Department of Health and Human Services
OFFICE OF 
 
INSPECTOR GENERAL 
 
 
 
 
 
 
 
 
REASSI  GNMENT OF MEDICARE 
 
B  
ENEFITS
 
 
 
 
 
 
 
 
Daniel R. Levinson  
Inspector General 
 
October 2009 
OEI-07-08-00180   
Office of Inspector General 
http://oig.hhs.gov 
 
The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, as 
amended, is to protect the integrity of the Department of Health and Human Services 
(HHS) programs, as well as the health and welfare of beneficiaries served by those 
programs.  This statutory mission is carried out through a nationwide network of audits, 
investigations, and inspections conducted by the following operating components: 
Office of Audit Services 
The Office of Audit Services (OAS) provides 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.   
   
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 E X E C U T I V E   S U M M A R Y  
OBJECTIVES
 
To determine the extent to which:  
  1.   practitioners have reassignments of benefits,  
  2.  practitioners indicate that their reassignments of benefits should 
be active,  
  3.  practitioners had Medicare expenditures through reassignments of 
benefits that should not have been active, and 
  4.   the Centers for Medicare & Medicaid Services (CMS) has 
established safeguards with respect to reassignment of benefits.  
BACKGROUND 
Medicare regulations require that contractors distribute payments 
directly to practitioners who render services, unless those practitioners 
benefits are reassigned to third parties.  A reassignment of benefits is a 
mechanism by which Medicare practitioners allow third parties to bill 
and receive payment for services that they rendered. 
Practitioners submit to Medicare contractors Form CMS-855I (855I) to 
enroll in Medicare and Form CMS-855R (855R) to reassign benefits.  
Contractors create records in the Provider Enrollment, Chain, and 
Ownership System (PECOS) reflecting information in the 855I.  
Contractors process 855Is and 855Rs using the safeguards established 
in Chapter 10 of the Medicare Program Integrity Manual.  Contractors 
may employ additional safeguards, as needed.   
We obtained the PECOS May 2008 Individual Global Extract File (the 
May 2008 Extract), which contained records for all reassignments that 
were established between January 1, 2003, and December 31, 2007.  We 
analyzed the Extract to determine the number of practitioners with 
reassignments and the number of reassignments per practitioner.  Our 
sample included 497 practitioners with 1,723 reassignments.  We also 
used the 2007 Part B Medicare claims data from the National Claims 
History file to match claims to practitioners and reassignments and 
interviewed CMS Central Office staff and contractors regarding 
procedures pertaining to reassignments and safeguards.   
FINDINGS 
CMS data indicate that 77 percent of practitioners have at least one 
reassignment.  The May 2008 Extract indicated that 77 percent of 
practitioners had at least one reassignment.   
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Practitioners indicated that 37 percent of reassignments should not 
have been active.  For 92 percent of reassignments that should not 
have been active, the practitioners were once employed with the third 
parties to which their reassignments were made, but had since 
terminated their employment with them.  For the remaining 8 percent 
of reassignments, practitioners had no knowledge of the third parties to 
which their benefits had been reassigned or had applied for positions 
with the third parties but were never employed there. 
Medicare paid a total of $140,488 through reassignments that should 
not have been active.  Medicare paid $140,488, in 2007, through 
16 reassignments in our sample that should not have been active.   
CMS contractors reported using safeguards to ensure correct 
processing of reassignments, but several factors may limit their 
effectiveness.  CMS contractor staff reported that they use safeguards 
for processing reassignments.  Contractors also reported comparing 
signatures on reassignment applications to signatures on file and 
verifying the reassignments by telephone, mail, or site visits.  However, 
only 48 percent of PECOS addresses resulted in responses from the 
practitioners, and 29 percent of practitioners indicated that they never 
update, did not know how to update, or relied on others to update their 
contact information with Medicare.  Further, 48 percent of practitioners 
were not aware that they were entitled to access the claims billed on 
their behalf.  System vulnerabilities also could lead to abuse of active 
reassignments.  Finally, because the Multiple Carrier System does not 
populate PECOS with provider transaction access number deactivation 
information, reassignments in PECOS remain active. 
RECOMMENDATIONS 
Most practitioners enrolled in Medicare have at least one reassignment.  
However, practitioners indicated that 37 percent of their reassignments 
should not have been active.  Despite the high number of reassignments 
that should not have been active, Medicare payments made through 
these reassignments were low.  Safeguards are in place to ensure 
correct processing of reassignments, but several factors may limit their 
effectiveness. 
Subsequent to our analyses, CMS staff informed us of new policies that 
might address the limitations we identified regarding providers failure 
to update their contact information or terminate inactive reassignments 
and regarding the deactivation of provider transaction access numbers. 
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E X E C U T I V E   S U M M A R Y  
To reduce the number of reassignments that should not be active, we 
recommend that CMS: 
Implement Plans To Revalidate Practitioner Enrollment Information.  
We encourage CMS to implement its plans to revalidate practitioners 
enrollment information every 5 years.   
Educate Practitioners on the Need To Provide Current Information. 
CMS could educate practitioners on the need to provide current 
correspondence information and terminate inactive reassignments. 
Implement Plans To Update PECOS From Other Data Sources.  We 
encourage CMS to follow through with plans to allow the Multiple 
Carrier System to populate PECOS with information on practitioners 
whose billing privileges have been deactivated.    
Follow Up With the Practitioners for Whom Payments Were Made 
Through Reassignments That Should Not Have Been Active.  We will 
forward information on these claims to CMS in a separate 
memorandum. 
AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 
RESPONSE 
In its written comments, CMS agreed with the first and second 
recommendations, but it did not indicate specific agreement or 
disagreement with the third and fourth recommendations.  However, 
CMS described actions it has taken or plans to take to address all four 
recommendations.   
In response to the first recommendation, CMS indicated that it 
instructed Medicare carriers and Part A/B Medicare Administrative 
Contractors to initiate and complete more than 10,000 revalidations.  In 
response to the second recommendation, CMS indicated it has taken 
significant steps to help educate the public about its reporting 
responsibilities including discussing reporting responsibilities and the 
need to update enrollment information during CMS Open Door Forums, 
participating in conference calls with regional offices and contractors to 
discuss reporting responsibilities, mailing reporting responsibility 
information to high-risk providers, posting reporting responsibility 
information on the Medicare provider enrollment Web site, and sending 
listserv announcements to practitioners about their reporting 
responsibilities.  
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E X E C U T I V E   S U M M A R Y  
In response to the third recommendation, CMS plans in October 2009 to 
update PECOS with verified deactivation information contained in the 
Multiple Carrier System.  In response to the fourth recommendation, 
CMS stated that once it receives the information from OIG, it will follow 
up with third parties that may have been inappropriately paid.  We did 
not make 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  
EXECUTIVE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i
 
 
I N T RO DUC T IO N . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 
 
 
F I N D IN G S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 
CMS data indicate that 77 percent of practitioners have at least 
one reassignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 
Practitioners indicated that 37 percent of reassignments should  
not have been active . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 
Medicare paid a total of $140,488 through reassignments that  
should not have been active . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 
CMS contractors reported using safeguards to ensure correct 
processing of reassignments, but several factors may limit their 
effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 
 
 
R E C O MMEN D A T ION S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 
Agency Comments and Office of Inspector General Response . . . 12 
 
APPENDIXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 
  A:  Original Sampling Frames and Active Reassignments . . . . . . 14 
  B:  Point Estimates and Confidence Intervals. . . . . . . . . . . . . . . . 15 
  C:  Nonresponse Analysis. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 
  D:  Practitioners With Reassignments by Specialty . . . . . . . . . . . 17 
  E:  Reassignments That Should Not Have Been Active . . . . . . . . 19 
  F:  Agency Comments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 
 
 
A C K NO WL E D G M E N T S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 
   
   
 I N T R O D U C T I O N  
OBJECTIVES 
To determine the extent to which:  
  1.   practitioners have reassignments of benefits,  
  2.  practitioners indicate that their reassignments of benefits should 
be active,  
  3.  practitioners had Medicare expenditures through reassignments of 
benefits that should not have been active, and 
  4.   the Centers for Medicare & Medicaid Services (CMS) has 
established safeguards with respect to reassignment of benefits.  
BACKGROUND 
Medicare regulations require that contractors distribute payments 
directly to the practitioners who render services, unless those 
practitioners benefits are reassigned to third parties.1  A reassignment 
of benefits (hereinafter referred to as reassignment) is a mechanism by 
which Medicare practitioners allow third parties to bill and receive 
payment for services that they rendered.  Approximately $28 billion was 
paid through reassignments in 2007.  Many practitioners routinely 
reassign their Medicare benefits as part of their normal business 
practices.  For example, anesthesiologists might reassign their benefits 
to several different hospitals where they render services in order for the 
hospitals to bill and receive payment from Medicare Part B for the 
services that the anesthesiologists performed.  The hospitals would also 
bill and receive payment from Medicare Part A for the hospital portion 
of the service.  In this example, anesthesiologists might have multiple 
reassignments, one for each hospital where they render services.   
According to 42 CFR  424.80, third parties that may receive 
reassignments include the practitioners employers or billing agents, 
other Medicare-enrolled entities with which practitioners have 
contractual arrangements, Government agencies or entities, or other 
entities as established by court orders.  
Processing Enrollments and Reassignments 
Medicare contractors are responsible for enrolling practitioners and 
processing payments; each contractor is responsible for a specific 
geographic region.  Under Medicare Contracting Reform, 
responsibilities of contractors are transitioning to Medicare 
 
1 Section 1842(b)(6) of the Social Security Act; 42 CFR  424.73. 
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Administrative Contractors.  There were 10 contractors at the time of 
our review in March 2009.     
Enrollments.  To enroll in Medicare, practitioners must submit 
Form CMS-855I (855I) to Medicare contractors serving their respective 
regions.  Each 855I contains identifying information about the 
practitioner, including medical specialty, billing address, practice 
location, and any adverse legal actions.  Using information from the 
855I, contractors create records in the Provider Enrollment, Chain, and 
Ownership System (PECOS) for each enrolled practitioner.2   
Reassignments.  To reassign benefits, practitioners submit 
Form CMS-855R (855R) to Medicare contractors with which the 
practitioners are enrolled.  The 855R contains information about both 
the practitioners and the third parties to which practitioners reassign 
benefits.  The 855R requires the practitioners or delegated officials 
original signatures authorizing the reassignments.3  To reassign 
benefits, practitioners must first enroll in Medicare as individuals.  The 
third parties to which the benefits are reassigned must enroll in 
Medicare as institutions or groups.  Additionally, both the practitioners 
and the third parties must enroll with the same contractor serving their 
region.  For example, practitioners enrolled through Contractor A may 
not reassign their benefits to clinics enrolled through Contractor B.  The 
contractors process the 855Rs, adhering to required safeguards, and 
create PECOS records reflecting the information in the 855Rs.  The 
855Rs are also used by both the practitioners and the third parties to 
terminate reassignments.  The 855R requires the practitioners or 
delegated officials original signatures to terminate reassignments.  
Billing through reassignments.  PECOS is linked to the Multiple Carrier 
System, which contractors use to pay Medicare claims, to create a 
record for each reassignment.  In the Multiple Carrier System, a 
Provider Transaction Access Number (PTAN) is assigned to each 
practitioner for each reassignment so that the third party receiving the 
reassignment can bill on the practitioners behalf.  In effect, there is one 
PTAN for each reassignment.  If practitioners have multiple 
 
2 PECOS is the CMS system of records for enrollment and reassignments of Medicare 
practitioners.  
3 Delegated official means an individual who is given the authority by the practitioner to 
report changes and updates to the practitioners enrollment record.  The delegated official 
must be an individual with an ownership or control interest (as defined in Section 
1124(a)(3) of the Social Security Act) or be a W-2 managing employee of the practitioner. 
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reassignments, they will have multiple PTANs.  If no billing occurs for a 
period of 12 consecutive months, the PTAN is deactivated and no 
further billing can occur through that reassignment.     
Planned CMS Improvements 
After we completed data collection, CMS staff informed us of new 
policies that would improve existing reassignment safeguards.  These 
improvements include periodically revalidating practitioner contact 
information and implementing communication from the Multiple 
Carrier System to PECOS.   
METHODOLOGY 
PECOS Individual Global Extract File 
From CMS, we obtained the PECOS May 2008 Individual Global 
Extract File (the May 2008 Extract), which CMS staff indicated to us 
contained records for all reassignments that were established between 
January 1, 2003, and December 31, 2007, and were still active on May 
1, 2008.4  We analyzed this information to determine the number of 
practitioners with reassignments and the number of reassignments per 
practitioner.  Our sampling plan assigned practitioners to one of three 
strata, depending on the number of reassignments in the May 2008 
Extractone or two reassignments, three or four reassignments, and 
five or more reassignments.  We initially sampled 166 practitioners in 
each stratum for this study.  The sampled practitioners had from 1 to 
21 reassignments. 
Prior to sample selection, CMS enrollment staff indicated to us that the 
May 2008 Extract contained only active reassignmentsthat is, 
reassignments for which no terminations have been submitted.  
However, we discovered discrepancies between the data contained in 
the May 2008 Extract and those in the PECOS database.  When we 
asked CMS staff to explain these discrepancies, they determined that 
errors in the procedures that created the May 2008 Extract had caused 
it to contain records of terminated reassignments and inaccurate 
effective dates for reassignments.5  Therefore, we initially assigned 
 
4  We selected the May 2008 Extract to increase the likelihood that practitioners would 
still be in practice at the time we attempted to contact them from September 2008 to 
February 2009.  
5 Further information on the errors is available in our report entitled Inaccurate Data in 
the Provider Enrollment, Chain, and Ownership System Individual Global Extract File, 
OEI-07-08-00181. 
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I N T R O D U C T I O N  
some practitioners to the wrong stratum because of inaccuracies in the 
May 2008 Extract.  After discovering the discrepancies and inaccurate 
effective dates, we examined PECOS data for every practitioner and 
reassignment in our sample to identify the correct number of active 
reassignments for each practitioner.  This resulted in our sample having 
194 practitioners with 1 or 2 reassignments (249 total reassignments), 
152 practitioners with 3 or 4 reassignments (497 total reassignments), 
and 151 practitioners with 5 or more reassignments (977 total 
reassignments).   
We excluded from our analyses all reassignments that had been 
terminated as of May 1, 2008, and our reported study results reflect 
these adjustments.  One practitioner with more than five reassignments 
was excluded because of an open Office of Inspector General (OIG) 
investigation.   
After we made these corrections, our sample included 497 practitioners 
with 1,723 reassignments.  Projections were made for both practitioners 
and reassignments.  See Appendix A for further details on the original 
sample and adjustments.  See Appendix B for point estimates and 
confidence intervals. 
Practitioner Data Collection 
After selecting our sample, we mailed lists of the reassignments found 
in the May 2008 Extract to the sampled practitioners.  We asked these 
practitioners whether each reassignment listed should have been active.  
Our overall response rate from practitioners was 88 percent.6  To 
achieve the highest response rate possible, we used multiple 
information sources to identify correct addresses for practitioners.  We 
first used the correspondence address in the May 2008 Extract.  If the 
U.S. Postal Service was unable to deliver a letter and it was returned to 
us with return to sender or not at this address noted on it or we 
received no response, we used the following sources to locate 
practitioners addresses: 
  the pay-to address listed in the May 2008 Extract,   
 
6 The response rates were:  practitioners with one to two reassignments, 
158 practitioners, or 93 percent; practitioners with three to four reassignments, 
145 practitioners, or 86 percent; and practitioners with five or more reassignments, 
136 practitioners, or 82 percent.  Responses from these 439 practitioners represent 
1,482 reassignments. 
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  the practitioners National Provider Identifier (NPI) mailing 
address, and 
  the practitioners NPI practice location address. 
We used additional resources to locate practitioners for whom we were 
still unable to identify correct mailing addresses, which included:   
  searching networking Web sites and public records, such as 
Google.com, LinkedIn.com, Facebook.com, State medical licensing 
Web sites, telephone and cell phone directories, and county tax 
information;  
  calling the practitioners;   
  examining the 2008 National Claims History file for recently paid 
claims to identify practitioners most recent places of employment;  
  searching LexisNexis to identify other potential addresses; and 
  searching the current PECOS database to determine whether the 
practitioners had updated their correspondence addresses. 
Once we identified the correct mailing address for each practitioner, we 
made at least four attempts to solicit a response by mail, with the 
fourth attempt being a certified letter.   
We then used the 2007 Part B Medicare claims data from the National 
Claims History file to determine how much Medicare paid through the 
sampled practitioners reassignments.  We used practitioners 
identifying information (NPI and provider identification number) and 
third parties tax identification numbers to identify Medicare Part B 
claims paid through specific reassignments. 
Interviews With CMS and Contractors 
We interviewed CMS Central Office staff regarding procedures 
pertaining to reassignments and required safeguards.  We conducted 
structured interviews with staff at all 10 contractors responsible for 
processing reassignments to assess the established reassignment 
safeguards. 
Nonresponse Analysis 
We received an 88-percent response rate from practitioners to the 
survey.  Therefore, we conducted a nonresponse analysis.  We found no 
statistical evidence of nonresponse in our key survey estimates.  
Appendix C provides details on the nonresponse analysis.   
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I N T R O D U C T I O N  
Limitations 
We limited our analyses to 2007 Medicare Part B claims from the 
National Claims History File and reassignment information in the 
May 2008 Extract.  Information regarding whether reassignments 
should have been active was self-reported. 
Quality Standards 
This study was conducted in accordance with the Quality Standards for 
Inspections approved by the Council of the Inspectors General on 
Integrity and Efficiency.
  OEI-07-08-00180  REASSIGNMENT OF MEDICARE BENEFITS  6   
   
 F I N D I N G S  
Data in the May 2008 Extract 
CMS data indicate that 77 percent of 
indicate that 517,936 practitioners 
practitioners have at least one reassignment 
had at least one reassignment (see 
Table 1).  The May 2008 Extract data also indicate that these 
practitioners had a total of 833,016 reassignments. 
As Table 1 shows, nearly all certified registered nurse anesthetists had 
at least one reassignment, while physician assistants rarely had 
reassignments.  The majority of practitioners with reassignments were 
physicians.  Appendix D provides the percentages of practitioner 
specialties with reassignments.  As Appendix D shows, emergency 
department physicians had the highest rate of reassignments for any 
physician specialty. 
Table 1:  Types of Medicare-Enrolled Practitioners With Reassignments  
Percent of Enrolled 
Total Enrolled  Total Practitioners with 
Practitioner Type Practitioners with 
Practitioners Reassignments
Reassignments
Certified Registered Nurse 
24,555 23,294 94.9
Anesthetist
Nurse Midwife 3,113 2,820 90.6
Nurse Practitioner 45,140 40,333 89.4
Physical Therapist 34,354 30,329 88.3
Occupational Therapist 6,411 5,529 86.2
Doctor of Medicine/Doctor of 
454,975 372,636 81.9
Osteopathy
Audiologist 3,470 2,779 80.1
Dietician 6,936 5,440 78.4
Clinical Nurse Specialist 2,474 1,683 68.0
Licensed Clinical Social Worker 34,682 20,228 58.3
Clinical Psychologist 21,353 11,384 53.3
Other 1,391 741 53.3
Physician Assistant 35,712 740 2.1
     Total 674,566 517,936 76.8
Source:  Office of Inspector General (OIG) analysis of Individual Global Extract File Enrollment and Reassignment Tables, 2009.  
 
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Overall, 37 percent of 
Practitioners indicated that 37 percent of 
reassignments in the May 2008 
reassignments should not have been active 
Extract should not have been 
active.  Further, 39 percent of practitioners had at least one 
reassignment that should not have been active.  For 92 percent of 
reassignments that should not have been active, the practitioners were 
once employed with the third parties to which their reassignments were 
made, but had since terminated their employment with them.  For the 
remaining 8 percent of reassignments that should not have been active, 
practitioners had no knowledge of third parties to which their benefits 
had been reassigned or indicated that they had applied for positions 
with the third parties but were never employed there.  As one of the 
practitioners in our sample stated, Years ago, I was considering 
[working for the third party].  I dont recall any contract [being] signed, 
much less [completing or signing] any Medicare forms.  I never provided 
any services on their behalf, either. 
Thirty-five percent of practitioners who indicated they had at least one 
reassignment that should not have been active believed that the 
reassignment(s) automatically terminated when their employment did.  
When we asked practitioners whether they knew they could terminate 
reassignments, 55 percent responded that they were not aware that 
they could do so.7  Point estimates with confidence intervals for selected 
statistics are contained in Appendix B. 
Appendix E compares reassignments that should not have been active 
among practitioners with one or two reassignments to those with three 
or four reassignments and five or more reassignments. 
 
Third parties collected payments 
Medicare paid a total of $140,488 through 
from Medicare through 
reassignments that should not have been active 
reassignments that should not 
have been active for only 1 percent of practitioners.8  From our sample, 
we identified 12 practitioners who had a total of 16 reassignments 
through which Medicare made payments (1) after the dates the 
 
7 After completing our survey, 12 practitioners requested us to provide them with copies 
of the CMS-855R or asked us how to find the CMS-855R so they could terminate their 
inactive reassignments. 
8 We counted payments in error only for services that were provided more than 1 month 
after the dates the practitioners indicated the reassignments should have been terminated. 
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practitioners indicated their employment with the third parties ended 
or (2) to third parties of which practitioners were not aware.9  While 
Medicare allowed a total of $35.3 million in payments through the 
sampled reassignments, only $140,488 in payments were made through 
reassignments that should not have been active.  The amount paid 
through each of these 16 reassignments ranged from $7 to $66,901.   
In one example, a practitioner had a total of 21 reassignments.  Of 
these, only three should have been active.  For the remaining 
18 reassignments, four were for third parties with which the 
practitioner had terminated her employment in 2004.  These third 
parties continued to collect Medicare payments on the practitioners 
behalf.  Medicare payments to these third parties totaled more than 
$7,800 in 2007, which was 3 years after the practitioner indicated she 
terminated her employment with them.  All four of these entities shared 
the same address.10 
 
CMS contractor staff reported using 
CMS contractors reported using safeguards to 
safeguards to ensure that both 
ensure correct processing of reassignments, 
practitioners and third parties are 
but several factors may limit their effectiveness 
enrolled in Medicare, the signatures on 
the applications are those of the practitioners or delegated officials, the 
signatures are original (not photocopied or stamped), and the third parties 
listed are eligible to receive reassigned benefits.11  
Although they are not required to do so, 7 of 10 Medicare contractors 
reported using additional safeguards, such as comparing the signatures 
on reassignment applications to signatures on file or contacting the 
practitioners or the third parties to verify the reassignments by 
telephone, mail, or site visits.  Contractors that used these additional 
safeguards indicated that they target these efforts to areas of high  
 
9 When practitioners indicated they had no knowledge of the third parties, all payments 
made through those reassignments were determined to be made in error regardless of date. 
10 We found that 25 separate legal entities shared this same address and suite number. 
11 The safeguards contractors reported using are those in CMSs Medicare Program 
Integrity Manual, Pub. No. 100-08, ch. 10. 
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F I N D I N G S  
suspected fraud, practitioners with multiple reassignments, and/or 
855Rs they find suspicious or questionable.12 
While contractors have implemented safeguards to prevent payments 
made through reassignments that should not have been active, the 
safeguards have limited effectiveness because (1) many practitioners 
fail to update their contact information with CMS, (2) many 
practitioners fail to review claims that were billed on their behalf, and 
(3) PTANs are not automatically deactivated when reassignments are 
deactivated. 
More than half of practitioners failed to update their information with CMS  
Many practitioners failed to provide CMS updated contact information, 
which could create challenges in contacting practitioners to verify 
reassignments.  Only 48 percent of PECOS addresses resulted in 
responses from the practitioners.  We identified correct mailing 
addresses for nearly all of the remaining practitioners using sources 
other than the May 2008 Extract.  We obtained addresses from the NPI 
registry for 32 percent of practitioners.  We obtained addresses for 
19 percent of practitioners through multiple Internet sources, such as 
Google.com, State licensing board Web sites, LexisNexis, and social 
networking sites.  We were unable to locate addresses for 2 percent of 
practitioners.13 
Additionally, 29 percent of practitioners indicated that they never 
update, did not know how to update, or relied on others to update their 
contact information with Medicare.14  One practitioner explained, I 
personally do not contact Medicare.  I have always presumed that the 
credentialing and billing departments take care of this. . . .  All of the 
practitioners in our sample who had payments made through 
reassignments that should not have been active failed to either 
 
12 In one example demonstrating the efforts contractors undertake to prevent 
inappropriate reassignments, a contractor rejected a reassignment application because it 
lacked required information.  Subsequent to the rejection, the third party provided the 
missing information, resubmitting the original application.  However, the contractor noted 
that the date on the application had been erased and rewritten.  The contractor spoke with 
the practitioner, who explained that he decided not to join the group, leading the contractor 
to believe that the third party submitted the reassignment application without the 
practitioners knowledge.  The contractor referred the group for further investigation. 
13 Percentages exceed 100 percent because of rounding. 
14 Practitioners indicated that they relied on administrative staff and credentialing or 
billing departments to update their information or prompt them to do so. 
  OEI-07-08-00180  REASSIGNMENT OF MEDICARE BENEFITS  10   
   
F I N D I N G S  
terminate their reassignments or update their contact information with 
CMS.   
Nearly half of practitioners were unaware that they could review 
claims billed on their behalf 
Practitioners, upon request to CMS, have unrestricted access to all 
claims billed on their behalf by the third parties to which their benefits 
have been reassigned.15  Theoretically, practitioners would see potential 
inappropriate claims that third parties billed to Medicare when 
reviewing the claims billed on their behalf.  However, two factors 
impede the effectiveness of this safeguard.  First, 48 percent of 
practitioners reported that they were not even aware that they were 
entitled to access the claims billed on their behalf.  Second, if 
practitioners are not aware that third parties are billing Medicare on 
their behalf, they have no reason to request access to claims that the 
third parties are billing. 
PTAN deactivation does not currently update PECOS and terminate the 
reassignment 
Contractors use the Multiple Carrier System to pay Medicare claims.  If 
after 12 months a PTAN is not used, it is deactivated in the system.16  
Deactivation of the PTAN prevents further billing through a given 
reassignment.  However, as long as third parties continue to bill on 
practitioners behalf, the deactivation date is not triggered.  
Additionally, deactivation of a PTAN has no effect on the reassignment 
record in PECOS because the Multiple Carrier System did not populate 
PECOS with deactivation information at the time of this study.
 
15 42 CFR  424.80(d)(2).  Although the regulation requires practitioners to have 
unrestricted access, it does not specify how this access should be given. 
16 CMS, Medicare Program Integrity Manual, Pub. No. 100-08, ch. 10,  13.1. 
  OEI-07-08-00180  REASSIGNMENT OF MEDICARE BENEFITS  11   
   
 R E C O M M E N D A T I O N S  
 
Most practitioners enrolled in Medicare have at least one reassignment.  
However, practitioners indicated that 37 percent of their reassignments 
should not have been active.  Despite the high number of reassignments 
that should not have been active, Medicare payments made through 
these reassignments were low.  Safeguards are in place to ensure 
correct processing of reassignments, but several factors may limit their 
effectiveness. 
Subsequent to our analyses, CMS staff informed us of new policies that 
might address the limitations that we identified.  These include 
periodically revalidating practitioner contact information and 
implementing communication from the Multiple Carrier System to 
PECOS.  The implementation of these new policies would address the 
limitations we identified regarding providers failure to update their 
contact information or terminate inactive reassignments and regarding 
the deactivation of PTANs. 
To reduce the number of reassignments that should not be active, we 
recommend that CMS: 
Implement Plans To Revalidate Practitioner Enrollment Information.  
We encourage CMS to implement its plans to revalidate practitioners 
enrollment information every 5 years.   
Educate Practitioners on the Need To Provide Current Information. 
CMS could educate practitioners on the need to provide current 
correspondence information and terminate inactive reassignments.
Implement Plans To Update PECOS From Other Data Sources.  We 
encourage CMS to follow through with plans to allow the Multiple 
Carrier System to populate PECOS with information on practitioners 
whose billing privileges have been deactivated.    
Follow Up With the Practitioners for Whom Payments Were Made 
Through Reassignments That Should Not Have Been Active.  We will 
forward information on these claims to CMS in a separate 
memorandum. 
AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 
RESPONSE 
In its written comments, CMS agreed with the first and second 
recommendations, but it did not indicate specific agreement or 
  OEI-07-08-00180  REASSIGNMENT OF MEDICARE BENEFITS  12   
   
R E C O M M E N D A T I O N S  
disagreement with the third and fourth recommendations.  However, 
CMS described actions it has taken or plans to take to address all four 
recommendations.   
CMS indicated that it has taken a number of steps to strengthen the 
reassignment process, such as implementing a systematic process to 
deactivate approximately 2 million infrequently used Medicare billing 
numbers.  CMS indicated that it has also provided practitioners online 
access to enroll, change, or view existing enrollments. 
In response to the first recommendation, CMS indicated that it 
instructed Medicare carriers and Part A/B Medicare Administrative 
Contractors, through program instructions, to initiate and complete 
more than 10,000 revalidations. 
In response to the second recommendation, CMS indicated it has taken 
significant steps to help educate the public about its reporting 
responsibilities including discussing reporting responsibilities and the 
need to update enrollment information during CMS Open Door Forums, 
participating in conference calls with regional offices and contractors to 
discuss reporting responsibilities, mailing reporting responsibility 
information to high-risk providers, posting reporting responsibility 
information on the Medicare provider enrollment Web site, and sending 
listserv announcements to practitioners about their reporting 
responsibilities. 
In response to the third recommendation, CMS plans in October 2009 to 
update PECOS with verified deactivation information contained in the 
Multiple Carrier System.  The synchronization process will ensure 
PECOS maintains current information on practitioners. 
In response to the fourth recommendation, CMS stated that once it 
receives the information from OIG, it will follow up with third parties 
that may have been inappropriately paid.   
We did not make changes to the report based on CMSs comments.  The 
full text of CMSs comments can be found in Appendix F. 
  OEI-07-08-00180  REASSIGNMENT OF MEDICARE BENEFITS  13   
   
 A P P E N D I X   ~   A  
Table A-1:  Original Sampling Frames 
Original Sample Design
Practitioners in  Reassignments in 
Stratum Stratum Definition
Population* Population* Practitioners in  Reassignments in 
Sample Sample
Practitioners with one 
1 or two active  448,824 559,308 166 202
reassignments
Practitioners with 
2 three or four active  54,345 178,208 166 543
reassignments
Practitioners with five 
3 or more active  14,767 95,500 166 1,076
reassignments
     Total 517,936 833,016 498 1,821
*The population figures are based on data in the Provider Enrollment, Chain, and Ownership System May 2008 Extract.  As described in the "Methodology" section, the May 
2008 Extract is known to contain reassignments that should not be active.  However, no other data source is available to provide more accuarate population figures.
Source:  Office of Inspector General (OIG) analysis of May 2008 Individual Global Extract File Enrollment and Reassignment Tables, 2009.  
Table A-2:  Active Reassignments Correctly Identified     
 
Practitioners With  Practitioners With  Practitioners With 
Design Sample  Reassignments in 
Stratum One or Two Active  Three or Four Active  Five or More Active 
Size Sample
Reassignments Reassignments Reassignments
1 166 0 0 166 249
2 22 144 0 166 497
3 6 8 152 166 977
     Adjusted
194 152 152 498 1,723
     Sample Size
Source:  OIG analysis of May 2008 Individual Global Extract File Enrollment and Reassignment Tables and Provider Enrollment, Chain, and Ownership System data, 2009.
  OEI-07-08-00180  REASSIGNMENT OF MEDICARE BENEFITS  14   
   
 A P P E N D I X   ~   B  
Table B-1:  Point Estimates and Confidence Intervals
95-Percent 
Sample 
Description Point Estimate Confidence 
Size (n)
Interval
 $21,056,195,180 
Medicare expenditures through reassignments 497 $27,828,102,201
$34,600,009,222
Percentage of reassignments practitioners indicated should not have been active 1,482 36.5 31.441.6
Percentage of practitioners with reassignments that should not have been active 439 38.8 32.545.5
Percentage of reassignments to third parties that should not have been active for which the 
682 91.7 87.296.2
practitioner worked previously
Percentage of reassignments to third parties that should not have been active for which the 
682 8.3 3.812.8
practitioner never worked
Percentage of practitioners believing that reassignments automatically terminated with end 
267 35.1 25.244.9
of employment
Percentage of practitioners unaware they could terminate a reassignment 439 55.2 48.262.0
Percentage of reassignments that should not have been active (practitioners 
233 33.1 26.240.1
with one or two reassignments)
Percentage of reassignments that should not have been active (practitioners 
428 42.1 36.248.0
with three or four reassignments)
Percentage of reassignments that should not have been active (practitioners 
821 50.0 43.656.5
with five or more reassignments)
Percentage of practitioners with reassignments that should not have been active 
182 34.7 27.342.0
(practitioners with one or two reassignments)
Percentage of practitioners with reassignments that should not have been active  
132 70.4 62.578.3
(practitioners with three or four reassignments)
Percentage of practitioners with reassignments that should not have been active 
125 79.2 72.186.3
(practitioners with five or more reassignments)
Percentage of practitioners with payments for reassignments that should not have been 
439 1.0 0.22.9
active
Percentage of Provider Enrollment, Chain, and Onwership System (PECOS) 
497 48.1 41.554.7
correspondence addresses that were correct
Percentage of practitioners with correct National Provider Identifier contact information and 
497 31.8 26.038.3
incorrect PECOS contact information
Percentage of practitioners with correct other contact information and incorrect PECOS and 
497 18.5 14.024.0
NPI contact information
Percentage of practitioners we could not locate  497 1.7 0.44.5
Percentage of practitioners who never updated Medicare on contact information 439 29.0 23.135.7
Percentage of practitioners unaware they had access to claims billed on their behalf 439 48.1 41.355.1
Source:  Office of Inspector General analysis of survey responses and 2007 National Claims History file data, 2009.
  OEI-07-08-00180  REASSIGNMENT OF MEDICARE BENEFITS  15   
   
 A P P E N D I X   ~   C  
Nonresponse Analysis 
We analyzed how nonresponse to our survey may have affected our 
survey estimates.  We examined potential nonresponse bias effects on 
key survey questions.  Our nonresponse analysis provided no statistical 
evidence that our survey results were biased because of nonresponse.   
Our basic approach was to impute answers for nonrespondents and 
determine whether the survey estimate calculated with the imputed 
values differed significantly from the survey estimate based solely on 
the respondents answers.  If no statistical difference was found between 
the two estimates, we considered our survey estimates to be unaffected 
by potential nonresponse bias. 
Variables available for both respondent and nonrespondent 
practitioners were the number of allowed claims for 2007, the amount of 
allowed claims for 2007, the number of active reassignments indicated 
in PECOS, and the number of years since graduating from their medical 
programs.  We determined whether respondents and nonrespondents 
differed statistically at the 95-percent confidence level on these 
variables.  We found only one difference for practitioners with five or 
more reassignments:  nonresponding practitioners graduated more 
recently (on average 14 years ago) than responding practitioners (on 
average 17 years ago). 
Because practitioners with five or more reassignments who graduated 
more recently were now underrepresented in our sample because of 
nonresponse, we investigated whether this might bias our survey 
results.  To do this, we first classified respondents into two categories 
corresponding to 14 or 17 years since graduation.  Then we randomly 
assigned respondents values to missing nonrespondents values within 
the same graduation year categories.  Finally, we conducted statistical 
tests of significance at the 95-percent confidence level to determine 
whether the estimates based on both respondents answers and 
nonrespondents imputed values differed from the estimates based only 
on respondents answers.   
Based on this analysis, we found no statistical evidence that our survey 
results were biased because of practitioner nonresponse. 
  OEI-07-08-00180  REASSIGNMENT OF MEDICARE BENEFITS  16   
   
A P P E N D I X   ~   D  
 A P P E N D I X   ~  D 
Table D-1:  Practitioners With Reassignments by Specialty 
Comparisons should not be made between Table 1 and Table D-1.  
Practitioners may have multiple specialties; thus, the information will 
not match between the tables. 
Percentage of Enrolled 
Enrolled  Providers With 
Physician Specialty Providers With 
Providers Reassignments
Reassignments
Emergency Medicine 35,993 34,341 95.4
Interventional Radiology 1,493 1,399 93.7
Radiation Oncology 3,259 3,046 93.5
Critical Care 4,435 4,085 92.1
Diagnostic Radiology 29,701 27,284 91.9
Cardiac Surgery 1,803 1,654 91.7
Nuclear Medicine 1,049 954 90.9
Anesthesiology 26,913 24,385 90.6
Interventional Pain Management 3,957 3,549 89.7
Hematology/Oncology 5,780 5,162 89.3
Pediatrics 25,470 22,706 89.1
Surgery Oncology 711 632 88.9
Pathology 7,667 6,805 88.8
Cardiology 18,422 16,326 88.6
Family Practice 58,364 51,687 88.6
Nephrology 5,056 4,453 88.1
Gynecological/Oncology 796 701 88.1
Hematology 968 852 88.0
Peripheral Vascular Medicine 262 228 87.0
Medical Oncology 1,920 1,661 86.5
Orthopedic Surgery 14,846 12,817 86.3
Pulmonary Disease 6,835 5,877 86.0
Neurosurgery 3,400 2,923 86.0
Vascular Surgery 2,721 2,339 86.0
Internal Medicine 84,207 72,145 85.7
Other 1,595 1,363 85.5
Obstetrics/Gynecology 21,967 18,727 85.3
Geriatric Medicine 2,925 2,487 85.0
Thoracic Surgery 2,650 2,245 84.7
Hand Surgery 1,228 1,040 84.7
Urology 5,934 5,011 84.4
continued on next page
  OEI-07-08-00180  REASSIGNMENT OF MEDICARE BENEFITS  17   
   
A P P E N D I X   ~   D  
Table D-1:  Practitioners With Reassignments by Specialty (continued) 
Percentage of Enrolled 
Enrolled  Providers With 
Physician Specialty Providers With 
Providers Reassignments
Reassignments
Infectious Medicine 3,666 3,092 84.3
Neurology 9,023 7,610 84.3
Gastroenterology 7,405 6,231 84.1
Colorectal Surgery 827 690 83.4
Osteopathic Manipulative Treatment 1,366 1,139 83.4
Physical Medicine and Rehabilitation 5,767 4,806 83.3
General Surgery 17,241 14,349 83.2
Ophthalmology 10,497 8,706 82.9
Endocrinology 3,586 2,928 81.7
Otolaryngology 5,461 4,455 81.6
Preventative Medicine 789 641 81.2
Allergy/Immunology 2,221 1,803 81.2
Rheumatology 2,674 2,159 80.7
Dermatology 6,174 4,940 80.0
Psychiatry 22,880 18,053 78.9
Addiction Medicine 408 305 74.8
Maxillofacial Surgery 1,029 761 74.0
Optometry 19,055 14,036 73.7
Plastics 3,505 2,443 69.7
General Practice 8,739 5,981 68.4
Podiatry 9,109 6,223 68.3
Neuropsychiatry 196 133 67.9
Oral Surgery 3,014 1,965 65.2
Chiropractic 32,276 17,263 53.5
  Total 559,235 469,596
Source:  Office of Inspector General analysis of Provider Enrollment, Chain, and Ownership System data, 2009.
  OEI-07-08-00180  REASSIGNMENT OF MEDICARE BENEFITS  18   
   
 AA PP PP EE NN DD II XX    ~~    EE   
Reassignments That Should Not Have Been Active 
Although practitioners with one or two reassignments were less likely to 
have reassignments that should not have been active than practitioners 
with more than two reassignments, they had the greatest number of 
reassignments that should not have been active overall.  Among 
practitioners with three or four reassignments, the proportion of 
practitioners with at least one reassignment that should not have been 
active was 35 percentage points higher than that of practitioners with 
one or two reassignments.  Among practitioners with five or more 
reassignments, the proportion of practitioners with at least 
one reassignment that should not have been active was 45 percentage 
points higher than that of those with one or two reassignments (see 
Table E-1).  Statistical significance is shown in Table E-2. 
Table E-1:  Comparisons of Percentages of Reassignments That Should Not 
Have Been Active 
 
Percentage of Reassignments  Percentage of Practitioners With One 
Number of 
That Should Not Have Been  or More Reassignments That Should 
reassignments
Active Not Have Been Active
One or two 
33.1 34.7
reassignments
Three or four 
42.1 70.4
reassignments
Five or more 
50.0 79.2
reassignments
     Total 36.5 38.8
Source:  Office of Inspector General (OIG) analysis of survey responses and claims data, 2009.
 
Table E-2:  Statistical Significance Between Strata 
Percentage of Practitioners With  95-Percent 
Number of Reassignments One or More Reassignments That  Confidence  P-Value
Should Not Have Been Active Interval
One or two reassignments 34.7 - -
Three or four reassignments 70.4 - -
Difference  35.7 24.946.5 < 0.0001
One or two reassignments 34.7 - -
Five or more reassignments 79.2 - -
Difference  44.5 34.354.8 < 0.0001
Source:  OIG analysis of survey responses, 2009.
  OEI-07-08-00180  REASSIGNMENT OF MEDICARE BENEFITS  19  A P  PEN  D  x  F 
Agency Comments 
DEPARTMENT OF HEALTH & HUMAN SERVICES  Centers for Medicare & Medicaid Services 
Administrator 
Washlngton,DC 20201 
DATE:  SEP lilt 2JJIl9j 
TO:  Daniel R. Levinson 
Inspector General 
FROM:  Charlene Frizzera 
Acting Administrator 
SUBJECT:  Office of Inspector Geneml (OlG) Draft Report: "Reassignment of Medicare 
Benefits" (OEI-07-08-00L80) 
Thank you for the opportunity to review and respond to the above referenced GIG Draft Report. 
The Centers for Medicare & Medicaid Services (CMS) appreciates the OIG's efforts in 
reviewing the Medicare reassignment process. 
The cMS has already taken a number ofsteps to strengthen the reassignment process. 
Specifically, after the publication of"Medicare Program: Requirements for Providers and 
Suppliers to Establish and Maintain Medicare Enrollment (CMS-0002-F)'' in the Pederql 
Register On April 21, 2006, CMS implemented a systematic. process to deactivate infrequently 
used Medicare billing numbers (i.e., a billing numhernot used in more than 12 consecutive 
months) for physicians, non-physician practitioners, and other suppIlers.  Since implementIng 
this systematic process, we have deactivated approximately 2 million hilling numbers. 
In addition, CMSimplemented an internet-based provider enrollment system known as, the 
Provider Enrollment, Chain and Ownership System (PECOS), an electronic version of the 
Medicare enroJIment application process, earlier this year. The PECOS system allows 
physicians, non-physician practitioners,and other providers and suppliers (except for suppliers 
ofdurable medical equipment, prosthetics, orthotics and supplies) to enroll, change, or view an 
existing enrollment record at any time,  By allowing physicians and non-physician practitioners 
ready access to their Medicare emolhnent record, we believe that physicians and non-physician 
practitioners will review and, as appropriate, update their current reassignments with the 
Medicare program more routinely. 
OIG Recommendation 
Implement plans to revalidate practitioner enrollment information. 
OEI070800180  REASSIGNMENT OF MEDICARE BENEFITS  20   
   
A P P E N D I X   ~   F  
  OEI-07-08-00180  REASSIGNMENT OF MEDICARE BENEFITS  21   
   
A P P E N D I X   ~   F  
  OEI-07-08-00180  REASSIGNMENT OF MEDICARE BENEFITS  22   
   
 A C K N O W L E D G M E N T S  
This report was prepared under the direction of Brian T. Pattison, 
Regional Inspector General for Evaluation and Inspections in the 
Kansas City regional office.   
Brian Whitley served as the team leader for this study.  Other principal 
Office of Evaluation and Inspections staff from the Kansas City regional 
office who contributed to the report include Megan Buck and 
Michala Walker; central office staff who contributed include Kevin 
Farber and Kevin Manley.  
  OEI-07-08-00180  REASSIGNMENT OF MEDICARE BENEFITS  23