Department of Health and Human Services

OFFICE OF

INSPECTOR GENERAL

INAPPROPRIATE MEDICARE PAYMENTS

FOR WORK-RELATED DISABiliTY

EXPENSES

MANAGEMENT ADVISORY REPORT 
.. SERVIC'E 
to'" 
JU 
GIBBS BROWN 
Inspector General

AUGUST 1994 
:tltcl3G 
06-89-00903  PUS~

To determine if the Heath Care Financing Administrtion could use the Social Security
Administrtion s workers' compensation information to detect inappropriate Medicare 
payments for medica expenses incurred becuse of work-related disabilties. 
BACKGR()UN 
The Social Security Administrtion (SSA) provides disabilty payments to certn 
persons 
with work-related disabilties. After receiving disabilty payments for 24 months, disabled 
workers become entitled to Medicae benefits. The Medicae progra, which pays for 
varous medica expenses, is administered by the Heath Care Financing Administrtion 
(HCFA). 
ca 
Disabled workers  additionaly qualfy for workers' compensation (WC) benefits under 
State progras. Under the Social Security Act, the Medicae progra canot pay for
medica expenses covered under a WC agreement. 
FIINGS 
RCF A could detect more beneficiaries with WC involvement by using SSA records. 
HCF A was unaware of the WC involvement of 45 percent of the SSA disabilty 
beneficiares in our saple. 
There is a strong probabilty of erroneous Medicare payments due to undetected WC 
involvement. Estimated savings to Medicae from an SSA-HCFA data exchange rage
from $14 millon to $96 mion. 
The effectivenes of an SSAIHCF A exchange of WC inormation could be maximed 
by appropriate selection criteria. Diagnosis coes, as well as Workers Computation 
coes ca be used to more effectively identify SSA disabilty beneficiares with potential 
WC involvement. 
C()NCLUSI()N 
In light of the findings, we believe that a renewed data exchange between SSA and HCF 
would be productive. However, we have not prepared a detaled examination of the 
feaibilty, cost of, or alternatives to a data exchange. At this juncture we suggest that 
HCF A and SSA furter explore the possibilties. Given the magnitude of potential 
savings, a one-yea pilot might be the best way to test out results, quantify costs and  benefits, and reach a final determination on whether to renew the data exchange
, and in
what form. 
We are wiling to conduct further analysis if HCFA would consider more OIG work 
useful. For now , we are ceasing work and reportng our results 
because we believe that 
our data provides ample grounds for administrtive action.  . . . . . . . . . . . . . . . . . . 
. . . ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  . . . 
TABLE OF CONTENTS

EXECUT SUMARY

INODUCTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
. . . . . . . . 1
FINDINGS 
. . . . . . . . . . . . 4
. . . . . . . . . . . . . . . . . . . . 4
Undtected Beneficiaries With WC Involvement. 

E"oneous Medicare Payments  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Exchange Of Workers Compensaton Informaton 
CONCLUSION 
. . . . . . . . . 6 computer matches under negotiation. In 16 States no match wil be possible because of 
State privacy law, data collection and storage problems 
, or lack of State resources. 
The advantage that SSA has over HCF A in obtaning WC information is that SSA 
collects the information shorty, if not immediately, after the injury has ocurred. 
Beuse SSA disabilty beneficiares receive Medicae benefits after 24 months of 
disabilty entitlement, the HCF A has at least that long before a beneficiar submits the 
first Medicae claim. 
Potental Federal Losses

There are approximately 310 00 SSA disabilty beneficiares with known WC 
involvement. The average duration of entitlement to disabilty benefits is eight yeas, so it 
is very liely most of the WC beneficiares wil also become entitled to Medicare. 
fisca yea 1993, as shown on HCFA reports, approximately $111 milion were saved by 
Medicare becuse WC progras covered medica expenses that would otherwise have 
been paid by Medicae. Although the number of beneficiares is small, the WC related 
costs involved can be substatial.

METHOOOLOGY 
Intervews 
We interviewed HCFA personnel , and SSA disabilty beneficiares. 
, contrctor personnel
The HCF A and contrctor personnel were interviewed to determine the extent of exchange 
of WC information between HCF A and SSA and between Medicare 
contrctors and 
agencies. The beneficiares were interviewed to determine the accuracy of the diagnosis 
and WC information in SSA records. 
Record Reviews

We use thee sets of records to detect discrepancies, and the related potential 
overpayments, between the WC information in the SSA and HCFA beneficiar records. 
The recrds use were SSA disabilty records, Medicare claims records , and HCF A 
primar payer records. 
The SSA recrds were taen from a one percent sample used by SSA to analyze data for 
the disabilty population. They 
included disabilty beneficiares with dates of entitlement 
from 1986-1988. From these records we selected beneficiares whose SSA recrds 
contaned the offset coes OP , PE, RJ, or WP. These coes are used by SSA to indicate 
if a beneficiar s payment is being reduced or offset becuse of recipt of WC or State or 
loc 
, which follows, explais the meaings of each 
public disabilty benefits. Table 1 
coe use. We selecte 768 beneficiares.  Estimate on the basis of our sample results, savings through a SSA-HCFA exchange 
would be $14.425 millon. This estimate does not include claims paid by carers 
, such as 
physician and durable medical equipment bils, and is probably too low for this reason. 
Estimated on the basis of past recoveries, savings would be over $96 millon. 
Based on 
our saple results , HCFA is aware of 55 percent, or 170 500, of the 310 
beneficiares whom SSA reports as having WC involvement. HCFA avoided 
$111 milion 
in payments in 1993 for those beneficiares. If that rate of recovery applied to the 45 
percent, or 139 500, of beneficiares unknown to HCFA as having WC involvement 
HCF A would have saved an additional $96 milion. 
Th 
Effectiveness Of An SSA/HCFA Exchange Of Workers Compensation Information 
Could Be Maximized By Appropriate Selection Criteria 
Exchanges of information between SSA and HCF A ended about four yeas ago. 
Respondents indicate that leads generated through the matches were not productive. 
While past exchanges might have produced nonproductive leads, the leads could be made 
more productive by using different selection criteria. For example, we used the diagnosis 
code, in addition to the WC codes, to select the initial 25 beneficiares for whom the 
likelihoo of an overpayment existed. Furtermore, if SSA began to distinguish between 
WC and public disabilty benefits in their OP, PE and RI offset codes, HCF A could 
furter improve the selection criteria.  CONCLUSION

In light of the findings, we believe that a renewed data exchange between SSA and HCF 
would be productive. However, we have not prepared a detaled examination of the 
feaibilty, cost of, or alternatives to a data exchange. At this juncture we suggest that
HCFA and SSA furter explore the possibilties. Given the magnitude of potential 
savings, a one-yea pilot might be the best way to test out results, quantify costs and 
benefits, and reach a final determination on whether to renew the data exchange 
, and in 
what form. 
We are willng to conduct furter analysis if HCFA would consider more OIG work 
useful. For now, we are cesing work and reportg our results becuse we believe that 
our data provides ample grounds for administrtive action.