Department of Health and Human Services 

OFFICE OF 

INSPECTOR GENERAL 

Portable Imaging Services: 

Nursing Home Perspectives 

JUNl3 GIBBS BROWN 

Inspector General 

NOVEMBER 1997 

OEI-09-95-00091 
OFFICE OF INSPECTOR GENERAL 

The mission of the Office of Inspector General (OIG), as mandated by Public Law 

95-452, is to protect the integrity of the Department of Health and Human Services 

programs as well as the health and welfare of beneficiaries served by them. This statutory 

mission is carried out through a nationwide program of audits, investigations, inspections, 

sanctions, and fraud alerts. The Inspector General informs the Secretary of program and 

management problems and recommends legislative, regulatory, and operational approaches 

to correct them. 

Office of Evaluation and Inspections 

The Office of Evaluation and Inspections (OEI) is one of several components of the Office 

of Inspector General. It conducts short-term management and program evaluations (called 

inspections) that focus on issues of concern to the Department, the Congress, and the 

public. The inspection reports provide findings and recommendations on the efficiency, 

vulnerability, and effectiveness of departmental programs. 

OEI’s San Francisco Regional Office prepared this report under the direction of 

Kaye D. Kidwell, Regional Inspector General, and Paul A. Gottlober, Deputy Regional 

Inspector General. Principal OEI staff included: 

REGION IX HEADQUARTERS 

Brad Rollin, Project Leader Stuart Wright, Program Specialist 

Robert Gibbons, Project Leader 

Kathy Dezotte 

Don Loeb 

Thomas Purvis 

Joseph Corso, Consultant 

To obtain a copy of this report, call the San Francisco Regional Office at 415-437-7900. 
Department of Health and Human Services 

OFFICE OF 

INSPECTOR GENERAL 

Portable Imaging Services: 

Nursing Home Perspectives 

JUNE GIBBS BROWN 

Inspector General 

NOVEMBER 1997 

OEI-09-95-00091 
EXECUTIVE SUMMARY 

PURPOSE 

This inspection determined when, how, and why nursing homes use portable imaging 

services for their patients. 

BACKGROUND 

Portable Imaging 

Nursing homes* provide directly or arrange for ancillary services--such as x-rays--for 

patients who require them. In some instances, firms known as portable x-ray suppliers 

provide portable x-ray and electrocardiogram (EKG) services in nursing homes.** These 

services may be billed either by skilled nursing facilities to the Part A fiscal intermediary 

or by the portable supplier to the Part B carrier. “Direct billing ” occurs when the 

portable supplier bills the carrier. ‘Billing under arrangement” occurs when, based on a 

contractual agreement, a skilled nursing facility bills the fiscal intermediary and pays the 

portable supplier for services rendered. Skilled nursing facilities may bill under 

arrangement even for patients who are not in Part A-covered stays. 

When a fiscal intermediary processes the claim, reimbursement is based on a 

predetermined interim payment which is finalized after a skilled nursing facility submits 

its annual cost report. When a carrier processes the claim, reimbursement is based on a 

combination of a reasonable charge determination and the national fee schedule. 

In a companion report, entitled “Portable Imaging Services: A Costly Option” 

(OEI-09-9500090), we found that portable services cost much more than non-portable 

services and that Medicare pays too much when services are billed under arrangement. 

As a result, we conducted interviews with nursing homes that provide portable services to 

determine (1) why they use portable services and (2) why they bill under arrangement. 

Another companion report, “Imaging Services for Nursing Home Patients: Medical 

Necessity” (OEI-09-95-00092), assesses the medical necessity and quality of care. 

Methodology 

We conducted the interviews with a sample of 93 nursing homes that had provided a 

portable chest x-ray for the patients sampled in our studies on costs, medical necessity, 

* For purposes of this inspection, nursing homes refers to skilled nursing, Medicaid nursing, board and 

care, assisted living, and retirement facilities collectively. Where appropriate, we distinguish between 

skilled nursing facilities and these other facilities. 

**Other options for nursing homes include transporting patients to hospital outpatient departments, 

imaging centers, physician offices, or other facilities for x-rays or EKGs. 

i 
and quality of care of selected imaging procedures provided in different settings. We 

asked the nursing homes how they provide services, how they bill for them, and their 

rationale for these decisions. For skilled nursing facilities that bill under arrangement, we 

obtained copies of their contracts with portable suppliers. 

Operation Restore Trust 

In May 1995, President Clinton announced Operation Restore Trust (ORT), a crackdown 

on Medicare and Medicaid fraud, waste, and abuse in home health agencies, nursing 

homes, and durable medical equipment suppliers. The ORT focuses on the five States-­

California, New York, Florida, Texas, and Illinois--that account for 40 percent of the 

nation’s Medicare beneficiaries and program expenditures. This was an ORT inspection, 

and this report is the second in a series on imaging services for nursing home patients 

prepared by the Office of Inspector General. 

FINDINGS 

Portable services have become routine 

Although Health Care Financing Administration (HCFA) regulations state that physicians 

must justify the need for the use of a portable imaging supplier, portable services are 

routinely provided to patients who reside in the sampled nursing homes. Approximately 

one-third of the physician orders for chest x-rays that were provided by portable suppliers 

indicated the reason why the x-ray was medically necessary but did not justify the need 

for portable services. Furthermore, there was no indication in more than 50 percent of 

the beneficiaries’ medical records that they would be unable to be transported outside of 

the nursing home for medical services. In response to these findings, sampled nursing 

homes stated that patients routinely receive portable services because (1) portable services 

are less costly and more convenient for nursing homes and (2) they believe that portable 

services are easier and more convenient for the patient. 

Reasons for billing under arrangement are questionable 

In our report on the costs of imaging services, we found that portable services billed 

under arrangement cost as much as nine times more than the same services provided in 

other settings. Respondents were unable to shed much light on the subject of billing under 

arrangement, however. They stated that they were unable to answer questions about 

billing under arrangement because they were too new to the skilled nursing facility, were 

not involved in the decision, or did not occupy a decision-making position when the 

facility negotiated the arrangement. 

Patient records are not secure 

Approximately 21 percent of nursing homes in our sample stated that portable x-ray 

technicians have access to the medical file for the patient who is receiving a portable 

service. 

ii 
RECOMMENDATIONS 

In the draft of this report, we recommended that HCFA: 

b eliminate the requirement that physicians just@ the use of portable services for 

nursing home patients and 

b remind nursing homes that suppliers should not have access to patient records. 

The HCFA concurred with our recommendation on patient records but did not concur with 

our recommendation that it eliminate the requirement that physicians justify the use of 

portable services. The HCFA believes that the current requirements should be maintained 

but does not state that it will enforce them. 

After we released our draft report, President Clinton signed into law the Balanced Budget 

Act of 1997. Among the provisions in this law, it (1) establishes a prospective payment 

system for beneficiaries in Part A-covered stays in skilled nursing facilities, to be phased 

in over several years; (2) requires that all Part B items and services furnished to residents 

of nursing homes (not covered under Part A) be billed by the nursing homes as part of a 

consolidated billing system; (3) limits reimbursement for services paid under consolidated 

billing to the Part B fee schedule; and (4) requires HCFA Common Procedure Coding 

System codes for services provided to skilled nursing facility patients that are billed to 

fiscal intermediaries. 

Based on HCFA’s comments as well as the impact of the Balanced Budget Act, we have 

amended our recommendations. We now recommend that HCFA: 

b enforce the requirement that physicians justify the need for portable services, 

We estimate that HCFA could save as much as $63.7 million in 1 year and 

$37 1.9 million over 5 years by enforcing current requirements. 

b take into account the unnecessary payments that have been made for portable 

imaging services when it implements the prospective payment and Part B 

provisions of the Balanced Budget Act, seeking legislative authority if 

necessary, and 

Because HCFA has not enforced the physician justification requirement, services 

that were not justified were routinely paid. 

b remind nursing homes that suppliers should not have access to patient records. 

Most nursing homes know that portable suppliers do not need access to patient 

records. Federal law dictates that nursing homes maintain strict control of these 

records. 

. . . 111 
TABLE OF CONTENTS 

PAGE 

EXECUTIVE SUMMARY 

INTRODUCTION ......................................... 1 

FINDINGS .............................................. 5 

�  Portable services have become routine ........................... 5 

�  Reasons for billing under arrangement are questionable ................. 6 

�  Patient records are not secure ................................ 7 

RECOMMENDATIONS ..................................... 8 

APPENDICES 

A: Agency Comments ..................................... A-l 

B: Confidence Intervals .................................... B-l 

C: Estimated Savings ..................................... C-l 
INTRODUCTION 

PURPOSE 

This inspection determined when, how, and why nursing homes use portable imaging 

services for their patients. 

BACKGROUND 

Congress enacted Medicare in 1965 to provide health services to the elderly and disabled. 

The program consists of two distinct parts. The first part is hospital insurance or Part A. 

Part A covers services furnished by providers, i.e., hospitals, home health agencies, and 

skilled nursing facilities. The second part, supplementary medical insurance or Part B, 

covers a wide range of medical services and supplies. These include physician services, 

outpatient hospital services, diagnostic laboratory tests, x-rays, ambulance services, and 

durable medical equipment. 

The Health Care Financing Administration (HCFA) administers Medicare and contracts 

with private insurance companies to process and pay claims. Contractors that process Part 

A claims are referred to as fiscal intermediaries. Contractors that process Part B claims 

are called carriers.’ Some companies operate as both fiscal intermediaries and carriers. 

The HCFA provides substantial guidance to fiscal intermediaries and carriers on applicable 

laws, regulations, national polices, fee schedules, and other requirements. In some areas, 

Federal law and HCFA allow the fiscal intermediaries and carriers considerable latitude in 

determining both coverage and reimbursement. 

Skilled nursing facilities and other extended care facilities 

Medicare beneficiaries recuperating from an acute episode may be eligible for post-acute 

skilled nursing services. The Medicare program provides coverage under Part A for 

skilled nursing services but not for custodial care. The skilled nursing benefit includes: 

b nursing care, 

b bed and board, 

b physical, occupational, or speech therapy, 

b medical social services, and 

b drugs, biologicals, supplies, appliances, and equipment for use in the facility. 

Medicare law stipulates that beneficiaries are eligible for skilled nursing benefits if they 

are transferred to a skilled nursing facility after a minimum 3-day covered stay in an acute 

’ An exception to this general rule is that fiscal intermediaries process Part B claims submitted by 

hospitals (for inpatient and outpatient services), home health agencies, and nursing facilities. 

1 
hospital. The patient must require skilled nursing care, and a physician must order the 

services. Part A covers skilled nursing services for up to 100 days per “spell of illness. ” 

In addition to skilled nursing facilities, other facilities offer varying levels of care for 

Medicare beneficiaries. These include Medicaid nursing, board and care, assisted living, 

and retirement facilities. We have included all of these facilities in the scope of this 

study and refer to them collectively as “nursing homes. ‘I We do, however, refer to 

skilled nursing facilities specifically where findings pertain solely to these entities. 

Portable x-ray and EKG services 

Nursing homes provide directly or arrange for ancillary services--such as x-rays--for their 

patients who require them. In some instances, firms known as portable x-ray suppliers 

provide portable x-ray and electrocardiogram (EKG) services in nursing homes.2 

Medicare’s portable x-ray benefit covers skeletal films of the arms, legs, pelvis, vertebral 

column, and skull as well as chest and abdominal films that do not use contrast media. 

Medicare also covers EKG services under the portable benefit, if they are medically 

necessary and are performed by certified portable x-ray suppliers. All of these services 

must be diagnostic rather than therapeutic. Portable x-ray suppliers must meet HCFA’s 

conditions of participation to receive reimbursement for these services. These conditions 

of participation require, among other things, that suppliers comply with State and local 

laws, which may provide for the licensing and regulation of portable suppliers. 

According to Medicare regulations, all portable x-ray services must be ordered by a 

physician. The physician’s signed order must specify the reason why the x-ray is being 

taken, the area of the body to be exposed, the number of x-rays to be taken, and the views 

needed. The physician also must state why portable services are necessary. 

Portable x-ray suppliers must maintain records for each patient. These records should 

include the examination date, a description of the x-rays that were taken, the name of the 

referring physician, the equipment operator, the physician to whom the x-rays were sent 

for interpretation, and the date the x-rays were sent to that physician. 

Billing for portable x-ray and EKG services 

Portable x-ray and EKG services provided to nursing home patients may be billed either 

by a skilled nursing facility to the Part A fiscal intermediary or by the portable supplier to 

the Part B carrier. Skilled nursing facilities have the option to do either. When the 

portable supplier bills the carrier, this is called ‘direct billing. ” When the skilled nursing 

facility bills the fiscal intermediary and pays the portable supplier for the services 

provided, this is called “billing under arrangement. ‘I Skilled nursing facilities may bill 

2 Other options for nursing facilities include transporting patients to hospital outpatient departments, 

imaging centers, physician offices, or other facilities for x-rays or EKGs. 
under arrangement even for patients who are not in Part A-covered stays. In these cases, 

the skilled nursing facility submits an outpatient claim to the fiscal intermediary. 

When the claim is processed by the fiscal intermediary, reimbursement is based on a 

predetermined interim payment which is finalized when the skilled nursing facility submits 

its annual cost report to its fiscal intermediary. When the claim is processed by the 

carrier, reimbursement is based on a combination of a reasonable charge determination 

and the national fee schedule. 

These different billing methods can result in vastly different reimbursement rates and costs 

to the Medicare program and beneficiaries, particularly when one compares reimbursement 

made by the fiscal intermediary to that made by the carrier. A companion report, entitled 

“Portable Imaging Services: A Costly Option” (OEI-09-9500090), contains a full 

description of these billing methods. 

Recent work on ancillary services for nursing home patients 

A 1996 General Accounting Office report entitled “Fraud and Abuse: Providers Target 

Medicare Patients in Nursing Facilities” (GAO/HEHS-96-18) warned that 

. . .a population with extensive health care needs grouped together at a single 

location offers unscrupulous providers the opportunity for volume billing, and 

Medicare often does not look for warning of egregious overutilization or rapid 

increases in billing. 

Operation Restore Trust 

In May 1995, President Clinton and Health and Human Services Secretary Donna Shalala 

announced the kickoff of Operation Restore Trust (ORT), a new health care anti-fraud 

initiative. The ORT is a crackdown on Medicare and Medicaid fraud, waste, and abuse in 

home health agencies, nursing homes, and durable medical equipment suppliers. It 

focuses on the five States--California, New York, Florida, Texas, and Illinois--that 

account for 40 percent of the nation’s Medicare beneficiaries and program expenditures. 

The ORT includes Federal and State agencies in collaboration with private sector entities 

and beneficiaries. The Federal agencies involved in this effort include the Office of 

Inspector General (OIG), HCFA, and the Administration on Aging. The OIG has 

undertaken a number of national program inspections aimed at identifying and eliminating 

systemic weaknesses that allow fraud, waste, and abuse to occur in the areas of home 

health, nursing homes, and durable medical equipment. This inspection was conducted as 

part of ORT. 

METHODOLOGY 

In the companion report, “Portable Imaging Services: A Costly Option, ” we found that 

portable services cost much more than non-portable services and that Medicare pays too 

3 
much when services are billed under arrangement. As a result, we conducted interviews 

with nursing homes who provide portable services to determine (1) why they use portable 

services and (2) if and why they bill under arrangement. 

From a 1 percent simple random sample of the Common Working File, we extracted data 

on all beneficiaries who were in a nursing homes or who received a portable imaging 

service at any time during calendar year (CY) 1994. We then extracted claims data on all 

imaging services provided to these beneficiaries during CY 1994. 

We identified these nursing home residents through several indicators in the claims data. 

These indicators included place of service, hospital discharge destination, skilled nursing 

claims, and HCFA Common Procedure Coding System (HCPCS) codes that are likely to 

correspond to a nursing home resident (such as transportation of portable x-ray 

equipment). Based on a pre-test of this approach, we estimate that our database included 

approximately 93 percent of all imaging services provided to nursing home residents. 

From this newly created database, we selected a stratified random sample of 729 imaging 

services that were provided while the beneficiaries were nursing home residents. The 

strata are illustrated below: 

r Stratum 1 Sample size 11 

Billed as part of 1 ORT States 1 :: ( 

Chest x-rays (HCPCS = Part-A nursing SbY NonsORT States 

I I II

71010 through 71035) All other billing ORT States 134 

II 

arrangements Non-ORT States 60 

ORT States 143 _ . EKGs (numerous HCPCS codes ) 

Non-ORT States 65 

Computerized axial tomography and magnetic ORT States 167 

resonance imaging (numerous HCPCS codes) Non-ORT States 75 

When there was no skilled nursing facility claim overlapping the date of imaging service 

in our sample, we attempted to verify that the beneficiary was a nursing home resident by 

contacting providers and nursing homes. 

We conducted interviews with the 93 nursing homes that we verified had provided a 

portable chest x-ray for the patients in our sample. We asked the nursing homes how they 

provide services, how they bill for them, and their rationale for these decisions. For 

skilled nursing facilities that bill under arrangement, we obtained copies of their contracts 

with portable suppliers. We also collected medical records for all beneficiaries in our 

sample for our report “Imaging Services for Nursing Home Patients: Medical Necessity” 

(OEI-09-95-00092). 

4 
FINDINGS 

Portable services have become routine 

Although HCFA’s regulations state that physicians must justify the need for the use of a 

portable imaging supplier, portable services are routinely provided to patients who reside 

in the sampled nursing homes. For our review of medical necessity, we collected medical 

records for all of the patients in our sample. In order to assess compliance with HCFA’s 

regulations on use of portable services, we reviewed each patient’s record to determine 

whether a clear justification for portable services was stated. 

Approximately one-third of the physician orders for chest x-rays that were provided by 

portable suppliers indicated the reason why the x-ray was medically necessary but did not 

justify the need for portable services. Furthermore, there was no indication in more than 

50 percent of the beneficiaries’ medical records that they would be unable to be 

transported outside of the nursing home for medical services. 

In response to these findings, we asked sampled nursing homes why their patients 

routinely receive portable services. They cited two reasons, the first of which has nothing 

to do with the patient’s condition: 

w Portable services are less costly and more convenient for nursing homes 

When asked why their nursing homes routinely used portable services, respondents 

mentioned the increased cost to their nursing home of using non-portable services 

far more frequently than they mentioned the benefits to their patients. 

Transporting patients for services that otherwise could be provided by a portable 

supplier and paid fully by Medicare causes nursing homes to incur additional costs. 

These include (1) the cost of sending an aide with the patient and (2) the cost of 

transporting the patient, which is not covered by Medicare if it consists of a 

wheelchair van or other non-emergency transportation. On the other hand, 

respondents noted that beneficiaries routinely travel to other medical appointments. 

More than 88 percent of nursing homes in our sample acknowledged that 

beneficiaries take wheelchair vans to other appointments, and approximately 

38 percent noted that family members sometimes take patients to medical 

appointments. 

While sampled nursing homes save themselves money by using portable services, 

they do not consider the cost to beneficiaries, Medicare, and third party payers 

when selecting a portable supplier. Less than 8 percent of nursing homes solicit 

bids, negotiate, or otherwise consider the cost-effectiveness when selecting their 

portable supplier. Those that solicit bids tend to be public facilities that are 

required to do so in order to meet State or local laws. Nursing homes use other 

criteria to select portable suppliers. Timeliness and responsiveness are the primary 

5 
reasons why nursing homes use their portable suppliers. Nursing homes also 

consider the supplier’s reputation, equipment, and reliability. 

Lack of competition among portable x-ray suppliers is a factor. Only 26 percent 

of the nursing homes in our sample reported considering other portable imaging 

suppliers when they decided to use their current supplier. In addition, about half 

of the nursing homes stated that no other portable suppliers solicit their business. 

For the half that do receive solicitations, almost all of them noted that the 

suppliers’ marketing efforts were ineffective. At the same time, the number of 

consolidations and buyouts of portable suppliers is significant. We requested 

medical records from portable suppliers for all beneficiaries in our sample who 

received portable services. We encountered numerous instances where the supplier 

who provided the service in 1994 had been bought out by a larger corporation. 

The market is now dominated by national chains. 

b Sampled nursing homes believe that portable services are easier and more 

convenient for the patient 

Respondents stated that transporting patients for imaging services creates a 

hardship. Patients may have to endure long waits in hospital outpatient 

departments where emergency services are given priority over non-emergency 

imaging procedures. 

A patient’s ability to ambulate has no bearing on how the services are provided. 

In sampled nursing homes, physicians know that if they order a service that can be 

portable, it will be portable. In fact, no nursing homes in our sample have criteria 

that would determine when a patient should be transported for a routine or 

otherwise non-emergency chest x-ray. 

Reasons for billing under arrangement are questionable 

In our report on the costs of imaging services, we found that portable services billed 

under arrangement cost as much as nine times more than the same services provided in 

other settings. Respondents were unable to shed much light on the subject of billing under 

arrangement, however. They stated that they were unable to answer questions about 

billing under arrangement because they were too new to their skilled nursing facility, were 

not involved in the decision, or did not occupy a decision-making position when the 

skilled nursing facility negotiated the arrangement. 

Approximately 14 percent of respondents from skilled nursing facilities that bill under 

arrangement acknowledged that they do so to increase Medicare revenue. Other reasons 

for billing under arrangement included that (1) it was the policy of the skilled nursing 

facility or its corporate entity to provide all ancillary services under arrangement or 

(2) the facility thought that Medicare required it to bill under arrangement. 

6 
Most respondents (72 percent) do not know whether they would continue billing under 

arrangement if the fee schedule were applied. This is primarily because they are not 

acquainted with the fee schedule. 

Patient records are not secure 

Approximately 21 percent of nursing homes in our sample stated that portable x-ray 

technicians have access to the medical file for the patient who is receiving a portable 

service, In all other nursing homes, respondents stated that they provide the technician 

with a specific order and that the patient’s file is kept under strict control of the facility’s 

personnel. 

7 
RECOMMENDATIONS 

Legislative Update 

Afler we released our dra$!report?PresidentClintonsigned into law the Balanced 

Budget Act of X997, Among the provisionsin this law, it: 

* establishesa prospectivepaymentsystemfor beneficiariesin Part A-covered 

staysin skillednursingfacilities, to be phased in over severalyears; 

w requires thatull Part B itemsand servicesfurnished to residentsof nursing 

homes (notcovered under Part A/ be billed by the nursing homes as part of a 

consolidatedbilling system; 

* limitsreimbursementforservicespaid under consolidatedbilling to the 

Purt B fee schedule; and 

* requires HCPCS codesforservicesprovided to skillednursingfacility 

patientsthat are billed tofiscal intermediaries. 

In the draft of this report, we recommended that HCFA: 

b eliminatethe requirementthatphysiciansjustifythe use of portable servicesfor 

nursing homepatientsand 

b remind nursing homes thatsuppliersshouldnot have access to patient records. 

AGENCY COMMENTS AND REVISED RECOMMENDATIONS 

The HCFA concurred with our recommendation on patient records but did not concur with 

our recommendation that it eliminate the requirement that physicians justify the use of 

portable services. The HCFA believes that the current requirements should be maintained 

but does not state that it will enforce them. The full text of HCFA’s comments appears in 

appendix A. 

Based on HCFA’s comments as well as the impact of the Balanced Budget Act, we have 

amended our recommendations. We now recommend that HCFA: 

8 
b enforce the requirement that physicians justify the need for portable services, 

We estimate that HCFA could save as much as $63.7 million in 1 year and 

$371.9 million over 5 years by enforcing current requirements. 

Appendix C describes how we estimated the cost savings. 

b take into account the unnecessary payments that have been made for portable 

imaging services when it implements the prospective payment and Part B 

provisions of the Balanced Budget Act, seeking legislative authority if 

necessary, and 

Because HCFA has not enforced the physician justification requirement, services 

that were not justified were routinely paid. In implementing the Balanced Budget 

Act, HCFA needs to take these unnecessary payments into account and reduce 

prospective payment and Part B ancillary rates accordingly. This recommendation 

should be considered in tandem with a recommendation in our report “Portable 

Imaging Services: A Costly Option.” That report recommends that, in 

implementing the Balanced Budget Act, HCFA should take into account the 

inflated charges for (1) services billed under arrangement (including payments for 

services that were non-covered) and (2) transportation charges that were excessive 

or prorated incorrectly. 

b remind nursing homes that suppliers should not have access to patient records. 

Most nursing homes know that portable suppliers do not need access to patient 

records. Federal law dictates that nursing homes maintain strict control of these 

records. 

9 
APPENDIX A 

AGENCY COMMENTS 

Health Care Financing Administration 

DEPARTMENT OF HEALTH a HUMAN SERVICES Health Care Financing Administration 

DATE: 

TO: 

FROM: 

SUBJECT: 

The Administrator 

Washin&n. D.C. 202Of 

AUG 4 " 

JUL 241997 

June Gibbs Bmwn 

Inspector General 

Bruce C. Vladeck ! 

Administrator G \ 

Oftice of Inspector General (OIG) Dratl Reports:“Portable Imaging 

Services:A Costly Option” (OEI-O9-95-00090),and “Portable Imaging 

Services:Nursing Facility Perspectives,”(OEI-O9-95-00091) 

We reviewed tbe above-referencedreports identifying a number of problems with how 

nursing facilities provide and bill for imaging servicesfor their patients. 

Our detailed comments on the recommendationsare attachedfor your consideration. 

Thank you for the opporhmityto review end commenton these reports. 

A-l 

l 
--- 

Comments of the Health Care Financirm Administration IHCFA) 

gn Offke of lnsuector General (OIG1 Draft Reuorts: 

“Portable Imaaitm Services: A Costlv Oution” (OEI-09-95-000901. and 

“Portable ha&n Services: Nursine. Facilitv Persuectives.” (OEI-09-95-00091) 

General Comments 

The Inspector General should be aware of legislation proposed by the President in his 

fiscal year (FY) 1998 budget that would mitigate problems with ancillary billing that are 

experienced under current law. 

First, the President proposed to implement a prospective payment system (PPS) for 

skilled nursing facilities (SNFs) effective July 1,1998. Prospective payments would 

cover all SNF service costs, including routine service costs, ancillary costs (whether 

provided under Part A or Part B of Medicare), and capital-related costs. A PPS would 

eliminate cost-based discrepancies between “direct” billing and ‘under arrangement’ 

billing. 

Second, the President’s consolidated billing proposal is designed to address the current 

law’s lack of restraints on aucillary billing. Under the proposal, SNFs would be required 

to bill Medicare for all services (except the services of physicians, certified muse 

midwives, psychologists, hospice care, and nurse anesthetists). This proposal would 

prohibit payment to any entity other than the SNF for services or supplies furnished to 

Medicare-covered SNF patients 

Finally, as recommended by OIG, the President’s FY 1998 budget legislation would 

require SNFs to include HCFA common procedure coding system (HCPCS) codes on 

their bii. 

OIG Draft Reuort - OEI-O9-9540090 - Portable Imaninu Services: A Costlv Option 

OIG Recommendation 

HCFA should instruct fiscal intermediaries (FIs) to never pay more than the fee schedule 

amount for portable imaging services billed under arrangement. 

A-2 
2 

HCFA Resuonse 

We concur. However, we note it will take a considerable amount of administrative work 

to implement this policy. (For example, it is currently impossible to impose this 

requirement because SNFs use reveuue codes rather than HCPCS codes wbeu billing for 

these services. It is impossible to compare services usiug these codes. It will take time to 

make the changes necessary to require SNFs to use HCPCS codes.) HCFA already 

instructed the FIs, that in applying the prudent buyer principle, they should compare the 

price paid by SNFs for portable x-ray services with the amount paid when portable x-ray 

services are billed by the supplier to the carrier. 

OIG Recommendation 

HCFA should require FI edits and HCPCS codes on all claims to discontinue payments 

for non-covered services. 

HCFA Resuonse 

We concur with the intent of the recommendation. HCFA is currently pursuing 

legislation that will change SNF payment methodology and make this action unnecessary. 

We believe implementation of consolidated billing and an amendment to the current 

statute is a broader approach to resolving issues surrouuding non-covered services and 

excessive costs associated with SNFs big for portable imaging services. In the 

interim, HCFA explored use of HCPCS codes. However, this would require a major 

change to the Medicare Uniform Institutional Provider Billing Form (UB-92) and costly 

claims processing systems changes. Therefore, it is not cost effective over the longer 

term. -_.. 

OIG Recommendation 

HCFA should require FIs to disallow any nursing facility overhead associated with 

portable imaging services. 

HCFA Resuonse 

We do not concur. Portable x-ray costs incurred by the SNF under arrangement are 

subject to the test of reasonableness as required by regulations at 42 CFR 413.9, Costa ’ 

Related to Patient Care, and Chapter 21, Costs Related to Patient Care, of the provider 

Reimbursement Manual (PRM). As pointed out in PRM section 2103B, Prudent BuyerApplication of Prudent Buyer Principle, intermediaries may employ various means for 

A-3 
detecting and investigating situations where costs appear to be excessive. Included may 

be such techniques as comparing the prices paid by providers to the price paid by others. 

HCFA instructed the FIs, that in applyiug the prudent buyer principle, they should 

compare the price paid by SNFs for portable x-ray services with the amouut paid when 

portable x-ray services are billed by the supplier to the carrier. After allowing any 

reasonable amout of actual overhead that may be applied to the cost incurred by the SNF 

for the technical component and transportation component of the portable x-ray charge 

made by the.carrier to the SNF, that amount should be compared with the amount paid 

when portable x-ray services are billed by tbe supplier to the carrier (excluding the 

professional fee portion). 

OIG Recommendation 

HCFA should immediately convert transportation reimbursement rates to a national fee 

schedule, rebundle equipment setup with transportation, and remind carriers that they 

must prorate transportation charges when multiple patients are seen at the same facility. 

HCFA Resuonse 

We partially concur. We will soon publish a proposed role for the 1998 Medicare 

physician fee schedule. Among the proposals will be one addressing au adjustment of 

practice expense relative values assigned to codes payable under the physician fee 

schedule. As a part of that proposal, we plan to include a national payment rate for the 

portable x-ray transportation codes ROO70- one patient and RO075- multiple patients, 

effective with the 1998 physician fee schedule. 

We made a p~&y decision that it was appropriate to pay a setup fee with every portable 

x-ray procedure fbmished because there was no question tbat Medicare had historically 

paid higher amounts for the technical component of x-ray services furnished by portable 

suppliers vis-a-vis procedures performed by stationary entities. The setup fee reflects the 

historic national average difference between carrier payments for x-rays furnished by 

portable suppliers v&a-vls payments made for the procedures furnished by other 

facilities. We continue to believe these payments are appropriate. Further, it would be 

inappropriate to bundle setup fees with transportation payments since carriers pay a 

single transportation payment per trip, but would pay multiple setup fees when an 

individual beneficiary receives several x-ray procedures during a session. 

A-4 
4 

Separate codes, describing situations in which one patient is seen and those in which 

multiple patients are seen, clearly indicate that carriers should have different payment 

amounts. Further, a discussion of the required proration when multiple patients are seen 

was included in a Medicare Carriers Manual revision published in June 1996, trausmittal 

number 1546, citation section 15022.G.3. 

OIG Draft Renort OEI-09-9500091- Portable Imaainu Services: Nursing Facilitv 

Persnectives 

OIG Recommendation 

HCFA should eliminate the requirement that physicians justify the use of portable 

x-ray services for nursing facility patients. 

HCFA Resuonse 

We do not concur. We believe the current requirement in 42 CFR 486.106(a) should be 

maintained, even though it may not be enforced effectively at this time. We recently 

proposed and adopted a new rule requiring that the physician who orders a diagnostic test 

must be a physician who is responsible for some aspect of the beneficiary’s care. One of 

the primary reasons we took tbis action was to give the carriers an additional tool to use 

in determining whether diagnostic tests performed in musing facilities are medically 

necessary. We believe any action taken the following year to relax the ordering 

requirements for a category of diagnostic tests that is usually done in musing facilities 

would be poorly timed. Further, we believe, since x-ray procedures furnished on a 

portable basis are more expensive, more extensive justification of the necessity for the 

procedure is re+mable. Fhmlly, since relaxing the ordering oriteria could not possibly 

save the program any money, we can not see any benefit arising from making such a 

change. 

Furthermore, section 483.75(k) of The Reuuirements for Lonn-Term Care Facilities 

requires a SNF to provide or obtain radiology and other diagnostic services to meet the 

needs of its residents. In so doing, the facility must assist the resident in making 

transportation arrangements to and &om the source of services, if the resident needs 

assistance. As stated in your report, 88 percent of the facilities in your sample note that 

beneficiaries routinely travel to medical appointments outside the facility by taking 

wheelchair vans, and 38 percent of the facilities note tbat family members sometimes 

A-5 
5 

take patients to medical appointments outside the facility. This would indicate the use of 

more costly portable x-ray services performed in the SNP may not always be reasonable 

and necessary in those instances where the use of available outside resources is feasible. 

There is no requirement that an aide be sent witb a resident when obtaining services 

outside the facility. We recognize in some instances an aide may be necessary to ensure 

the safety of the resident. In those cases, the SNF may charge the resident for this service. 

Furthermore, under Title 3, Part B, section 321(a) of the Older Americans Act, grants are 

provided to state tits on aging to provide supportive services, including transportation 

(i.e., wheelchair vans), that are utilized by all long-tetm care (LTC) facility residents in 

order to attend medical appointments outside the facility. These services are provided at 

no cost to the facility. Also, under the Medicaid program, nursing facilities (NFs) are 

reimbursed for transportation charges as part of the daily rate. 

OIG Recommendation 

HCFA should remind NFs that suppliers should not have access to patient records. 

HCFA Resuonse 

We concur. HCFA is preparing to release a program memorandum that addresses 

medical necessity and confidentiaIity of medical records for all services provided in LTC 

facilities. 

The term nejrrg facility utilized throughout tbis report is misleading. Current Federal 

regulations distinguish between two types of LTC facilities: an NF under the Medicaid 

program, and a SNP under the Medicare program. We suggest that the term “long-term 

care faciliv replace the words ‘hursing facility” throughout ibis report when referring to 

a generic mu&g home. If a policy or concern specifically relates to Medicare SNFs or 

Medicaid NFs, it should be so noted. 

The definition of SNF coverage under Part A that appears in the “Background” is too 

general. We suggest it be more specific. Section 1861(h) of the Social Security Act 

provides for coverage of extended care services furnished to an inpatient of a SNF. Such 

coverage includes: (1) nursing care provided by, or under the supervision of a registered * 

professional nurse; (2) bed and board in connection with the fmnishing of such musing 

A-6 
6 

care; (3) physical or occupational therapy or speech-lsnguage pathology services 

furnished by the SNP or others under arrangements with them made by the facility; (4) 

medical social services; (5) such drugs, biologicals, supplies, appliances, and equipment 

furnished for use in the SNP, as are ordinarily furnished by such facility for care and 

treatment of inpatients; (6) medical services provided by an intern or resident-in-training 

of a hospital with which the facility has in effect a transfer agreement, under an approved 

teaching program of such hospital, and other diagnostic, or therapeutic services provided 

by a hospital with which the facility has such an agreement in effect; and (7) such other 

services necessary to the health of the patients as are generally provided by SNPs. 

Additionally, the definition of the SNP benefit .that appears in the “Background” is too 

general. We suggest it be more specific. The SNP benefit is referred to as post-hospital 

extended care services. It is designed to assist persons who have had a 3-day quahfying 

hospital stay, and require skilled services on a daily basis to recuperate from an acute 

episode. Coverage, if approved, is limited to a total of 100 days per benefit period. On 

the 21st day the beneficiary becomes responsible for a daily coinsurance amount equal to 

one-eighth of the inpatient hospital deductible, as prescribed by law. 

A statement is made on page 3 of the “Introduction” that “Nursing facilities may bill 

under arraugement even for patients who are not in Part A-covered stays. ln these cases, 

the musing facility submits an outpatient claim to the fiscal iutermediary.” Although the 

first sentence is technically correct, the second sentence is incorrect and needs 

clarification. We suggest the following language: “Payment may be made for a limited 

range of services mder Part B when furnished by a participating SNP to an inpatient of 

the SNP, if payment cannot be made uuder Part A, e.g., the beneficiary exhausted his 

allowed days of inpatient SNP coverage under Part A in his current spell of ilhtess. In 

these cases, the SNP submits a claim to the PIs for those inpatient services rendered.” 

--. 

A-7 
APPENDIX B 

CONFIDENCE INTERVALS FOR SELECTED STATISTICS 

The following table shows the point estimates and 95 percent confidence intervals for 

(1) two statistics that appear on page 6 of the report and (2) one statistic that appears in 

appendix C (bottom of page C-l). 

Statistic 

Point estimate 95 percent 

confidence interval 

Of 1994 portable chest x-rays for nursing home residents, percent in which the medical record 

did not contain a physician order for the portable service 

31.8 percent 19.9 percent - 43.6 percent 

Of 1994 portable chest x-rays for nursing home residents, percent in which the medical record 

did not indicate that the patient was not ambulatory 

53.7 percent 4 1.1 percent - 66.3 percent 

Amount Medicare paid during 1994 for transportation and setup for nursing home residents’ 

portable chest x-rays, in which the medical records did not indicate that the patient was not 

ambulatory 

$3 1.4 million $19.9 million to $42.9 million 

B-l 
APPENDIX C 

CALCULATION OF ESTIMATED SAVINGS TO THE MEDICARE PROGRAM 

The calculation of estimated savings involved (1) estimating the amount that Medicare 

would have saved during 1994 if HCFA had disallowed the transportation and setup 

charges for portable x-ray services when the patient could have been transported and 

(2) projecting these savings to a 5-year period from 1997 through 2001. 

1994 portable x-rays for paiients who could have been transported 

We calculated this estimate through a four-step process, as described below. We cannot 

calculate a confidence interval for this estimate, because only chest x-rays were part of 

our sample. 

1. Using a 1 percent sample of 1994 part B claims, we calculated the amounts that 

Medicare paid to suppliers for portable x-ray transportation and setup claims that 

were billed directly to the Medicare carrier, as shown in the table below. 

Service (billed directly to carrier) 

Portable x-ray service that included 

a chest x-ray 

Portable x-ray service that did not 

include a chest x-ray 

Cannot determine (no x-ray 

technical component billed) 

TOTAL 

1994 amount paid for 

transport and setup 

$50,504,123 

$31,367,549 

$1,777,298 

$83,648,970 

As illustrated below, the ratio of (1) payments for services that did not include chest 

x-rays to (2) payments for services that included chest x-rays is 0.621. 

Calculation: Ratio of services that did not IIinclude chest x-rays to services that included $31,367,549 + $50,504,123 = 0.621 

11chest x-ravs I 

2. From our review of medical necessity, we estimated that Medicare paid 

$31.43 million during 1994 for portable chest x-ray transportation and setup, in 

which the medical records did not indicate that the patient was not ambulatory. 

C-l 
3. As illustrated below, we multiplied the estimate from step 2 by the ratio from 

step 1. 

$31,431,239 * 0.621 = $19.52 million 

4. By adding the amounts from steps 2 and 3, we estimated that, during 1994, 

Medicare paid $50.95 million for portable x-ray transportation and setup, in which 

the medical records did not indicate that the patient was not ambulatory. 

Estimated savings for 1997 through 2001 

We used a three-step process to estimate how much Medicare will save from 1997 through 

2001 if HCFA disallows transportation and setup charges when a patient could have been 

transported. 

1. Using 1 percent sample data for each year from 1992 through 1995, we calculated 

the total amount that Medicare paid for portable x-ray transportation and the 

associated setup charges. Next, we calculated the annual percent changes for each 

year. We selected the smallest of these annual percent changes (a 7.74 percent 

increase) to use in the step 3 calculations. 

2. As calculated in step 4 above, Medicare would have saved $50.95 million during 

1994 by disallowing transportation and setup charges when a patient could have 

been transported. 

3. Starting with the 1994 estimated savings from step 2, we calculated the savings in 

each subsequent year by increasing the previous year’s savings by 7.74 percent. 

The results of these calculations are displayed on the following page. 

For example, the table below illustrates how we calculated the 1997 savings. 

Starting point: 1994 savings $50,952,832 

Smallest percent increase in payments for 

x-ray transportation and setup, 1992 - 1995 7.74 percent 

1995 savings calculation $50,952,832 * 1.0774 = $54,896,399 

1996 savings calculation $54,896,399 * 1.0774 = $59,145,184 

1997 savings calculation I $59,145,184 * 1.0774 = $63,722,810 

The precise number usedfor these calculationswas 1.07739642383 

c-2 
STATISTICS FROM 1 PERCENT SAMPLE DATA 

Amount paid for directly billed 

Year portable x-ray transportation and Percent change from 7 associated setup previous year 

$66,100,078 

$77,639,918 

$83,648,970 

$90,378,681 

Data for 1996 were not available 

Not applicable 

17.46% 

7.74% 

8.05% 

at the time of this report. 

5-YEAR SAVINGS ESTIMATES 

Estimated savings if HCFA disallows 

Year transportation and setup charges when 

a patient could have been transported 

1997 

1998 

1999 

2000 

2001 

TOTAL 

$63,722,810 

$68,654,727 

$73,968,357 

$79,693,244 

$85,861,216 

$371,900,354 

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