Department of Health and Human Services 
OFFICE OF 
   
INSPECTOR GENERAL 
 
 
 
 
 
 
 
 
S   F M
OUTH  LORIDA  EDICARE 
 
C O
OMPR EHENSIVE  UTPATIENT 
 
R F  
EHABILITATION  ACILITIES 
 
 
 
 
 
 
Daniel R. Levinson  
Inspector General 
 
November 2011 
OEI-05-10-00090   
   
 E X E C U T I V E   S U M M A R Y  
OBJECTIVES
 
1. To determine whether Comprehensive Outpatient Rehabilitation 
Facilities (CORF) in South Florida were operational (i.e., at the 
location on file with the Centers for Medicare & Medicaid Services 
(CMS) and open during business hours). 
2. To describe CMS actions against CORFs that were not operational. 
BACKGROUND 
CORFs provide multidisciplinary outpatient rehabilitation services at a 
single location.  Medicare allowed approximately $70 million for almost 
40,000 beneficiaries nationwide who received CORF services in 2010.  
Of this amount, more than $22 million was for claims by South Florida 
CORFs.  In 2010, more than 25 percent of all CORFs were in South 
Florida.
 
Previous work has demonstrated that CORFs in South Florida may be 
vulnerable to fraud, waste, and abuse.  For example, the Office of 
Inspector General estimated that in 2003, three South Florida CORFs 
received between $720,000 and $1.6 million each in inappropriate 
payments for services.   A 2004 report by the Government 
Accountability Office found that per-beneficiary payments to CORFs in 
South Florida were two to three times higher than per-beneficiary 
payments to other outpatient therapy providers.     
To determine whether CORFs in South Florida were at the location on 
file with CMS and were open during business hours, we conducted 
unannounced site visits to all South Florida CORFs.  We also 
determined the amount that Medicare allowed for claims from 
nonoperational CORFs and reviewed documentation about CMS actions 
against nonoperational CORFs. 
FINDINGS 
Eighteen of the one hundred one South Florida CORFs were not 
operational.  Ten CORFs were not at the location on file with CMS.  
Eight CORFs were not open during business hours.  Medicare allowed 
$2.2 million for services provided by these CORFs in 2010. 
   
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CMS took action against most of the nonoperational CORFs based 
on a special enrollment project and routine oversight.  CMS took 
action against 16 of the 18 nonoperational CORFs in the months after 
we completed our site visits.  A special enrollment project resulted in 
10 actions against nonoperational CORFs, and routine oversight 
resulted in 6 such actions.  
RECOMMENDATIONS 
Periodically conduct unannounced site visits to CORFs.  Continuing 
to periodically conduct nationwide unannounced site visits would enable 
CMS to identify and remove nonoperational CORFs from the program 
and potentially reduce erroneous Medicare payments.  CMS could focus 
unannounced site visits in high-risk areas or base them on fraud-risk 
assessments. 
Use additional program safeguards for CORFs.  CMS should use other 
program safeguards to prevent potentially nonoperational CORFs from 
enrolling in the Medicare program and to monitor existing CORFs.  Other 
safeguards may include a moratorium on the enrollment of new CORFs 
and payment suspensions.  
AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 
RESPONSE 
CMS concurred with our recommendations.  CMS stated that it 
currently conducts unannounced enrollment and revalidation site visits 
to CORFs and that it plans to increase the frequency of unannounced, 
out-of-cycle site visits to CORFs.  CMS also stated that it will continue 
to take administrative actions, as appropriate.  CMS stated that these 
actions may include, but are not limited to, prepayment review, auto-
deny edits, payment suspensions, and revocations.  We did not make 
any changes to the report based on CMSs comments. 
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 T A B L E   O F   C O N T E N T S  
EX ECUT I VE  SUM M ARY  .....................................i 
 
 
I NT RO DU CT I O N  ............................................ 1 
 
 
F I NDI NG S  .................................................. 8 
  Eighteen of the one hundred one South Florida CORFs were 
  not operational .......................................... 8 
 
  CMS took action against most of the nonoperational CORFs  
  based on a special enrollment project and routine oversight ...... 9 
 
 
RECO M M END AT I O N S  .....................................  12 
Agency Comments and Office of Inspector General Response  ...  12 
 
 
 
APP EN DI X  ................................................  14 
  A:  Detailed Methodology .................................  14 
  B:  Agency Comments ...................................  17 
 
 
 
ACKNO WL E DG M E N T S .....................................  20   
   
 I N T R O D U C T I O N  
OBJECTIVES 
1. To determine whether Comprehensive Outpatient Rehabilitation 
Facilities (CORF) in South Florida were operational (i.e., at the 
location on file with the Centers for Medicare & Medicaid Services 
(CMS) and open during business hours). 
2. To describe CMS actions against CORFs that were not operational. 
BACKGROUND 
CORFs provide multidisciplinary outpatient rehabilitation services at a 
single location.  Medicare allowed approximately $70 million for almost 
40,000 beneficiaries nationwide who received CORF services in 2010.  
Of this amount, more than $22 million was for claims by South Florida 
CORFs.   
CORFs are disproportionately concentrated in South Florida.  Over 
one-fourth of the 303 CORFs that billed Medicare in 2010 were located 
in South Florida.
 
Vulnerabilities with CORFs in South Florida 
Previous work has demonstrated that CORFs in South Florida may be 
vulnerable to fraud, waste, and abuse.  The Office of Inspector General 
(OIG) estimated that in 2003, three South Florida CORFs received 
between $720,000 and $1.6 million each in inappropriate payments for 
services.1, 2, 3  A 2004 report by the Government Accountability Office 
(GAO) identified aberrant billing patterns among South Florida CORFs.  
GAO found that per-beneficiary payments to CORFs in South Florida 
were two to three times higher than per-beneficiary payments to other 
outpatient therapy providers.4   
In May 2009, the Health Care Fraud Prevention and Enforcement 
Action Team (HEAT) initiative was launched in Miami to increase 
efforts to reduce Medicare fraud.  A collaboration between officials from 
 
1 OIG, Review of Comprehensive Outpatient Rehabilitation Facility Therapy Services 
Provided by Ultimate Rehabilitation Agency, Inc., A-04-05-02009, September 2008.  
2 OIG, Review of Comprehensive Outpatient Rehabilitation Facility Therapy Services 
Provided by Action Rehabilitation Center, Inc., A-04-05-02010, November 2008. 
3 OIG, Review of Comprehensive Outpatient Rehabilitation Facility Therapy Services 
Provided by Care Alliance of America, Inc., A-04-05-02011, November 2009. 
4 GAO, Comprehensive Outpatient Rehabilitation Facilities:  High Medicare Payments in 
Florida Raise Program Concerns, August 2004. 
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I N T R O D U C T I O N  
the Department of Health and Human Services and the Department of 
Justice, the HEAT initiative builds upon existing programs that combat 
fraud and identifies new methods to prevent fraud. 
CORF Services  
CORFs are required to offer the following core services:  CORF 
physician services, physical therapy services, and social and/or 
psychological services.  CORF physician services are administrative and 
include such tasks as consultation with, and medical supervision of, 
CORF staff and review of patient treatment plans, as appropriate.5   
In addition to offering core services, CORFs may elect to offer 
occupational therapy, speech-language pathology, respiratory therapy, 
prosthetic and orthotic devices, supplies and durable medical 
equipment, and nursing as well as other services.   
A CORF must maintain a physical location that provides safe and 
sufficient space for the scope of services offered.6  Except for a single 
home environment evaluation visit and except for physical therapy, 
occupational therapy, and speech-language pathology services, all 
CORF services must be provided on CORF premises.7  The majority of 
physical therapy, occupational therapy, and speech-language pathology 
services must also be provided on CORF premises for all CORF 
patients.8 
CORF Enrollments   
To enroll in Medicare, a CORF must submit an application that collects 
a variety of information, including the address at which the CORF will 
provide services (i.e., the practice location). 9   
Before approving a CORFs enrollment, CMS arranges for an initial site 
visit.  This visit is part of a process called survey and certification, in 
which CMS contracts with State survey agencies to assess the 
prospective CORFs compliance with certain Federal regulations.  The 
survey and certification process culminates in a recommendation by the 
 
5 CMS, Medicare Benefit Policy Manual, Pub. No. 100-02, ch. 12  20.1.  Accessed at 
http://www.cms.hhs.gov on May 19, 2011. 
6 42 CFR  485.62(a)(7). 
7 42 CFR  485(e).   
8 CMS, Medicare Benefit Policy Manual, Pub. No. 100-02, ch. 12  30(A).  Accessed at 
http://www.cms.hhs.gov on May 19, 2011. 
9 Form CMS-855A.  Accessed at http://www.cms.hhs.gov on May 19, 2011. 
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I N T R O D U C T I O N  
State survey agency to CMS as to whether the CORF should be accepted 
into the Medicare program.  
After being accepted, each CORF must continue to meet the initial 
enrollment requirements.  Each CORF is required to be periodically 
resurveyed by its State survey agency to ensure continued compliance 
with all requirements.10  CMS also requires CORFs to report enrollment 
application changes, including changes in practice location, within 
90 days of the changes. 11   
Postenrollment Site Visits 
After a CORF is enrolled in the Medicare program, CMS may conduct 
unannounced site visits.12  CMS cites the use of unannounced 
postenrollment site visits as a successful way to determine whether 
providers are operational and are at the location on file with CMS.13   
The Medicare Program Integrity Manual provides guidelines regarding 
unannounced site visits.  When conducting a site visit to verify that a 
provider is operational, CMS should attempt to make its determination 
using only an external review of the facility.  CMS requires that 
reviewers document visits using written observations of the facilities 
and photographs, as appropriate.14  Unannounced site visits should take 
place during posted business hours, or between 9 a.m. and 5 p.m. if no 
business hours are posted.15   
CMS Administrative Actions 
CMS may take the following administrative actions against  
nonoperational providers, including CORFs:  
  Investigation.  CMS investigations may include site visits and 

interviews with CORF staff and Medicare beneficiaries, as well 
as analysis of claims data.   
 
10 42 CFR  488.20(b)(1). 
11 42 CFR  424.516(e)(2).  A change in ownership or control must be reported within 30 
days.  42 CFR  424.516(e)(1). 
12 CMS, Medicare Program Integrity Manual  Pub. No. 100-08, ch. 15,  15.20.  Accessed 
at http://www.cms.hhs.gov on May 19, 2011. 
13 Preamble to final rule implementing sections of the Patient Protection and Affordable 
Care Act, as amended by the Health Care and Education Reconciliation Act of 2010.   
76 Fed. Reg. 5862, 5869 (Feb. 2, 2011).   
14 CMS, Medicare Program Integrity Manual, Pub. No. 100-08, ch. 15,  15.20.1.  
Accessed at http://www.cms.hhs.gov on February 22, 2011. 
15 CMS, Medicare Program Integrity Manual,  Pub. No. 100-08, ch. 15,  15.20.1  
Accessed at http://www.cms.hhs.gov on May 19, 2011. 
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  Prepayment review.  CMS reviews documentation from 

providers before deciding whether to pay claims. 
  Payment suspension.  CMS temporarily stops some or all 

payments to a provider.  CMS may suspend payments to a 
provider if there is a credible allegation of fraud against that 
provider.16     
  Revocation.  CMS may revoke Medicare billing privileges for a 

CORF that is no longer operational.17   
  Deactivation.  CMS may deactivate a providers billing 

privileges when a CORF has not submitted claims for 
12 consecutive months. 18  This reduces the risk that the 
providers billing privileges will be used for fraudulent purposes.   
Temporary Moratoria 
CMS may also reduce the potential for fraud, waste, or abuse among 
CORFs by imposing a moratorium on CORF enrollment.  CMSs 
authority to impose moratoria on specific provider types, specific 
geographic areas, or both was established by the Patient Protection and 
Affordable Care Act and implemented in 2011.19 
South Florida High Risk Enrollment Project 
Concurrent to our review, CMS conducted a special enrollment project
the South Florida High Risk Provider Enrollment Projectthat 
targeted fraud among specific provider types that are vulnerable to 
abuse.  As part of the project, CMS conducted site visits to all CORFs in 
South Florida to verify their existence.   
CMS used the results of these site visits, along with other information, 
to create a fraud-risk score for each CORF.  CORFs with high fraud-risk 
scores could be subject to a variety of administrative actions.  In some 
 
16 CMS, Medicare Program Integrity Manual, Pub. No. 100-08, ch. 8,  8.3.1.1.  Accessed 
at http://www.cms.hhs.gov on August 16, 2011.  See also 42 CFR  405.371(a)(2) and 
405.372(a)(4). 
17 CMS, Medicare Program Integrity Manual, Pub. No. 100-08, ch. 15,  15.27.2(A). 
Accessed at http://www.cms.hhs.gov on January 31, 2011.  See also 42 CFR  424.535(a)(5). 
18 CMS, Medicare Program Integrity Manual, Pub. No. 100-08, ch. 15,  15.27.1.  
Accessed at http://www.cms.hhs.gov on January 31, 2011.  See also 42 CFR  424.540(a). 
19 The Patient Protection and Affordable Care Act, P.L. 111-148,  6401(a)(3) (adding 
section 1866(j)(6) of the Social Security Act, which was redesignated as section 1866(j)(7) by 
the Health Care and Education Reconciliation Act of 2010, P.L. 111-152,  1304).  
Implementing regulations for moratoria on newly enrolling Medicare providers and 
suppliers are located at 42 CFR  424.570.  
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cases, CMS used evidence from the site visits to take action against 
CORFs that were not operational. 
METHODOLOGY 
We performed unannounced site visits to all CORFs with a practice 
location in one of three Core Based Statistical Areas (CBSA) in Florida:  
the MiamiMiami BeachKendall CBSA, the Fort Lauderdale
Pompano BeachDeerfield Beach CBSA, and the West Palm Beach
Boca RatonBoynton Beach CBSA.  We refer to these CBSAs 
collectively as South Florida.  We determined whether these CORFs 
were operational (i.e., were at the location on file with CMS and were 
open during business hours).  We also reviewed documentation about 
CMS actions against CORFs that were not operational at the time of 
our site visits.  See Appendix A for a detailed description of our 
methodology. 
Scope 
We focused our review on whether CORFs were operationalthat is, 
whether they were at the locations on file with CMS and were open 
during business hours.  We focused on these criteria to limit our 
interaction with CORF staff and reduce the risk of alerting staff at 
potentially fraudulent CORFs to our presence.   
Data Sources and Data Collection 
Identifying CORF locations.  To identify CORF locations for our 
South Florida site visits, we first used the 2009 Outpatient National 
Claims History (NCH) file to identify CORFs that submitted claims in 
2009 for a practice location in South Florida.  We then located addresses 
for all 132 CORFs through the Provider Enrollment, Chain, and 
Ownership System (PECOS) and a data request to CMS. 
Site visits to CORFs.  We conducted unannounced site visits to 
determine whether these CORFs maintained a physical facility at the 
location on file with CMS and were open during business hours.  We 
recorded all observations using a standard form.  We conducted all site 
visits in May 2010. 
Updates after site visits.  To account for changes in our information 
between the time we identified our study population and the dates of 
our site visits, we requested address updates and changes in enrollment 
status from CMS for all CORFs that we found to be nonoperational. 
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I N T R O D U C T I O N  
CMS actions against nonoperational CORFs.  To describe CMS actions 
against nonoperational CORFs following our site visits, we requested 
the results of the special enrollment project through April 2011.  Along 
with the results of the special enrollment project, we also received data 
about routine actions that CMS took through April 2011 for these 
nonoperational CORFs. 
Payments to nonoperational CORFs.  We used the 2010 Outpatient NCH 
file to determine how much Medicare allowed for services reportedly 
provided by nonoperational CORFs. 
Analysis 
Before analyzing our results, we removed 31 CORFs from our analysis.  
Twenty-nine were no longer enrolled in the Medicare program at the 
time of our site visits.  We removed one CORF because we were unable 
to complete the full site visit protocol.  We removed another CORF 
because it was closed for remodeling during the time of our visits.  We 
performed our analysis on the remaining 101 CORFs. 
We defined operational as at the location on file with CMS and open 
during business hours.  We determined whether a CORF met these 
criteria in the following manner: 
  We determined that a CORF was at the location on file with 
CMS if it maintained a physical facility with its name clearly 
marked somewhere other than a building directory (e.g., a sign 
on or near the primary entrance to the CORF).   
  We determined that a CORF was open if it was accessible to 
CMS and beneficiaries during regular business hours (i.e., the 
door was unlocked) during either of two visits on separate days. 
CORFs that did not meet at least one criterion were considered 
nonoperational for the purposes of this report. 
We aggregated the results of our site visits to determine the number of 
CORFs that (1) maintained a physical facility at the location on file with 
CMS and (2) were open during business hours.  We also categorized site 
reviewers observations about what they found (e.g., a sign with a 
different business name) at the location on file with CMS. 
Payments to nonoperational CORFs.  We calculated the total amount 
that Medicare allowed for 2010 for CORFs that were not at the location 
on file with CMS and for CORFs that were not open.  For each CORF, 
we also calculated the amount Medicare allowed in 2010 following our 
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I N T R O D U C T I O N  
site visits (i.e., from the date of our last site visit through 
December 2010).   
Review of CMS actions against nonoperational CORFs.  We reviewed 
CMS actions against the nonoperational CORFs identified by our site 
visits.  We determined for how many CORFs CMS took each type of 
action (e.g., prepayment review) and whether the actions resulted from 
the special enrollment project or from routine oversight.  We aggregated 
these results to determine the number of nonoperational CORFs that 
CMS took action against after our site visits, as well as the 
nonoperational CORFs that had been subject to each type of action. 
Standards 
This study was conducted in accordance with the Quality Standards for 
Inspection and Evaluation issued by the Council of the Inspectors 
General on Integrity and Efficiency. 
   
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 F I N D I N G S  
 
Eighteen of the one hundred one  Eighteen of the one hundred one 
South Florida CORFs were not operational  CORFs in South Florida were not 
at the location on file with CMS or 
were not open during business hours.  Medicare allowed $2.2 million for 
services provided by these CORFs in 2010, $450,000 of which was 
allowed after our site visits.  An additional five CORFs were open only 
during the second visit made to their locations.  We considered these 
CORFs open for the purposes of this review.   
Ten CORFs were not at the location on file with CMS 
After taking into account the CORFs that submitted address updates to 
CMS, 10 of the CORFs that we visited did not maintain a facility at the 
location on file with CMS.  Medicare allowed $1.4 million for these 
10 CORFs in 2010. 
As Table 1 shows, when site reviewers visited the location on file with 
CMS, they found different businesses, unmarked office suites, and a 
private residence with no indication that a CORF was located there.  In 
one case, site reviewers found an eviction notice posted on the door of an 
empty CORF facility.  See Photo 1 for an example of an empty storefront 
that reviewers found at the location CMS had on file for one CORF. 
 
  TABLE 1  What OIG Found at Location on File 
Description of the 
 location on file  Description  Count 
with CMS for 
  Sign with a different business name  4 
10 nonoperational 
CORFs. 
  No sign indicating a business name  4 
 
  Private residence with no sign indicating a CORF  1 
  Eviction notice  1 
       Total  10 
    Source:  OIG unannounced site visits to CORFs, May 2010. 
   
   
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F I N D I N G S  
PHOTO 1   
There was no 
indication that a 
CORF was 
operational at this 
location. 
 
  Source:  OIG unannounced site visits to CORFs, May 2010. 
 
Eight CORFs were not open during business hours 
Eight CORFs maintained a visible sign at the location on file with CMS 
but were locked during business hours on 2 separate days.  Site 
reviewers visited seven of the eight CORFs during their posted business 
hours.  The remaining CORF did not have posted business hours and 
was visited during reasonable business hours (9 a.m. to 5 p.m.).  
Medicare allowed $800,000 for these eight CORFs in 2010. 
Five additional CORFs were locked during business hours on the first 
date we visited and open on the second day.  These CORFs were 
considered open for the purposes of this report because they were open 
on our second visit.  However, these CORFs may have been open on our 
second visit because they became aware of our review. 
 
CMS took action against most of the          C  M  S took action against 16 of the 
nonoperational CORFs based on a special  18 nonoperational CORFs in the 
enrollment project and routine oversight  months after we completed our 
site visits.  These actions included 
 
investigation, prepayment review, and revocation.  More than half of 
these actions were because of CMSs special enrollment project.  The 
rest were because of routine oversight activities that apply to all 
Medicare providers.  See Chart 1 for the actions that CMS took against 
nonoperational CORFs that we identified in our site visits.   
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F I N D I N G S  
CHART 1    10
CMS actions  9
against 
8
nonoperational 
CORFs.  s 7
n
  ctio 6
A
S 
M
C 5
of  Special Enrollment Project
ber  4 Routine Oversight
m
Nu 3
2
1
0
Prepayment  Revocation Investigation
review
  Source:  OIG unannounced site visits to CORFs and CMS actions against CORFs, May 2010. 
The special enrollment project resulted in actions against 10 nonoperational 
CORFs 
Based on the results of the special enrollment project, CMS revoked the 
billing privileges of six nonoperational CORFs and monitored four 
others with prepayment review.  During the special enrollment project, 
CMS conducted site visits to Medicare providers in South Florida, 
including CORFs.  As a result of this project, CMS took action against 
10 nonoperational CORFs that may not have been identified through 
routine oversight. 
Actions based on the special enrollment project were not always timely.   
For one CORF, CMS took 9 months to take action.  After finding this 
CORF to be nonoperational on two separate visits, CMS made a third 
visit 6 months later.  Another 3 months elapsed before CMS put the 
provider on prepayment review.  Similarly, CMS took almost 7 months 
to revoke another CORFs billing privileges.  CMS found this CORF to 
be nonoperational on two separate visits.  Five months elapsed before 
CMS returned for a third site visit and found for rent signs posted at 
the location.  Another 2 months elapsed before CMS finalized the 
revocation of this CORFs billing privileges.  
 
    
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F I N D I N G S  
Routine CMS oversight resulted in actions against six nonoperational 
CORFs 
CMS revoked the billing privileges of three CORFs, monitored 
two others with prepayment review, and investigated another as a 
result of routine oversight.  CMS revoked the billing privileges of three 
CORFs because they were found to be nonoperational during site visits 
that were not related to the special enrollment project.   
CMS took no action against two nonoperational CORFs 
After the OIG site visits, CMS visited these two CORFs as part of the 
special enrollment project and found them to be operational.  Almost a 
year later, CMS reported that prepayment review actions were pending 
for these CORFs.  These actions were based on fraud indicators 
unrelated to the site visits. 
 
 
 
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R E RC EO MC MO EM NM DE ANT DI AO TN IS O  N S  
 
Eighteen of the one hundred one CORFs in South Florida were not 
operational.  Ten of these CORFs were not found at the location on file 
with CMS, and eight were not open during business hours.   
CMS also identified nonoperational CORFs in South Florida and was 
able to remove or monitor most of them.  CMS actions included 
revocation of billing privileges, prepayment review, and investigation.  
By using a special enrollment project, CMS was able to identify and 
take action against more CORFs than it would have using routine 
oversight alone.  However, in some cases, CMS took several months to 
take action against CORFs after identifying them as nonoperational.  
Further, CMS was unable to prevent these CORFs from initially 
enrolling in the Medicare program. 
Given the number of CORFs that OIG and CMS found to be 
nonoperational, CMS should continue its attempts to protect the 
integrity of the Medicare program and beneficiaries from potentially 
fraudulent CORFs.  Therefore, we recommend that CMS: 
Periodically conduct unannounced site visits to CORFs  
CMS advocates the use of unannounced postenrollment site visits to 
determine whether providers are operational.  Notably, CMS used 
unannounced site visits as a key component of its special enrollment 
project.  Continuing to periodically conduct nationwide unannounced 
site visits to CORFs would enable CMS to identify and remove 
nonoperational CORFs from the program and potentially reduce 
erroneous Medicare payments.  CMS could focus unannounced site 
visits in high-risk areas or base them on fraud-risk assessments.   
Use additional program safeguards for CORFs  
CMS should use other program safeguards to prevent potentially 
nonoperational CORFs from enrolling in the Medicare program and to 
monitor existing CORFs.  Such safeguards may include payment 
suspensions and a moratorium on the enrollment of new CORFs.  
AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 
RESPONSE 
CMS concurred with our recommendations.  In response to our first 
recommendation, CMS stated that it currently conducts unannounced 
enrollment and revalidation site visits to CORFs and that it plans to 
increase the frequency of unannounced, out-of-cycle site visits to 
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CORFs.  CMS also plans to compare CORF enrollment information with 
public records to identify potential changes to enrollment information 
that would warrant further investigation.  In response to our second 
recommendation, CMS stated that it will continue to take 
administrative actions, as appropriate.  CMS stated that these actions 
may include, but are not limited to, prepayment review, auto-deny edits, 
payment suspensions, and revocations.  CMS also stated that it had 
referred certain providers to OIG for investigation.  We did not make 
any changes to the report based on CMSs comments.  For the full text 
of CMSs comments, see Appendix B. 
 
   
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   A P P E N D I X ~ A  
Detailed Methodology 
We conducted unannounced site visits to all Comprehensive Outpatient 
Rehabilitation Facilities (CORF) in three Core Based Statistical Areas 
(CBSA) in Florida: the MiamiMiami BeachKendall CBSA, the 
Fort LauderdalePompano BeachDeerfield Beach CBSA, and the 
West Palm BeachBoca RatonBoynton Beach CBSA.  We refer to these 
CBSAs collectively as South Florida.  We determined whether each 
CORF was at the location on file with the Centers for Medicare & 
Medicaid Services (CMS) and was open during business hours.  We then 
reviewed documentation about actions that CMS took against the 
noncompliant CORFs and determined how much money Medicare 
allowed for services reportedly provided by these CORFs in 2010. 
Scope 
To concentrate our visits on CORFs with recent activity in the Medicare 
program, we focused our review on CORFs that submitted claims for 
Medicare payment in 2009.  At the time we developed our study 
population, data on claims from 2009 were the most recent available. 
Data Sources and Data Collection 
Identifying CORF locations.  We identified CORFs that submitted claims 
in 2009 using the bill type and provider identification numbers 
(provider ID) fields in the 2009 Outpatient National Claims History 
(NCH) file.  We counted each provider ID that had claims with bill type 
75 as a CORF.20  We then used the State code from the NCH file to 
identify all CORFs in Florida.   
Using two sources, we located an address for each CORF in Florida.  
Our primary source for CORF addresses was the practice location field 
from the Provider Enrollment, Chain, and Ownership System 
(PECOS).21  Most CORFs have enrollment information, such as practice 
locations, stored in PECOS.22  When a CORF did not have an address 
available in PECOS, we requested this information from CMS.  
 
20 Bill type is a variable used to describe the type of Medicare facility that delivered the 
services billed.  
21 PECOS is the system of record for Medicare provider enrollment information.  PECOS 
is populated based on the initial provider enrollment application and updated any time a 
provider submits an updated application to CMS.   
22 A CORF that enrolled before 2004 and has not submitted an updated application may 
not have an enrollment record in PECOS. 
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A P P E N D I X ~ A  
Finally, we matched the ZIP Code from each address to the ZIP Codes 
corresponding to each CBSA to determine whether the address was 
located in one of the three South Florida CBSAs.  This process resulted 
in 132 CORFs with addresses in South Florida. 
Site visits to CORFs.  We conducted unannounced site visits to these 
132 CORFs to determine whether they were at the location on file with 
CMS and were open during business hours.  We recorded all 
observations using a standard form.  We conducted all site visits from 
May 17 through May 28, 2010.  
We designed our site visit protocol to ensure that we gave providers the 
benefit of the doubt when determining whether they were operational.  
For example: 
  All visits to CORFs were made during posted business hours if 

hours were posted or during reasonable business hours (9 a.m. 
to 5 p.m.) if none were posted. 
  If a CORF was locked, we conducted a second visit to that 

location on a different day.  We considered CORFs to be open if 
they were open on either the first visit or (if applicable) the 
second visit. 
  When the building at a CORF location on file with CMS was a 

multisuite office building, site reviewers searched for the CORF 
by name as well as by suite number.  We considered the CORF 
to be at the location on file with CMS if site reviewers could find 
it in any suite or office space in the building. 
  If a CORF had a sign posted indicating that visitors should ring 

a buzzer or doorbell to enter the facility, site reviewers did so.  If 
the door was opened (e.g., someone came to the door or the lock 
was released), we considered the CORF to be open. 
  If a CORF had a sign posted indicating that it was available by 

appointment only, a site reviewer attempted to make an 
appointment for services with that CORF (i.e., called the phone 
number listed on the sign).  If the site reviewer was able to 
make an appointment, we considered the CORF to be open. 
  If we found a different business name at the CORF location on 

file with CMS, we attempted to determine if the CORF we were 
looking for was operating under the name we found.  First, we 
requested from CMS all names for CORFs that we did not find 
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A P P E N D I X ~ A  
and reviewed this information to ensure that we captured all 
possible aliases.  Second, as a final check, we reviewed public 
Web sites, including the National Provider Identifier registry, to 
determine whether the CORF we were looking for could be 
operating under the name we found.  If we were able to connect 
the two names, we categorized the CORF as being at the 
location on file with CMS.   
CMS actions against nonoperational CORFs.  Data received from the 
South Florida High Risk Enrollment Project (special enrollment project) 
through December 2010 included: 
  administrative actions taken against nonoperational CORFs, 

  the source of these administrative actions (i.e., special 

enrollment project activity or routine oversight), 
  the effective dates of these actions, 

  the dates that CMS finalized these actions, and 

  the dates and results of all of CMSs site visits and in-depth 

investigations related to the special enrollment project. 
Analysis 
Updates after site visits.  CMS indicated that it deactivated the billing 
privileges of 26 CORFs and revoked the billing privileges of 3 others 
before the dates of our site visits.  We removed these 29 CORFs from 
our analysis.  
   
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A  P  PEN  D  B 

Agency Comments 
.,...t..>. J
('"  .,CJ..t... .- 
DEPARTMENT OF HEALTH & HUMAN SERVICES  Centers for Medicare & Medicaid Services 
,  .....<tm  Administrator 
Washington, OC 20201 
OCT 1 22011i 
DATE: 
TO:  Daniel R. Levinson 
Inspector General 
FROM:  Donald M. Berwick, M.D. 
Administrator 
SUBJECT:  Office of Inspector General (OlG) Draft Report: "South Florida Medicare 
Comprehensive Outpatient Rehabilitation Facilities" (OEl-OS-! 0-00090) 
'Ine Centers for Medicare & Medicaid Services (CMS) appreciates the opportunity to review and 
comment on the Officc oflnspector General (OlG) draft report entitled. "South Florida Medicare 
Comprehensive Outpatient Rehabilitation Facilities." The purpose of this report is two-fold. 
First, it seeks to determine whcther Comprehensive Outpatient Rehabilitation Facilities (CORFs) 
in South Florida were operational (Le., at the location on file with CMS and open during 
business hours). Secondly, it describes CMS actions against CORFs that were not operational. 
CORPs provide multidisciplinary rehabilitation services at a single location. According to OlO's 
report, Medicare allowed approximately $70 million for CORP services for almost 40,000 
beneficiaries in 2010. Ofthis, more than $22 million was for claims by CORPs in South Florida. 
The Affordable Care Act provides important new tools for CMS to use to strengthen the integrity 
ofthe Medicare, Medicaid, and CHIP programs, including enhanced provider and supplier 
screening requirements, the authority to suspend payments to providers/suppliers pending 
investigations ofcredible allegations of mud, and the authority to impose enrollment moratoria 
on new providers and suppliers when necessary to combat fraud and abuse. 
CORF services have historically been vulnerable to abuse. To combat this abuse, CMS is taking 
additional steps to address potential vulnerabilities in the enrollment and claims payment process 
for this supplier group, using the authorities granted under the Affordable Care Act. This 
includes continuing to conduct unannounced site visits to CORFs and exploring options to use 
payment suspensions in conjuJlction with revocation actions for providers/suppliers detennined 
to be non-operational. 
According to the OlG report. CMS took action against most of the non-operational CORPs based 
on a special enrollment project and routine oversight. CMS believes it took the appropriate 
action on all non-operational CORFs identified by OlG in this study. eMS' definition oftaking 
action includes, but is not limited to, conducting its own unannounced site visit and taking the 
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A P P E N D I X   ~   B  
   
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A P P E N D I X   ~   B  
   
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 A C K N O W L E D G M E N T S  
 
 
This report was prepared under the direction of Ann Maxwell, Regional 
Inspector General for Evaluation and Inspections in the Chicago 
regional office, and Thomas Komaniecki, Deputy Regional Inspector 
General.   
Laura Kordish served as the team leader for this study, and Lisa Minich 
and Mara Werner served as lead analysts.  
We would also like to acknowledge the contributions of Office of 
Evaluation and Inspections central and regional offices.  Contributing 
staff from these offices include Melissa Baker, Tim Chettiath, 
Ben Dieterich, Kevin Farber, Robert Gibbons, Jennifer Gist, 
Rose Goldberg, Melissa Hafner, Scott Horning, Maria Maddaloni, 
Dan Mallinson, Kevin Manley, Conswelia McCourt, Beth McDowell, 
Jeremy Moore, Christine Moundas, Brian Pattison, Margo Rodriguez, 
Megan Ruhnke, Rachel Siman, Arianne Spaccarelli, Holly Williams, and 
Chetra Yean. 
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Office of Inspector General 
http://oig.hhs.gov 
 
The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, as 
amended, is to protect the integrity of Department of Health and Human Services (HHS) 
programs, as well as the health and welfare of beneficiaries served by those programs.  This 
statutory mission is carried out through a nationwide network of audits, investigations, and 
inspections conducted by the following operating components: 
Office of Audit Services 
The Office of Audit Services (OAS) provides auditing services for HHS, either by conducting 
audits with its own audit resources or by overseeing audit work done by others.  Audits 
examine the performance of HHS programs and/or its grantees and contractors in carrying 
out their respective responsibilities and are intended to provide independent assessments of 
HHS programs and operations.  These assessments help reduce waste, abuse, and 
mismanagement and promote economy and efficiency throughout HHS. 
Office of Evaluation and Inspections 
The Office of Evaluation and Inspections (OEI) conducts national evaluations to provide 
HHS, Congress, and the public with timely, useful, and reliable information on significant 
issues.  These evaluations focus on preventing fraud, waste, or abuse and promoting 
economy, efficiency, and effectiveness of departmental programs.  To promote impact, OEI 
reports also present practical recommendations for improving program operations.  
Office of Investigations 
The Office of Investigations (OI) conducts criminal, civil, and administrative investigations 
of fraud and misconduct related to HHS programs, operations, and beneficiaries.  With 
investigators working in all 50 States and the District of Columbia, OI utilizes its resources 
by actively coordinating with the Department of Justice and other Federal, State, and local 
law enforcement authorities.  The investigative efforts of OI often lead to criminal 
convictions, administrative sanctions, and/or civil monetary penalties. 
Office of Counsel to the Inspector General 
The Office of Counsel to the Inspector General (OCIG) provides general legal services to 
OIG, rendering advice and opinions on HHS programs and operations and providing all 
legal support for OIGs internal operations.  OCIG represents OIG in all civil and 
administrative fraud and abuse cases involving HHS programs, including False Claims Act, 
program exclusion, and civil monetary penalty cases.  In connection with these cases, OCIG 
also negotiates and monitors corporate integrity agreements.  OCIG renders advisory 
opinions, issues compliance program guidance, publishes fraud alerts, and provides other 
guidance to the health care industry concerning the anti-kickback statute and other OIG 
enforcement authorities.