Department of Health and Human Services

OFFICE OF 

INSPECTOR GENERAL 

 

Daniel R. Levinson 

Inspector General 

February 2009 

OEI-04-08-00470 

MEDICARE PAYMENTS IN 2007 

FOR MEDICAL EQUIPMENT AND 

SUPPLY CLAIMS WITH INVALID 

OR INACTIVE REFERRING 

PHYSICIAN IDENTIFIERS 
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 OIG’s 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. 
 

Δ EXECUTIVE SUMMARY 

OBJECTIVE

To determine the extent to which Medicare paid medical equipment and 

supply claims in 2007 submitted with (1) invalid or inactive unique 

physician identification numbers (UPIN) or (2) invalid referring 

physician national provider identifiers (NPI). 

BACKGROUND 

Medicare beneficiaries are eligible to receive medical equipment and 

supplies deemed medically necessary by a physician under Medicare 

Part B coverage. In 2007, Medicare allowed almost $11 billion for 

medical equipment and supplies. The Consolidated Omnibus Budget 

Reconciliation Act of 1985 required the Centers for Medicare & 

Medicaid Services (CMS) to establish UPINs for all physicians who 

provide services to Medicare beneficiaries. A physician was allowed to 

obtain only one UPIN, but a UPIN may have been associated with more 

than one practice setting (i.e., location where a physician provides 

services). 

Medicare Claims Processing Using UPINs 

Providers of medical equipment and supplies obtain reimbursement for 

items that they provide to Medicare beneficiaries by submitting claims 

to the CMS contractors servicing their areas. Billing suppliers 

identified themselves on claims using provider identification numbers. 

Medicare instructions also required suppliers to provide the UPIN of the 

referring physician (i.e., the physician who ordered the equipment 

and/or supplies) on claims. Medicare payments for medical equipment 

and supplies are authorized only when the items are ordered by 

physicians and meet coverage requirements. Therefore, claims with 

invalid or inactive UPINs should not be paid, and Medicare requires 

that they be returned to the supplier. 

In 2001, the Office of Inspector General reported that Medicare paid 

almost $91 million in 1999 for medical equipment and supply claims 

with invalid or inactive UPINs, including almost $8 million for claims 

with UPINs of deceased physicians. Based on that report, CMS stated 

that it had initiated system changes to prevent payment of claims 

submitted with deceased physicians’ UPINs. CMS also stated that it 

planned to implement changes to prevent payment of claims with 

invalid or inactive UPINs. 

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EXECUTIVE SUMMARY 

Medicare Claims Processing Using NPIs 

The Administrative Simplification provisions of the Health Insurance 

Portability and Accountability Act of 1996 required CMS to create NPIs 

to replace UPINs for Medicare claims processing. Both physicians and 

suppliers must apply for and obtain NPIs from CMS. 

From May 2005 to May 2008, Medicare accepted medical equipment and 

supply claims that included UPINs only, NPIs only, or a combination of 

both. However, as of May 23, 2008, suppliers are required to include 

their own NPIs in the primary provider field on claims, and the 

referring physicians’ NPIs in the secondary provider field. On the date 

when the requirement went into effect, CMS noted a large number of 

rejected claims because suppliers were not submitting referring 

physician NPIs. In response, CMS instituted a temporary provision 

that allows suppliers who, after reasonable effort, cannot obtain 

referring physicians’ NPIs to instead use their own NPI in the 

secondary provider field. As of December 2008, CMS had not 

discontinued this provision. 

We determined the extent to which Medicare paid medical equipment 

and supply claims in 2007 submitted with invalid or inactive UPINs, 

including UPINs of deceased physicians, or invalid NPIs of referring 

physicians who ordered medical equipment and/or supplies for Medicare 

beneficiaries. We did not determine the extent to which providers of 

medical equipment and supplies who received Medicare payments may 

have submitted claims with invalid or inactive provider identification 

numbers. 

We considered UPINs and referring physician NPIs that had never been 

assigned by CMS to be invalid and UPINs associated only with inactive 

practice settings to be inactive. 

FINDINGS 

Medicare allowed over $6 million for medical equipment and supply 

claims with invalid referring physician UPINs in 2007. 

Medicare-allowed amounts for claims with invalid referring physician 

UPINs totaled $6.1 million. This amount was associated with 

4,428 invalid UPINs of the 543,841 UPINs submitted on claims in 2007. 

Of these invalid UPINs, 75 percent (3,335 of 4,428) were associated with 

less than $1,000 each in Medicare-allowed amounts. However, 10 of 

these 4,428 invalid UPINs were associated with more than $50,000 each 

in Medicare-allowed amounts. 

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EXECUTIVE SUMMARY 

Medicare allowed almost $28 million for medical equipment and 

supply claims with inactive referring physician UPINs in 2007. 

Medicare-allowed amounts for claims with inactive referring physician 

UPINs totaled $27.8 million. This amount was associated with 

18,955 inactive UPINs of the 543,841 UPINs submitted on claims in 

2007. Of the $27.8 million, over $24 million was associated with UPINs 

that had been inactive for at least 13 months and $5 million was for 

claims with dates of service after the dates of death of the referring 

physicians. Certain Medicare claims may have been legitimately 

associated with UPINs that had been inactive for less than 13 months. 

However, claims with UPINs that had been inactive for over 13 months 

indicate that the UPINs were inactive on the date the rental began and, 

therefore, should not have been paid. 

Medicare allowed over $300,000 for medical equipment and supply 

claims with invalid referring physician NPIs in 2007. Medicareallowed amounts for claims with invalid referring physician NPIs totaled 

$333,432. This amount represented 313 invalid NPIs of the 475,535 NPIs 

submitted on claims in 2007. All but two of these invalid NPIs followed 

the correct CMS format. 

RECOMMENDATIONS 

Prior to the full implementation of NPIs in May 2008, we analyzed 

Medicare medical equipment and supply claims from 2007 to determine 

whether CMS had addressed our earlier findings that Medicare paid 

claims with invalid or inactive UPINs, including UPINs belonging to 

deceased physicians. Although the Medicare-allowed amount for claims 

with invalid or inactive UPINs that should not have been paid has 

declined since 1999, we found that Medicare continued to pay for claims 

with invalid or inactive UPINs. Medicare allowed almost $34 million in 

2007 for claims with invalid or inactive UPINs, including $5 million for 

claims with deceased physicians’ UPINs. We also found that Medicare 

allowed over $300,000 for claims with invalid referring physician NPIs. 

As CMS completes the transition from UPINs to NPIs, opportunities 

exist to address vulnerabilities highlighted in our earlier work and 

again in this study. Based on our findings and discussions with CMS 

staff, we have concerns that invalid and inactive physician identifiers 

may continue to be a problem with NPIs. Although CMS appears to be 

implementing system changes that will verify that NPIs are submitted 

in the correct format, it is unclear whether there will be controls to 

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EXECUTIVE SUMMARY 

identify NPIs that have not been assigned or that are inactive. For this 

reason, we remain concerned that longstanding vulnerabilities, as well 

as new challenges, may affect the integrity of the NPI claims-processing 

system as it moves forward. 

To address these concerns, we recommend that CMS: 

Determine why Medicare claims with identifiers associated with deceased 

referring physicians continue to be paid. 

Implement claims-processing system changes to ensure that NPIs for 

both referring physicians and suppliers listed on medical equipment and 

supply claims are valid and active. 

Emphasize to suppliers the importance of using accurate NPIs for both 

referring physicians and suppliers when submitting Medicare claims. 

Determine the earliest date to end the provision that allows suppliers to 

submit claims without referring physician NPIs while maintaining 

beneficiary access to services. 

AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 

RESPONSE 

CMS concurred with our recommendations and stated that it has taken 

steps, incorporating the recommendations from this report, toward 

correcting the problems we identified. 

In addition, CMS provided general and technical comments on our 

draft report. We have modified language in the report to address 

these comments as appropriate. 
Δ TABLE OF CONTENTS 

EXECUTIVE SUMMARY .....................................i

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

FINDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 

 Medicare allowed over $6 million for claims with 

 invalid UPINs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 

 

 Medicare allowed almost $28 million for claims with 

 inactive UPINs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 

 

 Medicare allowed over $300,000 for claims with 

 invalid NPIs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 

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

 Agency Comments and Office of Inspector General Response . . . . 9 

APPENDIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 

 Agency Comments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 

ACKNOWLEDGMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
 

Δ INTRODUCTION 

OBJECTIVE 

To determine the extent to which Medicare paid medical equipment and 

supply claims in 2007 submitted with (1) invalid or inactive unique 

physician identification numbers (UPIN) or (2) invalid referring 

physician national provider identifiers (NPI). 

BACKGROUND 

Medicare beneficiaries are eligible to receive medical equipment and 

supplies deemed medically necessary by a physician under Medicare 

Part B coverage. In 2007, Medicare allowed almost $11 billion for 

medical equipment and supplies. The Consolidated Omnibus Budget 

Reconciliation Act of 1985 required the Centers for Medicare & 

Medicaid Services (CMS) to establish UPINs for all physicians who 

provide services to Medicare beneficiaries.1 A physician was allowed to 

obtain only one UPIN, but a UPIN may have been associated with more 

than one practice setting (i.e., location where a physician provides 

services). Until May 2008, CMS maintained a UPIN Registry 

containing information on all assigned UPINs. 

Medicare Claims Processing Using UPINs 

Providers of medical equipment and supplies obtain reimbursement for 

items that they provide to Medicare beneficiaries by submitting claims 

to the CMS contractors servicing their areas. Billing suppliers 

identified themselves on claims using a provider identification number. 

Medicare instructions also required suppliers to provide the UPIN of the 

referring physician (i.e., the physician who ordered the equipment 

and/or supplies) on claims.2 Medicare payments for medical equipment 

and supplies are authorized only when the items are ordered by 

physicians and meet coverage requirements. Therefore, claims with 

invalid or inactive UPINs should not be paid, and Medicare requires 

that they be returned to the supplier.3 4 We considered UPINs that had 

1 CMS also issued UPINs to doctors of osteopathy, limited licensed practitioners, and 

some nonphysician practitioners. 

2 CMS, “Medicare Claims Processing Manual,” Ch. 1 § 80.3.2.1.2, Rev. 1328. Available 

online at http://www.cms.hhs.gov/manuals/downloads/clm104c01.pdf. Accessed on August 

5, 2008. 

3 Ibid. 

4 Certain Medicare claims may have been legitimately associated with UPINs that had 

been inactive for less than 13 months. However, claims with UPINs that had been inactive 

for over 13 months indicate that the UPINs were inactive on the date the rental began and, 

therefore, should not have been paid. 

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INTRODUCTION 

never been assigned by CMS to be invalid and UPINs associated only 

with inactive practice settings to be inactive. 

In 2001, the Office of Inspector General (OIG) reported that Medicare 

paid almost $91 million in 1999 for medical equipment and supply 

claims with invalid or inactive UPINs, including almost $8 million for 

claims with UPINs of deceased physicians.5 OIG recommended that 

CMS revise its claims-processing systems to ensure that UPINs listed 

on medical equipment and supply claims are valid and active. In 

response to this recommendation, CMS issued two sets of instructions 

for system changes to its contractors to deny claims submitted with 

deceased physicians’ UPINs. CMS also stated that it planned to 

implement changes to prevent payment of claims with invalid or 

inactive UPINs. As of July 2008, CMS had not taken further action to 

address the issue of invalid and inactive UPINs. 

Medicare Claims Processing Using NPIs 

The Administrative Simplification provisions of the Health Insurance 

Portability and Accountability Act of 1996 required CMS to create NPIs 

to replace UPINs for Medicare claims processing. Both physicians and 

suppliers must apply for and obtain NPIs from CMS.6 NPIs, as well as 

UPINs, are valuable program integrity safeguards. Medicare relies on 

physicians and other health care providers to ensure that only medically 

necessary medical equipment and/or supplies are ordered. When 

suppliers put UPINs or referring physicians’ NPIs on claims, they are 

indicating that physicians have verified the need for beneficiaries to 

obtain equipment and/or supplies. In addition, UPINs and NPIs enable 

CMS to determine who prescribed the equipment and/or supplies as 

part of any postpayment reviews. 

2 

From May 2005 to May 2008, Medicare accepted medical equipment and 

supply claims that included UPINs only, NPIs only, or a combination of 

both.7 As of May 23, 2008, suppliers are required to include their own 

NPIs in the primary provider field on claims and the referring 

5 OEI-03-01-00110, “Medical Equipment and Supply Claims With Invalid or Inactive 

Physician Numbers.” 

6 CMS launched an online NPI registry in September 2007. See “Data Dissemination” 

for additional details. Available online at 

http://www.cms.hhs.gov/NationalProvIdentStand/06a_DataDissemination.asp. Accessed on 

August 12, 2008. 

7 CMS. “MLN Matters Bulletin,” Number MM5595. Available online at 

http://www.cms.hhs.gov/MLNMattersArticles/downloads/MM5595.pdf. Accessed on 

August 7, 2008. This bulletin states that Medicare will accept claims with legacy numbers 

only, NPIs only, or a combination. UPINs are a subset of legacy numbers. 

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INTRODUCTION 

physicians’ NPIs in the secondary provider field.8 9 On the date when 

the requirement went into effect, CMS noted a large number of rejected 

claims because suppliers were not submitting referring physician 

NPIs.10 In response, CMS instituted a temporary provision that allows 

suppliers who, after reasonable effort, cannot obtain referring 

physicians’ NPIs to instead use their own NPIs in the secondary 

provider field.11 As of December 2008, CMS had not discontinued this 

provision. 

Related OIG Work 

In addition to issuing the 2001 report previously mentioned, OIG has 

issued several reports related to UPINs. These reports address the 

accuracy of UPIN data as well as the use of invalid or inactive UPINs on 

claims for medical equipment and supplies. 

In a 1999 report, OIG included recommendations that the Health Care 

Financing Administration (now CMS) ensure that UPINs for inactive 

providers are deactivated.12 In a 2001 report, OIG recommended that 

CMS take steps to validate and update UPIN Registry data.13 

In 2002, OIG recommended that CMS perform a targeted review of 

medical equipment and supply claims ordered using surrogate UPINs 

(i.e., temporary, substitute UPINs).14 OIG also recommended that CMS 

continue to educate suppliers and physicians that accurate UPINs must 

be used on claims and that surrogate UPINs should not be used if the 

referring physicians had permanent UPINs. Finally, in 2003, OIG 

issued a report including a recommendation for CMS to correct 

inaccurate and incomplete information in the UPIN Registry.15

3 

8 “Overview: National Provider Identifier Standard,” p. 1. Available online at 

http://www.cms.hhs.gov/NationalProvIdentStand/01_Overview.asp#TopOfPage. Accessed 

on July 23, 2008. 

9 “CMS Communications: National Provider Identifier Standard,” p. 1. Available online 

at http://www.cms.hhs.gov/NationalProvIdentStand/02_WhatsNew.asp#TopOfPage. 

Accessed on July 23, 2008. 

10 Ibid. 

11 Ibid. 

12 OEI-07-98-00410, “Accuracy of Unique Physician Identification Number Data.” 

13 OEI-03-99-00131, “Inaccuracies in the Unique Physician Identification Number 

Registry: Incorrect Addresses for Mental Health Services Providers.” 

14 OEI-03-01-00270, “Durable Medical Equipment Ordered With Surrogate Physician 

Identification Numbers.” 

15 OEI-03-01-00380, “Accuracy of Unique Physician/Practitioner Identification Number 

Registry Data.” 

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INTRODUCTION 

METHODOLOGY 

We determined the extent to which Medicare paid medical equipment 

and supply claims in 2007 submitted with invalid or inactive UPINs, 

including UPINs of deceased physicians, or invalid NPIs of referring 

physicians who ordered medical equipment and/or supplies for Medicare 

beneficiaries. We did not determine the extent to which providers of 

medical equipment and supplies who received Medicare payments may 

have submitted claims with invalid or inactive provider identification 

numbers. 

Data Collection and Analysis 

We obtained a file containing 100 percent of 2007 medical equipment 

and supply claims from CMS’s National Claims History File. We also 

obtained a UPIN database extracted from the UPIN Registry.16 The 

UPIN database is composed of two files: one file with UPINs associated 

with active practice settings in 2007 and another file with UPINs 

associated with inactive practice settings in 2007. In addition, we spoke 

with CMS officials regarding NPIs and obtained the NPI directory from 

the CMS Web site on June 9, 2008. 

To identify claims with invalid or inactive UPINs, we first compared the 

files of UPINs associated with active and inactive practice settings 

contained in the CMS UPIN database. We considered UPINs that were 

associated with at least one active practice setting to be active. We 

considered UPINs associated only with inactive practice settings to be 

inactive. This resulted in a list of active UPINs and a list of inactive 

UPINs for further comparison. 

We then compiled a list of UPINs appearing on the claims under review 

and compared them to the lists of active and inactive UPINs. We 

considered all UPINs that appeared on the claims but not on either list 

of active or inactive UPINs to be invalid. 

We also compared the list of UPINs appearing on the claims under 

review to the list of inactive UPINs. We considered all UPINs that 

appeared on claims on which the dates of service occurred after the most 

recent practice setting inactivation dates to be inactive. 

Once we identified claims with invalid or inactive UPINs, we 

determined whether they also had valid referring physician NPIs as 

16 According to CMS, the UPIN database was retired in June 2007 when CMS ceased 

issuing UPINs. Although the UPIN files remain available, the information in the files has 

not changed since June 2007. 

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INTRODUCTION 

listed in the 2008 NPI directory. We excluded all claims with 

invalid/inactive UPINs and valid referring physician NPIs from further 

analysis (this group included surrogate [i.e., temporary] UPINs). From 

the remaining claims, we identified claims with invalid referring 

physician NPIs. 

To identify claims with invalid referring physician NPIs, we compiled a 

list of NPIs on the claims under review and compared them to the 2008 

NPI directory. We considered all claims with NPIs that appeared on the 

claims but not in the directory to be invalid. 

We calculated the total allowed amounts for (1) claims with invalid 

UPINs (including those with no UPIN) and no referring physician NPIs, 

(2) claims with inactive UPINs and no referring physician NPIs, and 

(3) claims with invalid referring physician NPIs and invalid/inactive 

UPINs (including those with no UPIN). 

For claims with inactive UPINs and no referring physician NPIs, we 

also calculated the total allowed amount according to how long a UPIN 

had been inactive. We determined how long a UPIN had been inactive 

by comparing the date of service on a claim to the most recent practice 

setting inactivation date, as listed in the UPIN database. 

In addition, we determined whether and/or when a referring physician 

had died using the file of inactive UPINs that we obtained from CMS. 

Next, we determined the total allowed amount for claims with inactive 

UPINs, no referring physician NPIs, and dates of service after the date 

of death of the referring physician. 

For claims with invalid referring physician NPIs, we also determined 

whether the NPIs followed the correct CMS format of 10 digits starting 

with a 1, 2, 3, or 4. 

Limitations 

We could not determine the extent to which claims with valid referring 

physician NPIs and dates of service after the death of the referring 

physician may have been paid. The date of death information required 

to complete this analysis was not available at the time of our review. 

Standards 

This study was conducted in accordance with the “Quality Standards for 

Inspections” issued by the President’s Council on Integrity and 

Efficiency and the Executive Council on Integrity and Efficiency. 

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FINDINGS 

Medicare-allowed amounts for 

claims with invalid referring 

physician UPINs totaled 

$6.1 million.17 This amount was 

associated with 4,428 invalid UPINs out of the 543,841 UPINs 

submitted on claims in 2007. Of the invalid UPINs, 75 percent (3,335 of 

4,428) were associated with less than $1,000 each in Medicare-allowed 

amounts. However, 10 of these 4,428 invalid UPINs were associated 

with more than $50,000 each in Medicare-allowed amounts, including 

three invalid UPINs that were associated with more than $100,000 

each. 

Medicare-allowed amounts for 

claims with inactive referring 

physician UPINs totaled 

$27.8 million.18 This amount was 

associated with almost 19,000 inactive UPINs out of the 543,841 UPINs 

submitted on claims in 2007. Of the inactive UPINs, 94 percent 

(17,852 of 18,955) had been inactive for at least 13 months and 

accounted for a total of $24.8 million in Medicare-allowed amounts.19 

Thirty-five UPINs listed on medical equipment and supply claims had 

been inactive for more than 17 years each by the claims’ dates of 

service.20 

Medicare allowed over $6 million for medical 

equipment and supply claims with invalid 

referring physician UPINs in 2007 

Medicare allowed almost $28 million for medical 

equipment and supply claims with inactive 

referring physician UPINs in 2007 

Δ FINDINGS 

Certain Medicare claims may have been legitimately associated with 

UPINs that had been inactive for less than 13 months. Suppliers may 

rent certain medical equipment, such as hospital beds, for as long as 

13 consecutive months to Medicare beneficiaries.21 A physician may 

6 

17 The $6.1 million represents allowed amounts for claims with invalid UPINs and no 

referring physician NPIs. 

18 The $27.8 million represents allowed amounts for claims with inactive UPINs and no 

referring physician NPIs. 

19 There were a total of 18,962 inactive UPINs submitted on the claims under review, but 

there was insufficient information in the CMS UPIN directory to determine the length of 

time during which 7 of these UPINs had been inactive. Therefore, we excluded these 

7 UPINs for a total of 18,955 inactive UPINs. 

20 No claim had a UPIN that had been inactive 18 years or longer. 

21 Deficit Reduction Act of 2005, S.1932 § 5101. Available online at 

http://thomas.loc.gov/cgi-bin/query/F?c109:5:./temp/~c109ctUKD2:e104283. Accessed on 

August 22, 2008. 

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FINDINGS 

have written a prescription for an item for 13 months and retired or 

died during the prescription period. However, claims with UPINs that 

had been inactive for over 13 months indicate that the UPINs were 

inactive on the dates when the rentals began and, therefore, should not 

have been paid. 

Medicare allowed $5 million for claims with deceased physicians’ UPINs 

Of the $27.8 million that Medicare allowed for claims with inactive 

UPINs, $5 million was for claims with dates of service after the 

referring physicians’ dates of death. The date of death information for 

these claims was contained in the CMS UPIN Registry. However, CMS 

paid the claims with the deceased physicians’ UPINs. 

Table 1 shows timeframes for how long a physician had been deceased 

before the date of service and the allowed amount associated with each 

timeframe. 

TABLE 1 

Length of Time Physician Had Been 

Deceased Before the Date of Service 

Allowed 

Amount 

Percentage of Total 

Allowed Amount 

0 to 12 months $870,465 17.2% 

12 to 15 months $368,715 7.3% 

15 to 24 months $1,223,630 24.1% 

2 to 3 years $1,293,517 25.5% 

3 to 4 years $714,381 14.1% 

4 to 5 years $225,661 4.5% 

Over 5 years $372,681 7.4% 

 TOTAL $5,069,050 100.1%* 

* Total exceeds 100 percent because of rounding.

Medicare-allowed amounts for 

claims with invalid referring 

physician NPIs totaled 

$333,432.22 This amount was 

associated with 313 invalid NPIs of the 475,535 NPIs submitted on 

claims in 2007. All but two of the invalid NPIs followed the co

Medicare allowed over $300,000 for medical 

equipment and supply claims with invalid 

referring physician NPIs in 2007 

rrect 

CMS format. 

22 The $333,432 represents claims with invalid referring physician NPIs and invalid or 

inactive UPINs. 

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Δ RECOMMENDATIONS 

UPINs and NPIs are valuable program integrity safeguards that 

indicate that physicians have verified the need for beneficiaries to 

obtain medical equipment and/or supplies. In addition, they enable 

CMS to determine who prescribed the equipment and/or supplies as 

part of any postpayment reviews. 

Prior to the full implementation of NPIs in May 2008, we analyzed 

Medicare medical equipment and supply claims from 2007 to determine 

whether CMS had addressed our earlier findings that Medicare paid 

claims with invalid or inactive UPINs, including UPINs associated with 

deceased physicians. Although the Medicare-allowed amount for claims 

with invalid or inactive UPINs that should not have been paid has 

declined since 1999, we found that Medicare continued to pay for claims 

with invalid or inactive UPINs. Medicare allowed almost $34 million in 

2007 for claims with invalid or inactive UPINs, including $5 million for 

claims with deceased physicians’ UPINs. We also found that Medicare 

allowed over $300,000 for claims with invalid referring physician NPIs. 

As CMS completes the transition from UPINs to NPIs, opportunities 

exist to address vulnerabilities highlighted in our earlier work and 

again in this study. Based on our findings and discussions with CMS 

staff, we have concerns that invalid and inactive physician identifiers 

may continue to be a problem with NPIs. Although CMS appears to be 

implementing system changes that will verify that NPIs are submitted 

in the correct format, it is unclear whether there will be controls to 

identify NPIs that have not been assigned or that are inactive. For this 

reason, we remain concerned that longstanding vulnerabilities, as well 

as new challenges, may affect the integrity of the NPI claims-processing 

system as it moves forward. 

To address these concerns, we recommend that CMS: 

Determine Why Medicare Claims With Identifiers Associated With 

Deceased Referring Physicians Continue To Be Paid. 

Implement Claims-Processing System Changes To Ensure That NPIs for 

Both Referring Physicians and Suppliers Listed on Medical Equipment 

and Supply Claims Are Valid and Active. 

Emphasize to Suppliers the Importance of Using Accurate NPIs for Both 

Referring Physicians and Suppliers When Submitting Medicare Claims. 

 O E I - 0 4 - 0 8 - 0 0 4 7 0 MEDICARE PAYMENTS FOR CLAIMS WITH I NVALID OR I NACTIVE REFERRING P HYSICIAN I DENTIFIERS 8 
 

RECOMMENDATIONS 

Determine the Earliest Date To End the Provision That Allows Suppliers To 

Submit Claims Without Referring Physician NPIs While Maintaining 

Beneficiary Access to Services. 

In response to a large number of rejected Medicare claims that occurred 

after CMS required suppliers to replace UPINs with NPIs on claims, CMS 

instituted a temporary provision that allows suppliers to use their own 

NPIs in place of the referring physicians’ NPIs. The provision became 

effective in June 2008, after the analysis review of this study. However, 

this provision presents a claims-processing vulnerability similar to what 

we identified in 2007 with suppliers submitting claims with invalid or 

inactive UPINs. 

AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 

RESPONSE 

CMS concurred with our recommendations and stated that it has 

taken several steps, incorporating the recommendations from this 

report, toward correcting the problems we identified. 

CMS stated that it currently deactivates Medicare billing privileges of 

any provider that has not billed the Medicare program for 

12 consecutive months. In addition, CMS stated that it has developed 

various procedures designed to ensure that the Medicare billing 

privileges of deceased physicians are promptly terminated. 

CMS also stated that it has developed procedures to reject claims if 

the referring physician is not enrolled in Medicare and is not of the 

specialization that can refer in the Medicare program. Finally, CMS 

stated that it has conducted substantial outreach to the provider 

community and has instructed its contractors to perform outreach to 

medical societies and organizations, stressing the need for them to 

inform CMS contractors on the deaths of physicians participating in 

Medicare. 

However, CMS did not specifically address our recommendation that 

it determine the earliest date to end the provision that allows 

suppliers to submit claims without referring physician NPIs while 

maintaining beneficiary access to services. 

In addition to concurring with our recommendations, CMS provided 

general and technical comments on our draft report. In its general 

comments, CMS recommended that OIG clarify that the UPINs at 

issue in our draft report were those used to identify referring 

 O E I - 0 4 - 0 8 - 0 0 4 7 0 MEDICARE PAYMENTS FOR CLAIMS WITH I NVALID OR I NACTIVE REFERRING P HYSICIAN I DENTIFIERS 9 
 

 O E I - 0 4 - 0 8 - 0 0 4 7 0 MEDICARE PAYMENTS FOR CLAIMS WITH I NVALID OR I NACTIVE REFERRING P HYSICIAN I DENTIFIERS 10 

RECOMMENDATIONS 

physicians, not the suppliers who received the Medicare payments. 

We have incorporated additional clarifying language to address 

CMS’s concerns. 

Finally, we have modified language in the report to address CMS’s 

technical comments as appropriate. The full text of CMS’s comments 

is provided in the Appendix.
 

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Δ APPENDIX 

Agency Comments
 

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APPENDIX 
 

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APPENDIX 
 

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Δ ACKNOWLEDGMENTS 

This report was prepared under the direction of Dwayne F. Grant, 

Regional Inspector General for Evaluation and Inspections in the 

Atlanta regional office. 

Mary-Elizabeth Harmon served as the team leader for this study. 

Other principal Office of Evaluation and Inspections staff from the 

Atlanta regional office who contributed to the report include Gerius 

Patterson; central office staff who contributed include Eddie Baker, Jr., 

David Graf, and Rita Wurm. Robert A. Vito from the Philadelphia 

regional office also contributed.