segregatepayments for his 
professional servicesas opposed to payments to the sameradiologist for technical services 
where the equipment may be owned by a different entity.  Several carriers reported that 
giving multiple provider numbers was just a matter of courtesy to the provider. *  One 
carrier cited specific direction from its accounting department to give multiple provider 
numbers for eachphysician practice location. 
Figure 4 depicts the different carrier practices in assigning additional provider numbers (or 
modifiers to a base number) to the sameprovider.  It also shows some carriers treat certain 
types of providers differently  when assigning additional provider numbers for the 
bookkeeping purposesof the provider. 
Many Carriers  Give Additional Nunbers  for 
the Providers Bookkeephg  Convenience 
Carriers 
1A 
DME  Ambulance 
Source:  Carrler  Survey  (23  rerpondentr) 
Figure  4 
Data supplied HCFA  by the Physician Registry confirms many physicians do have more than 
one provider number.  (See Figure 5.)  Over fifty  percent of medical physicians (doctors of 
medicine or osteopathy) have multiple carrier records at the same or other carriers.  The 
HCFA  refers to such records as active practice settings. 
18  Many  Medical  Physicians  Have  Multiple  Provider  Numbers 
with  the  Same  or  Multiple  Carriers 
Carrier 
rlumbers/  Four  or More 
Records  One  Carrier  Two  Carriers  Three  Carriers  Carriers  Total 
1  187,618  46.3%  0  0.0%  0  0.0%  0  0.00%  197,616  46.3% 
2  92,651  21.7%  28,738  6.7%  0  0.0%  0  0.00%  121,380  28.5% 
3  36,561  8.6%  16,600  3.9%  1,331  0.3%  0  0.00%  54,692  12.8% 
4  15,405  3.6%  8,483  2.0%  1,083  0.3%  75  0.02%  25,056  5.9% 
5  7,246  1.7%  4,338  1.O%  631  0.1%  79  0.02%  12,286  2.9% 
6-10  7,966  1.9%  5,028  1.2%  804  0.2%  145  0.03%  13,943  3.3% 
Ii-46  786  0.2%  581  0.1%  82  0.0%  33  0.01%  1,504  0.4% 
Total  358.237  84.0%  63,979  15.0%  3.851  0.8%  332  0.08%  426.499  100.0% 
source:  Preliminary  UPIN  data  presented  by HCFA  researchers  at the  118th  Annul  Meeting  of the 
American  Public  Health  Association,  October  I,  1990. 
Figure  5 
Variation  exists from carrier to carrier concerning the average number of active records 
(practice settings) for physicians with UPINs.  Carrier averagesrange from a low of 1.05 to 
as many as 2.49 provider numbers (practice settings) per physician.  (See Appendix F.) 
While many factors such as the number of carrier pricing localities or local physician 
practice patterns may help to explain carrier variations, carrier easeof assigning multiple 
provider numbers is surely a significant factor. 
Interestingly,  we found three carriers with  multi-state jurisdiction,  and the States averages 
were vktually  identical.  (See Figure 6.)  This finding  underscoresthe impact a carriers 
provider number assignment policy  can have on the average number of provider numbers per 
physician. 
Carrier  Policy  Impacts  Provider  Numbers  (Records) 
.:.  ~......:...: :.::.--.:....:.:.::.:::  ..  
., !..: 1: ..: ?I:::I~:j]l:~:/~~:~f<:...-&fii&  f??I::::::J:,~;::::~:fi~  :I:: ~:.~~:~:::~:~,:::j  J  Uris&  ction  Avg.  Xdrocords 
::..   : ..:    ,. ;,.  :.  :.  ::. .  :  :.  .,.  per  Physician 
Nationwide  Mutual  Insurance  Ohio  2.20 
West  Virginia  2.35 
Aetna  Life  and  Casualty  Oklahoma  1.32 
New  Mexico  1.32 
Blue  Cross  and  Blue  Shield  of Arkansas 	 Arkansas  2.14 
Louisiana  2.14 
Figure  6 
19  RECOMMENDATIONS 
The HCFA  should: 
0 	 specify a minimum  framework for provider number assignment to be followed by all 
carriers.  Within  this framework carriers should be allowed flexibility  for 
implementation.  Additionally,  this framework should recognize similarities and 
distinctions between types of providers.  Some areas to addressinclude: 
the minimum essential data elements carriers are to maintain in their computer 
systemson providers, 
other information deemed necessaryor valuable for the carrier to obtain from 
providers during the provider number application process, 
provider information  to be validated and the method(s) of verification,  and 
carrier responsibility to: 
maintain a list of all Part B provider types with corresponding Federal, 
b 	
State and local laws affecting legal authority to practice and the 
carriers methods of verifying  legal authority.  Carriers should be 
required to maintain communication with appropriate agencies (e.g, 
licensing) adequateto understandand monitor changesin legal 
authorization requirements. 
ensure, before issuing a provider number, adequatedocumentation on 
b 	
each provider number assignmentincluding: 
1) 	 a completed application (containing a penalty clause for making 
false statements)signed by the individual  provider;  the owner, if 
a business; or a company official,  if a corporation, 
the method and contacts used to verify  the providers 
2) 	
credentials, 
3) 	 a list of all other provider numbers assigned the provider  (the 
carrier should determine the need for continued use of identified 
numbers and document justification  for the new number), and 
4) 	 the specific reassignmentexception(s) applicable as well as a 
statement, signed by the reassigning provider,  acknowledging 
the reassignment. 
20  query the Registry, prior  to assigning a provider number, for all active 
b 	
records/practice settings listed for the specified physician.  The carrier 
should ascertain a providers need for identified provider numbers and 
deactivate those not neededin their jurisdiction.  The carrier should 
notify  other carriers where numbers exist.  Also, if an existing number 
is flagged for any type of carrier review, the new provider number 
should be considered for possible review as well. 
maintain relevant application documentation (e.g., application form) for 
b 	
active provider numbers. 
verify  provider qualifications. 
b 
have adequatesystem controls to 1) identify  all provider numbers 
b 	
assignedto a particular provider and 2) ensure providers with  multiple 
provider numbers cannot avoid prepayment review or screens, 
postpayment utilization  review, and overpayment recovery. 
identify  all providers (e.g.,  physician assistants)adequatefor 
b 	
utilization  review on an individual  basis. 
update (at least) annually any listings used for license verification. 
b 
identify  the ownership of providers and maintain such information  in 
b 	
the carriers computer system in a manner ensuring identification  of 
entities having the same owners.  Carriers should review the ownership 
databasefor sanctionedindividuals or entities. 
maintain provider records which are complete (e.g., license number 
b 	
entered in file)  and consistent (e.g., name field should carry the same 
spelling in each record pertaining to the provider). 
evaluate their provider application forms to ensure they are well 
b 	
designed, easy to understand, and professional in appearance. 
ensure coordination between the provider number assignment staff and 
b 	
other departments (specifically,  those for program integrity  - medical 
and utilization  review) for the sharing of experiences and suggestions 
for improvements to provider number assignment procedures. 
0 	 consider implementation of a system of user fees to defray the costs of provider 
number assignment and maintenance (e.g., determination of legal authorization to 
practice, Physician Registry contact for prior  or present practices, more extensive 
review of applicants, assignment of additional provider numbers for a providers 
convenience, and efforts to update records). 
21  0 	 expand the Physician Registry to include non-physician practitioners such as clinical 
psychologists, audiologists, nurse anesthetists,midwives, physical and occupational 
therapists, nurse practitioners, physician assistants,and clinical  social workers. 
require the Physician Registry to provide feedback to carriers concerning all active 
0 	
practice records (settings) for physicians with unique practitioner identifier  numbers. 
0 	 ensure carrier implementation of HCFA provider number assignment directives.  We 
recommend HCFA  consider evaluating implementation through a Contractor 
Performance Evaluation Program (CPEP) standard(s). 
HCFARESPONSEAND  ACTION  PLAN 
The HCFA  provided written comments on the draft report.  More importantly,  however, 

HCFA  itself has undertaken several major initiatives to addressthese problems and related 

issuesraised in a prior  OIG report entitled  Carrier Maintenance of Medicare Provider 

Numbers.   We and HCFA,  therefore, worked together to reach agreement on an action plan 

to improve the provider number process. In light of this, we are no longer designating the 

problems cited in this and the prior  report as a material weakness. The following  is the  ~ 

agreed upon action plan: 

MEDICARE  PROVIDER  NUMBERS 
ACTION  PLAN 
GEh?ERAL 
HCFA will  issuea modification to the Medicare Carrier Manual which will: 
Clearly statethat carriers have a responsibility to ensurethe integrity of 
provider numbersandto ensurethat only thosepractitioners andproviders 
with  legal  authority  to  practice are given  and may  retain  provider 
numbers. 
. 
Require carriersto stayabreastof changesin relevant laws and regulations 
concerningmedical practice requirements. 
Require carriers to make every reasonableeffort to receiveon an ongoing 
basis information from State licensing authorities and other appropriate 
bodies about the currency of licenses. 
Require carriers to maintain provider number applications for at least six 
years after deactivation of the number (the period needed to facilitate 
22  investigations,  prosecutions,  and sanctions).  This requirement  pertains to 
applications  from both health professionals and provider  entities which  are 
discussed separately below. 
Require carriers to periodically  purge from their lists of approved numbers 
those that  have been inactive  and for  professionals  or  entities  who  no 
longer have valid licenses required  by the State. 
EEALlTl  PROlTESSIONALS 
HCFA  will  continue  to vigorously  implement  and enforce  compliance  with  the 
provisions  of  the  recently  established  UPIN  system  for  Medicare  physicians 
(which  includes medical doctors,  osteopaths, dentists,  chiropractors,  podiatrists, 
and optometrists). 
HCFA  will  explore the extension of the UPIN  system to cover all limited  licensed 
professionals  that can bill  Medicare  directly.  HCFA  will  provide  a schedule for 
doing  so.  This would  include clinical  psychologists,  clinical  social workers,  and 
certified  registered  nurse anesthetists. 
All  registry  data will  be made readily  available to all carriers on January 1. 1992. 
(Procedures  prior  to that date only  allowed  carriers  to obtain  information  about 
professionals  within  their own jurisdiction.) 
HCFA  will  monitor  and ensure compliance of the carriers with  their responsibili
ties regarding  provider  numbers as set forth in the Medicare  Carrier  Manual.  (See 
GENERAL section above.) 
SUPPLIERS 
HCFA  will  implement  a major  reform  of  the carrier  process for  dealing  with 
certain  suppliers.  (Here,  the term  is meant to include  entities  which  provide: 
durable  medical  equipment,  routine  and readily  available  supplies,  prosthetics, 
orthotics,  immunosuppressant  drugs,  and ESRD  services.) 
Some of the more important  features of this initiative  are: 
Four regional  carriers will  be responsible for establishing supplier numbers 
and processing  all Medicare  claims for the above mentioned  supplies. 
A  clearinghouse  which  will  contain  information  from  supplier  number 
applications  and whose data will  be accessible to all of these carriers. 
A  standard  application  form  which  includes  information  to  enable  the 
carriers  to identify  each unique  entity,  their  ownership,  related  entities, 
and sanctions. 
23  The  application  form  will  contain  a signed  statement of  the  applicant 
attesting to the veracity  of  all  information  provided  and acknowledging 
responsibility  for false or misleading  statements. 
The  carriers  will  be responsible  for  processing  all  claims  for  supplies 
furnished  to beneficiaries  who reside within  their jurisdiction. 
HCFA  plans to implement this major reform  within  the next two  years. 
The statement of work  for the contract under which  these carriers  will  function 
will  include  a clear  statement of  responsibilities  concerning  supplier  numbers 
similar  to those listed in the GENERAL,section above. 
These carriers  will  be required  to use the information  in the  clearinghouse  to 
screen  applicants  for  supplier  numbers  for  such  things  as  relationships  to 
sanctioned individuals  or business or to businesses suspected of fraud or abuse. 
The  carriers  will  verify  the  accuracy  and  completeness  of  the  information 
contained  in  supplier  number  applications  and files,  and will  identify  and take 
appropriate  action against problem  suppliers. 
HCFA  will  vigorously  monitor  compliance of these carriers with  those contractual 
provisions  related to the application  for, granting  of, and maintenance of supplier 
numbers.  HCFA  is determining  how the performance  of these carriers  will  be 
evaluated. 
HCFA  will  require  carriers to reenroll  all suppliers every two years to insure that 
the ownership  and operating  information  remains current. 
In the future,  HCFA  will  extend this system to cover other supplier  entities such 
as independent physiological  labs, magnetic resonance imagers,  and ambulance 
companies.  In  the  meantime,  however,  these other  supplier  entities  will  be 
required  to  use  a  standard  application  form  with  provisions  for  identifying 
ownership  and sanctions, and including  the signed veracity  certification. 
24  Endnotes 
1 
Only a few statesmonitor medical suppliers.  One state, North Carolina, requires places 
dispensing prescription devices (e.g., TENS units, support hose, catheters) to register 
with the State Board of Pharmacy.  An application must be completed before a permit is 
issued.  The person issued the permit must supply such information  as his education, 
home address, social security number, criminal  history, employment history, and photo. 
New York  is pursuing legislation to provide similar authority to its pharmacy board. 
Although the Board assignspermits, the Medicare carrier for North Carolina does not 
verify  a suppliers permit prior  to assigning provider numbers. 
Another state, California,  has passedlegislation giving the Department of Health 
Services (Medi-Cal Prograrh) the authority to require more involved information  from 
suppliers of incontinent supplies (e.g., diapers).  For example, suppliers must have a 
retail businesslocation (not a P.O. Box) and,inventory.  Additionally,  operators are 
required to supply such information  as owners, interested parties and the drivers license 
numbers for names reported.  Suppliers misrepresenting themselves through either the 
application or supporting documentation are subject to criminal  penalties of up to 5 years 
in jail  and as much as a $500,000 fine.  A State official  reports efforts to have the law 
amended to apply to other types of suppliers (e.g., durable medical equipment). 
2 
Suppliers such as DME  often provide oxygen and other medical gasesto beneficiaries. 
If  the supplier repacks (transfills) the gases, they are required to register with the Food 
and Drug Administration  (FDA).  FDA  conducts annual inspections of registered 
suppliers.  Although it is a criminal  offense not to register, FDA  has not sought 
prosecution.  Suppliers who do not register are not inspected and therefore, are not 
required to correct violations of FDA  regulations nor stopped from providing  gasesif a 
danger to the public exists.  None of the carriers contacted require FDA  registration 
certificates from  suppliers.  In fact, no carriers application form even asks the supplier 
whether they repack gases. 
3 
A new reassignment exception has been recently added.  The exception allows 
physicians covering the practice of another physician to reassign payment to the absent 
physician for a specified period of time.  APPENDICES 

Appendix  A:  Part  B Providers 
Appendix  B:  Carrier  Respondents  and  State  Jurisdictions 
Appendix  C:  Examples  of  Information  Requested  on  Application  Forms  for 
DME  and  Physicians 
Appendix  D:  Claim  Jurisdiction  Rules  Simplified 
Appendix  E:  Examples  of  Carrier  Methods  of  Processing  PA  Claims 
Appendix  F:  Physician  Registry  Activity  by  Carrier 
Appendix  G:  Carrier  Provider  Number  Assignment  Activity 
Appendix  H:  Carrier  Supplied  Counts  of  Various  Types  of  Providers 
Appendix  I:  HCFA  Comments  to  the  Draft  Report  APPENDIX  6 
Part  B Providers  APPENDIX  I$ 

*  l  Blue Cross and Blue Shield of Alabama  AL 
 Alabama 
*  *  Aetna Life and Casualty AZ, NV 
 Arizona, Nevada 
*  *  Arkansas Blue Cross and Blue Shield, Inc.  AR,LA 
 Arkansas, Louisiana 
* 	 *  Blue Shield of California  CA 
 California 
*  Transamerica  Occidental  Life Insurance  CA 
 California 
Blue Cross and Blue Shield of Colorado  co 
 Colorado 
*  Travelers Insurance  CT 
 Connecticut 
*  **  Blue Cross and Blue Shield of Florida, Inc. FL 
 Florida 
I  1Aetna Life and Casualty IGA 
 1Georgia 
*  *  Aetna Life! and Casualty 1HI 
 1Hawaii 
*  *  Equicor 1ID 
 1Idaho 
*  *  Health Care Service Corporation I IL 
 I Illinois 
*  Associate d Insurance  IN 
 Indiana 
l  Blue Shield of Iowa  IA 
 Iowa 
*  Blue Cross and Blue Shield of Kansas  KS 
 Kansas 
*  Blue Cross and Blue Shield of Kentucky IKY 
 1Kentucky 
* 
Blue  Cross  and  Blue  Shield  of Marvland  1MD 
 1Marvland 
I  *  I  *  1Blue Cross and Blue Shield of Massachusetts  1M	 A, ME 1Massachusetts,  Maine, 
VT,NH  Vermont,  New Hampshire 
*  * 
Blue Cross and Blue Shield of Michigan Ml  Michigan 
*  * 
General American  Life  MO  Missouri 
* 
l  Blue Cross and Blue Shield of Kansas City  MO,KS  Missouri,  Kansas (Johnson  and 
I
** Blue Cross and Blue Shield of North Dakota has assumed responsibility  for Wyoming from Equicor.  APPENDIX  6 
Information  Requested  on  Application  Forms  for  DME 
..i.,:,i.....~:>.,..:.. .. .:~.: .:, .  . i.:....:i....:..; :...>) .:   .ii ..,,.)l: .,..,:.,.i:,,..i~ ... :.l .,.:.:  . :. ;.,..:j: . ..,..i:: .!.:.  ....  .;.i~  -..: j .:, ..i. . ::..: i.:. ...:..,.j....i-i::. .: .   :i.,  , .:,..?. i:j::..,.: ..;.::.:.,:,..,,,~,.,.,.jl..:.,.:. ,,,; i.;::,::..:...:~..:,,: .::.,.:.,.,; ,:../.,,::. :.,.. .:~,,,:.,::..:.:. ..,  . :_;: .:,: .::,. ,. .,~. : ...): ...,..c. .. h.:, .:: :: ... .;.j.:,~.:.:.:,.,) .:...:i.,... : ..-,:  .,,..   .,.: .: ~: .:,. ...:. .,  . i:, , ;, ,: .~ :,.:..:, :): ,::~l.F:.:f..:..:ij...~:,..,:.~::.i.3.i..y,.:....~.:::.::~),:.1,....:.,:,.,~:.:.j.~ ... 1:::::..).:.i.:~~..~/.)/::: :...:) ~.  :m .:j/ , ./.,.~:: .:q:.:..~.:::., :. .@..::..~:y::. .::::.:.:~ :.::..::.&:.:: .. ..: .~: :: : :...:: ::. ..:~:..:::::. ::.j::.~x..j..  :.j:,.~j, ::..:.jj: :j...j~c.. :::.. .:::::. ~.. : .::j :.:.;:::.~.:.i.j:..:.:.K :...~::ij:.. .:.:;...:j,:i j::i: :  .;...;:j~.j;.:;.:jj::: , i: 5).::j~.::j:):::..;,j::::..:j~,:..;..:::: . j ;:1  j ..:..:.:< : ~ :..:..:...:k:.:. .:.:: :j :: ~,y::?.::..j  .:.$.,:;.:,: .:;..: :.:,$I:.:,:::.:::....$: ::..:::..:.:3: .:  . ::;.:.::: :j:y..:;:: :...:.,::,...:: ,I.:,,;.::::..$:;:c.i:.$,&z:$;e;,..&:+..:.;,: ;I;.,wC,;..;,& o &unG:t,&c..7 .&P bearctaent
Background/Profile  Information:
:I;;iji,.:s~~~~~~~~:~~~.:~~~~ ./:j)$::..:j;j: :ii:...ij:::y:.: ~;$j:::.II..:.:j.yI, i::l:..;~.i;.;.~:.: i..Y  .jj:iB.. ..: . ..,:.. I:  .:.:: .:::$::I:::j:j,i,,x,:j;..1..;;....;. j:  .::. :y:y I .:.  fj@& 
. ...  . .. . .   . .I 
Doing Business As (D/B/A)
$$,;;;;Bil~ig ~&f&e~,  :::ii:ll:iijr<i$,,$ l:$;:ii;;;i ;;;. .f;: ..:~:~;+.+;:i:/.;;..: ./ . . .;:,I,:;:I $;,  ,.,;::::.l;:::;:,;I, :;I:: ,:,I;;j:;;:;j;j~l:l~:;:l~::::;::~~::~:;,;.,. ~:,::;i~:) li;:j:iii::Ti;::jj  ;.&:,:,:I::;:::I::,:1:.:;1.,,.;y;. .; :A.:.:I!..:xg 
$;jj:Bil:i:!Biin&gG T&e& W,(,mffie~   jJ$.J&@,z:..~. . .. .~ . . . . . :. . .i  . ::;.y..~.; .::.:,.~.x.. . . ,y .;..j  $. !:,I:j:: ...:. ..; . . ;. . .y . . .  .  ..  . ... ;;:::~::i:,:,~..,. ..:;;-::::?:j j:T~/: j;j:;.~$:iji;::i::i,j.;::: I:: .:::..,::i i.j::,.;.:.:::3y$ ...:::;;; ::;: agig
Request  for  Some  Type  of Documentation  with  Application: 

Certification  and  Signature  on Application: 

Type  of Business: 

Questions  Concerning  What  and  How  Services  are Provided:

:~:::l(jn~r-~&&~~~~~~s  tin  mis &g@  :.:. I..: .: :.:.:I)..I  .  : l...  -3% 

y~b&d@,g~lj&ifi&~~\~ 
Does the beneficiary  sign contract  prior to or at the time of delivery,,, 
.g 
:( Does  acontract  indicate  if the  supply  is rental  or putia;sed  .: ...::1.  .. :  ... .I:j:,:.  :1 
is the equipment  provided  both purchased  and rental items or purchaseonly 

How are prescribin  physicians  and benef~iaries  si  natures obtained  :- :z 

The names and ad 3 resses of parties supplying  your B ME equipment

>Do safes representzltlves  aiways have direct onsite contact  with beneficiary  at sale  :- 2 

Are sales made through  catalogs 
 (mailorder)  11% 

Describe how items are .marketed  ;~ 
Describe how orders are received  and processed  (e.g., phone,  mail, or in person) 4  1z 
tf testinq  is performed,  what tape is done and what ohvsician  provides trainino  1  3% 
Ownership,  Financial  Interest,  and  Employee  Questions: 
Owners name  22:  59% 
List ail licensed  practitioners  who are employees,  owners or have a financial  interest 
list  ail licensed  ractitioners  who are cons&ants  or contractors  :~  ii; 
Number  of emp Povees  1  3%  Information  Requested  on  Application  Forms  for  DME  (cont.) 
:...:.. ::. :..(Y .: .: .?.  ..::.,. ::),..f..:., ,..:.. s .:... . ...  :  ..., .::  j:.::. ...  ;,,::: ..:...::,....    ... .. ,.:. . , ,,,,. , .... .~....-:.I ..~,:.f.~., .,..,a::. ..::.t; :i:o.I:,..n,:..j:::.R:::.:e:::.ig::.:..:..u.:::..e. : :s .t.e:,d:.  ,.:  .,: ,,, :.:, ::  ,:.;.:....:.:: . ... . ...:..  :.  .. ~~.;::.;: :.;.;.:.::  .:::.;T. 1,  .,.. . ;?:: .,... ..  I:: .  ?;.:I  .j:  :,:..,,,  ,.::I:.  : w,  ; :;  pe&.jt
::;::.::.l:.l~..::~:...:.I: ,.;,;:;,,,?::..,..:::.::)  . ..  .: ., 
: .:  ..... :: :: .. 
Billing  ,C+estions:
~;:::::;$is-~~b;lie~&ge   u&  (p,i:.o.. in..,;&.. .  t&$&me  and $jdEs)  .. ..  :  ..  ,:.,  .:.  ..,  ,, fi  -1696 
. . 
Will this.offie  bill by electronic  media claims  11% 
:,:. :i!p*&g#&lbcg;ti;ori  .&~l~ing  @Co&-,  .ji.:j:;:,.    :  :  ;..  ..  ..  .....:...::I;: ,j,:,   .::;.:.:: ...   ..  ...I$..g 
I 
fs a.hospital  your biifing agency  1 
.i,::. :.%,bg&$&  eentra  u,rjg  :&jje,-,,, %:..,,  ;.  ..  ..  ::  :  j  ....  .., , .j... ....:.;g
W.il,l. you bill from your corporate  or office address  1  3% 
:j ::  :  :.:;.%% 
Am.b&hMediwre  and NonMedicampaknts  charged  the same for the samest&vices  .. 
Will YOUbe biiiina for patients located in other states  3  8% 
Participation  Status  Question$;.
Y$i&  j;ou pmicip~e(jtn.#&d&&ythe  &&  ...   :,. .;.... y...;+..  :.  .;  .. ....  ,,, .j.. ..   ~g~.,-:I::~.:y;cr%
:c. 
Do vou accept assionment  (will participate)  2  5% 
Qu,estions  to Determine  Jurisdiction,  Other  Provider  Numbers,  and  Service  Area  :
.. 
.,:Do~~~~iii:other &a.  i+i&r&$com~$jies  :  .:  1  .: :3%. 
Do you have other numbers with this carrier  5  14% 
.....Do  have a.Medic&  number  in~&&&&s  .:,.  ,  ...  , 9..  .::24% 
yo$&&tly  biliihg 
.,Do you bill any of these numbers?  if so! what items are billed at each  1  3% 
: Do~o~+~~ers~oljeratorhsave&y-other  numbers  ...     2 I~  ::tjtg 
Qst ail companies  related to yours which  are or have been Medicare providers  3  a96 
.Arethere any similar companiesin  this State in whichowners  have a financial  interest  3  ..a96 
in what States have you been located and what numbers were used  2
.13: :.  5%
: ., Do j&hab.&f&i.aeli&j  &f&s/l~aQon$  jn the St&$<.:<.:.:c:  35% 
Are you pan of a chain of stores with a centralized  billing  office  3  a96 
.. --~I.:if,yes;shwidcorres~de~e  be sent to the billing  offii  ......::  ...    ..  .  :. ,:.:,.  I :  :3% 
..is this company  a chain store  1  3% 
: ,, fsyou::cdmp~y  . .  .assodi~d  ~  any  other  supply  cOm:p~~:;l:,~.:,  ...  ,  1  :  :a% 
ff yes, what is the numberof  sales outlets, names, .and are charges  uniform  1  3% 
W~all.indi\riduals.~a\iing.a-financialinierestin  your companytio  have been in Medicare  2  :5% 
Do,you have a branch  office in this State  1  3% 
.~::~::l&~&r?&ffi~@&:&&i&f!&  ~ain~ff@  ,,.,,,,,j;  j  ..   ::,,;,,  .. 
..1:  3% 
is,yw  firm a branch  office or muiti-state  supplier?  if so, where are billing  and tax records  1  3% 
..Doywhave  saiesrepresent&esin  this state (gNe names, addresses  and phone  %s)  12 
What is the name of your parent company  2  5% 
;Are yw  hospital  6-d  ;:ji  ;, ,:$.; ::  2~  5% 
is a member of this entity currently  employed  by another state or out-of-state  company 
in a management,  accwnting,  auditing,  or similar capacity  2  5% 
Questions  Concerning  the  Suppliers  Past: 
Datethis  business  started (or first started providing  services)  12  32% 
Have you recently  terminated  your association  with any supply  company  in this area  1  3% 
Was this company  purchased  (give business  name, previous  owner and  1  3% 
were accounts  receivable  purchased  by you)  1  3% 
Have VW had a biiiina  number  in this area  2  5%  Some  Types  of  Information  Obtained  on  Physician  Application  Forms 

3lny provider  numbers  with other carriers 
Will a billing  service  be used  APPENDIX  ti 
Claim  Jurisdiction  Rules  Simplified 
TYPE  SERVlCES  JURISDICTION 
DETERMINATION 
Phvsicim  Servic88 
S8rvic88  r8nd8d  from  m  office  Curiw  88rvicing  offic8  loc8tion 
In a 8ingle  pay  lodii 
S8rvic8s  r8rd8d  from  offic88  E8ch  offic8  8srviced  by 8ppropri8te 
in more  thm  on8  curid  8re6  cmitn  baed  on each  office  location 
No  office,  us- hom8  8ddra8  Home  ad&m  loc8tim 
Servica  provid#l  by ouGd8  bC8tiOll  Of OUt6id8  f8Cikv 
f8cilii  (e.g.,  clinic) 
provide  fdii  bib  for  Lowtion  of provider  f8cilii 
884088  of provide-brd  phricim 
or phy8ici8n8  who  r8nd8r8  88rvic88 
primurily  in provider  fdi 
8etting  18.0..  886x8  p8rfornd 
in  8 hapitd  88tting,  hcepital  bill81 
Provkk-bned  phy8icim  who  m8int8ins  8  Priv8te  office  location 
priV8t8  Office  for  th8  tr88tt,I8nt  Of 
hi6  OW  p8ti8tlt8 
Provider-bad  phy8icim  bilk  Loc8tion  of  provider  f8cilii 
p8tient8  directly  or  through 
billing  86rvice  ~6% doa  not 
h8V8  m  OffiC8  OUt6id8  the 
provide  fdri 
Provider-bm8d  phy8icim  performing  Eech  providsr  f8cilii  loaltion  for 
88rvica  in mor8  thm  on8  ftiri  8ervic86  r8nder6d  therein 
Note:  Pnyeiciens  who meintain  more then one office  cennot  be nzquired to bill from  eech of&e  for the services 
renoked  h  the indduel  offie. 
Suodier  Servic66 
A 8i,,gl8  OffiC8  8Uppli,,r  i6  8 8Uppkr  with  brmdl  OffiC86,88k/rmt8k  OUtkt6,  or  r6qX6J68flt8tiV86  in  only  on8  CMli8r 
jurisdiction.  Multi@8  ~8rri8r  8Uppk6  8r8  thO88  6uppk6  with  brmCh  0fflC66  or  8d88/rmtd  outlstr  in  more  thm 
on8  curkr  g8ogrphic  ~88. 
single  office  rupplier 	 Cmiw  88rvicing  office  loation  regardl868  of  whsthsr 
8uppkN  providm  86rvic86  to  cu6tom6~6  out6ide  the  fxrrier8 
86rViC8  =88 
Multiplbcarrier  8upplkr  Locetion  of  where  the  88rvics  i6 fumi8hd  to  the  beneficiwy 
whsther  or not  the  8uppk  1186s 8 cmtrd  billing  office  (e.g., 
the  8ite  where  the  compmy  met  with  ths  beneficiary  or 
where  the  compmny  received  the  b8n8fiCiq6  c8il  - where 
the  88rvice  we6  furrkhed) 
DME  6upplier  with  branch  offices  Location  Of  Where  purchase  m8d8  or  c8t6h3g  848  or  if  no 
branch  office  or  c8tdogua  outk.  ths  location  Wh8r8  the 
regiond  c8tdogue  center  is  located  md  from  which  the 
equipment  ~166  8hippod 
SUppli8r  Of  pOrtti8  X-ray,  EKG,  Or  Location  of  where  the  rervice  is  rendered 
8i,,Iih,r  pOrt8b,8  88&X6 
Ind8psndsnt  Iabor8tory  Locstion  of  Wh8r8  the  labomtory  tmt  is  performed  APPENDIX  E 

Some  Carrier  Methods  of  Processing  PA  Claims 
One carrier reviewed (BC/BS of Minnesota) assigns a provider number (e.g., POO5)to 
physician assistantsalong with a group number to the clinic or group employing the 
PA.  Those responsible for filing  any claims are told to include the PAs number in 
item 24H of HCFA  form  1500 to indicate the performing  provider.  The supervising 
physicians name is to be placed in item 24C and the name and provider number of the 
group or clinic is to be included in item 31. 
Some carriers like Nationwide of Ohio, do not assign a number to a PA, but rather 
flag a supervising physicians number (e.g., Ohio uses flag 54) to indicate to the 
claims staff that the provider number department has verified that a licensed PA works 
for this provider.  A carrier official  said that claims should indicate who the PA is that 
did the service, but is not required for the claim to process.  However,  even if the PA 
is identified on the claim, a claim representative processing the claim could only 
ascertain from the computer that the supervising dot has a PA employed.  Only the 
Flag indicator is accessible. Consequently, if a physician employed more than one PA 
or a new PA replaced the PA which was approved by the provider number 
department, the carrier would have no knowledge of what PA performed the service. 
Like  Nationwide,  Aetna of Georgia does not assign a number to PAS.  However the 
carrier does require the claim to indicate the physician assistant whos  qualifications 
are verified  at the time of claim processing.  A claim representative is instructed to 
enter the first 4 characters of the physician assistants name, the first initial of the first 
name, two spaces and the first three initials of the supervising doctors name.  If the 
physician assistant had been previously credentialed by the carrier (license or 
certification  verified) the claim would process.  However,  if such a mnemonic check 
reveals the physician assistant has not been set up for this physician, the claim will 
suspend and an application will  be sent to the submitter of the claim.  APPENDIX  i 
Carrier  Registry  (UPIN)  Activity 
Total  UPINs  (  Average  Hecords1 
I .T 
BC/BS  of Pennsylvania  (a)  1.48 
I 
Aetna  Life and Casualty  (e)  ,  ,- ,  . . ,--- -,--- 1.48 
Bc/Bs  of Kansas  1  KS1  5,673  3,801  1.49 
Aetna  Life and Casualty  (e)  N. .V .  
 I1  = 3-,.0--9-8  2,068  1.50
Blue Shield  of Western  New  York  NY  19,931  13.232  1.51 

BC/BS  of Nebraska  NE  4,447 

BC/BS  of Masaachusetta  (a)  NH  4,331 

Blue  Shield  af Iowa  IA  12.305 

lllieor 
k  -.- ID
BCIB!  5 of Pennsylvania  (a)  DC  -,.-- ,  1...-6. 4  I
1 General  American  Life Insurance  Co.  MO  QAlR  I  1.64 

_I
I  ..T,- ,  .-,.- ,  1.70 

12,030  I  6,990 1  1.72 

1.75 

1.75 

Travelen  1  MS  1  7:  4 7c 

BC/BS  of Mervland  1  MD  1  18.1  10,539  I  1.76 

BCIBL  -.  . --- I  T.X_I_   ,  6_[_1.,6_7.1  . I  3__3,_._6. !34 I  1.79  I
BC/BS  of Kanraa  Cii  MO  1I   7. .2,-5-9  ,I  A.O,---R!  1.80 
Equicor  (a)  TN  20,- I  11,117  1.BO 
BC/BS  of Michigan  Ml  1  32,785  1  18,079  1.81 
1 Associated  Insurance  Company  (  IN  I  m-_.,& i.!-5-  I  11,104  1.84 
Heaith  Care  Service  Corporation  IL  s-,P--.?MI  28,397  1.84 
BC/BS  of Pennsylvania  (a)  DE  2,637  IIM,-OI   1  1,  .R-.7  I 
BOBS  of Kentucky  KY  14,811  7,912    1 n7 I 
I._, 
Empire  BC/BS  NY  76,057  39,950 i ,  1.90  1 
Transamertca  Occidental  Life Ins. Co.  CA  a- 36,542  1  1. .8-7-  I 
BC/BS  of Massachusetts  (a)  MA  47,909  24,749  1  1.94  I 
California  Blue Shield  CA  104,248  532 
Equicor  (a)  NC  28,667  13,9c- ( 
BC/BS  of Florida  FL  71,825  =,=  I 
BC/BS  of Arkansas  (a)  AR  11,147  5,216  1 
BC/BS  of Arkansas  (a)  LA  19,900  93  15  2.14 
BC/BS I of Alabama  AL  lQ._.,f_Fi_!i_   I  Q-..-O.8i   2.19 
I Nationwide  Mutual  Insurance  Co.  (a)  OH  -5-3,  A.S-9  ,1  3--2,  R- n- A-   (  7 70
1of Minnesota  MN  9,137  1  4,027  1 
wide  Mutual  Insurance  Co.  (a)  WV  10,016- I  4..2~5~5~1, 
; of South  Carolina  SC  19.2!74  7,733  I 
I 
I10  703,102  1 
- letters  next  to carrier  names  distinguishes  between  same  carrier  but different  management  control. 
Source:  From  data  supplied  the O/G from  the Physician  Registry  12/9o.  i 
APPENDIX  6 

Blue Cross  and Blue  Shield  of Alabama 
Eauicor  I  ID  I  30  I  10  I  5  I  5  I  1 

Blue Cross  and  Blue Shield  of 
Travelers  Insurance  VA  l  l  5  10  t 
Washington  Physicians  Service  WA  130  20  5  5  15 
Wisconsin  Physicians  Service  WI  100  25  7-10  7-10  . 
a 
This value  refers  to # assignment  for Pennsylvannia  only  and to newprotiders  from  out-of-state. 
l  Indicates  the camer  did not know 
Source:  Camer  suppfied  approximations  (5/90)  APPENDIX  ki 
Carrier  Counts  of  Some  Part  B Providers 
 Carrier  Physician  Counts  by  Type  and  State 
State  8 Carrier  MDs/DOs  Dentists  Podiatrists  Chiropractors  Optometrists  Clinics 
AL  BIB  6,537  1,609  76  364  60 
AR  BIB  l  3,565  46  301  269  252 
CA  BS  35,634  725  1,357  3,721  1,560  1,770 
CA  TO  21,771  6,194  1,590  3,550  ia  3,069  12 45 
CO  B/B  7,410  1  1,794  1  1431  762  1  3641  131 
CT  Tra  12.195  1  659 1  413  I  !a11  4861  239 
i D-- C  B-.-/B  P__A_   1 *I  --,---5-,.-2-34  II  1.-2-8 I  1..-.2.- 4 I  -1.--0..  1 I  1.-2-61  -jr 5
DE  B/B  PA  *  1,352  I  14 1  341  561  55 1  i4 
FL  B/B  l  26,767  99 
GA  Aet 
HI  rA..m    i  z- 20  125  123 
-IA  BIB l  4,640  343  131  696  536 
ID / B-.-IB 1  l  1,210  16  26  165  74 
IL  BIB  l  17fc7A  RR!!  RRA  l!iR6  Ifs7  Q6R 
IN  BIB  7,923  130  2901  590  1  660 1  320 
,KS  B/B  4,146  1,042  61 1  499  1  3671  373 
KS  B/B  KC  l  970  29  291  loo  I  361  2 
KY  B/B  I  I  8-,.-&--i  1  3--%-   I  9_5.  I  4.3-2-1  A.;-;.  1  Q--i   1 
LA  BIB  AR  t  6,761  526  75  512  342  416 
MAA  BIB  l  19,609  4,256  694  607  1,056  450 
MI D  B/B  6,396  1,475  227  196  221  342 
MLn  R, /q  PA  l  3,443  93  100  71  69  47 
ME  B/E !MA  l  2,401  67  56  161  190  66 
MI  BIB  l  2--3I-.6-70 - 3-,.-0-8-8 7. 9-8- 1.,.7. 68--  1.6,_A.A  5-47.-
,MN  B/B  5,915  613  63  616  439  395 
Ml N Tra  2,695  70  75  440  100 

M( 3  BIB  l  2,829  62  57  342  177  4 

MO  G-A  4.512  3--3- 8  11.8-  a--!-3 9  3-.7-7  1.-0.7 

MS  Tra  2,730  1  65 1  321  170 1  1661 
MT  BIB  l.R45  I  Ql  I  7R  I  1RA  I  1RAl 
NE 
NC 
I
No  l  indicates  the approximate  number  ofprotider  records  (i.e., numbers).
- Data  supplied  by canters  to the OIG (10/89).  Data  applies  to 47states  and the District  of Columbia. 
I 
I
- Blank  cells  indicate  the carrier  has no providers  with  the indicated  specialty  or no counts  were  provided. 
- Clinics  are providers  listed  under  HCFA  specialty  70 (multispecialty  clinic). 
I  Carrier  Nonphysician  Counts  by  Type  and  State 
Physician  Nurse  NlJW!  Physical  Occupational 
State  81Carrier  Assistants  Audioloaists  Anesthetists  Midwives  Therapists  Therapists 
I  ,  II   I  -- 
I  l  437  1  673 1  I  1 !Dn  I  I 
t  l  331  117 I .  1 
I..  .  --  -- 
3  l  41  l!.  ,  I 
B  50  1 
MD  B/LB _P A__   t  3  13  I  31  49  4
ME  B/B  MA  l  ii  50  36 
MI  B/B  l  365  1,313  1  96 
MN  B/B  4  474  16 
MN  Trr  E  17E  7fl
m  I  I  I  ,  I,,  I  -1  , 
MO  B/LB  l  61  236  I  I  91  2 
MO  GA  I  I  201  1:ii  I  II   391 
MS  Tra  ii1  ii  1  1 
MT  B/B  22  14  26  3 
NE  B/B  KS  34  6  193  53  2 
NC  EcpTN~~1  l  119  13  972  64  2 
ND  B/E I  l  1.0-  1.3-5-  I  4  I 
NH  B/B  M,A  (*I  201  641  461  51 
NJ  BIB  PA  l  531  61  11  172 1  6 
NM  AetnKw..  II  II  II  ml I  MI I  mlI  26 I 
AZ  l  I  12  I  19  1  ,.;I 
I 
I  l  481  23  1  7 
-_  _~. 
VA  Tr. 
VT  B/L  .-...  I  I  . 
I 
WA  PS  67  I  -2-0- 81  21  264  I 
WI  PS  I  361  1431  -44  1  I 
WV  NL IOH  t  27 1  10 I  27 1 
WY- 
f  Equ  l  1 I  31 I  20 1  I  Carrier  Nonp_h ys-ician  Counts  by  Type  and  State  (cont.)
I 
1 Portable  1 Clinical  ( Physiological  1  1Other  Supply* 
State  & Carrier  Ambulance  X-Ray  Labs  Labs  DME*  (e.g.,  drug)  1 
Al  B/B  162  2  61  21  595 
AR  B/wR  t  2--3-6   5  47  2  726 
CA  BS  150  5i  1,065  69  6,161  473 
CA  TO  499  43  594  1,247  3,009 
CO  BIB  171  6  57  51  13= 
CT  Trr  1.-0-5  12  291  722  366
l  11 I  -26  1  6  220  237 
PA  1 *I  77  I  I  11  56  176 
I  290 
1 IN  BIB  12  135  120  1, 
7  1  166  701  1 
KC  t  6  1  5  135  53 
I  I  767  10  76  13  1.272  949 
, . . .  I  I  ..w--ll  I  1.1.  I  17--s   I  113  I  2.231  1  1.9911 
I".  ,  ."  -.
rn  D*  I  *I  rl  Al  45  7  47 
20  16 	 292  252 
C77 
B KS  I  I  241 1  21  16 1  I  1,196  I  21 
BMA  l  93  1  1 I  261  41 
I  I  .  .  ,  . .  ,  . .- --  ,  -.- _,-_  
*nK  I  I  (I7  I  71  RQ I  I  1921 
TX  B/E 3  25 1  365 1  991  3260  1  9631 
TN  Equ  l  176  5  202  92  166  1,765 
UT  B/B  66  2  18  446 
VA  Tra  64  6  34  13  211  643 
VT  B/B  MA  69  4  ,  129  136 
WA  PS  177  107  515  1,039 
WI  PS  361  6  24  249  1,251 
WV  NMOH  l  152  4  56  494  243 
WY  Equ  t  63  27  32  129 
Total  10,600  553  6,583  1,725  45,653  36,996 
I
l  Other  Supply  consists  of counts  supplied  by carriers  under  HCFA  specialty  code  87.  DME  consists  of counts 
supplied  under  HCFA  specialty  codes  51-58.  During  the course  of contacting  some  carriers,  we discovered  some 

carriers  include  DME  under  specialty  87 rather  than  specialty  54 as prescribed  by HCFA.  I