Department of Health and Human Services 

OFFICE OF 

INSPECTOR GENERAL 

PHYSICIAN OFFICE SURGERY 

JUNE 1993 
, 

OFFICE OF INSPECI’OR GENERAL 

The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, as 

amended, is to protect the integri~ 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 three OIG operating components: the Office of Audit Services, the 

Office of Investigations, and the Office of Evaluation and Inspections. The OIG also informs 

the Secretary of HHS of program and management problems and recommends courses to 

correct them. 

OFFICE OF AUDIT SERVICES 

The OIG’S Office of Audit Services (OAS) provides all auditing sexvices 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 in order to reduce waste, abuse, and 

mismanagement and to promote economy and efficiency throughout the Department. 

OFFICE OF INVESTIGATIONS 

The OIG’S Office of Investigations (01) conducts criminal, civil, and administrative


investigations of allegations of wrongdoing in HHS programs or to HHS beneficiaries and of


unjust enrichment by providers. The investigative efforts of 01 lead to criminal convictions,


administrative sanctions, or civil money penalties. The 01 also oversees State Medicaid fraud


control units which investigate and prosecute fraud and patient abuse in the Medicaid program.


OFFICE OF EVALUATION AND INSPECTIONS 

The OIG’S Office of Evaluation and Inspections (OEI) conducts short-term management and 

program evaluations (called inspections) that focus on issues of concern to the Department, 

the Congress, and the public. The findings and recommendations contained in these inspection 

reports generate rapid, accurate, and up-to-date information on the efficiency, vulnerability, 

and effectiveness of departmental programs. This report was prepared in the Kansas City 

regional office under the direction of Jim Wolf, Regional Inspector General. Project staf~ 

Kansas City Headquarters 

Tim Dold, Project Leader Cathaleen Ahern, Program Specialist 

Dennis Tharp, Program Analyst Barbara Tedesco, Statistician 

To obtain a copy of this report, call the Kansas City Regional Office at (816) 426-3697. 
EXECUTIVE SUMMARY


PURPOSE 

To evaluate the appropriateness of the surgical setting, the medical necessity of the 

surgery, and quality of care for selected surgical procedures performed in physicians’ 

offices. 

BACKGROUND 

The volume of outpatient surgery continues to increase as reimbursement regulations 

change for inpatient surgical procedures. As medical technology improves, more 

surgeries are being performed in outpatient settings. These settings include 

ambulatory surgical centers, emergency centers, and single/multi-specialty physicians’ 

offices. Surgeries in these settings can be as simple as laceration repair and as 

complex as cataract surgery. 

The Health Care Financing Administration (HCFA) is concerned that the services 

provided to Medicare beneficiaries may not be reasonable and necessary. However, 

neither the Social Security Act nor the Medicare regulations specifically define quality 

of care for particular services performed in an office setting. 

Until recently, the quality of procedures rendered to Medicare beneficiaries in 

physicians’ offices was not subject to any type of review. Section l154(a)(4)(A) of the 

Social Security Act required that “Each peer review organization (PRO) shall provide 

... a reasonable allocation of such [quality review] activities is made among the 

different cases and settings” except that PRO review in physician offices could not 

begin before January 1, 1989. Currently, HCFA is conducting two pilot projects 

involving a total of 10 PROS. These PROS will review medical services provided in 

physicians’ offices. However, there is no general quality of care review of physician 

office surgery currently in place. 

METHODOLOGY 

We selected a sample of surgeries containing procedure codes for bunionectomies, 

dilation and curettage, and excisions of breast lesions. We drew the sample from 1989 

Part B Medicare Annual Data which showed these surgeries were performed in 

physicians’ offices. A medical contractor reviewed office medical records for these 

surgeries. We also obtained allowable charge information on certain procedure codes 

from 11 Medicare carriers. 

FINDINGS 

One-Fijlh of Medical Records Reviewed Dii Not Document Reasonable Quali@ of Care 

i 
The physician reviewers found that in 25 of the 122 surgeries (20 percent) the medical 

records did not document reasonable quality of care. This projects nationally to 2,500 

physician office surgeries for those procedure codes where medical records do not 

document reasonable quality of care. 

l%irteen Percent of the Medical Records Did Not Document an Indication For Sugery 

The physician reviewers found in 16 of the 122 surgeries (13 percent) the medical 

records did not document an indication for surgery, and therefore were not medically 

necessary. Projected nationally, Medicare paid $603,058 for medically unnecessary 

bunionectomies and excisions of breast lesions. 

27zePhysi”ciank Once Was Not An Appropriate Setting for A Small Number of Su~eries 

The physician reviewers found that in six surgeries the physician’s office was not an 

appropriate setting for the surgeries. The office setting was inappropriate due to the 

patient’s level of illness or the type of anesthesia. 

In 16 Percent of Our Sample Cases, I?rocedure Codes Did Not Match ~he Su~eries 

Pe#ormed 

The physician reviewers found in 20 cases that the specific surgeries performed did not 

match one of the procedure codes included in this study. In only one instance did a 

physician bill a procedure code with an allowable charge that was less than the 

appropriate procedure code. All the others were billed in excess of the allowable 

charge for the correct procedure code. The difference in allowable charges between 

the submitted procedure code and the correct code amounts to $3,130.98. This 

projects nationally to $313,098 in upcoded claims for the procedure codes under study. 

RECOMMENDATIONS 

PROS Shoukl Ektend Their Review to Surge~ Peflonned in Physicians’ Ofjces 

The results of this inspection confirm that quality assurance and peer review activities 

are needed in physicians’ offices, for the reasons cited in section 1154 of the Social 

Security Act. As discussed in section 1154, (1) we have demonstrated problems exist 

regarding quality of care, (2) the yield in terms of numbers and seriousness of quality 

of care problems is apt to be significant, and (3) there is no other source of quality 

review, quality assurance, or peer review. 

AGENCY COMMENTS 

We have received comments on the draft report from HCFA. While HCFA generally 

concurs with our findings and recommendation, they wish to defer comment on the 

recommendation pending the completion of two PRO pilot projects to test the 

feasibility of physician office review and the development of a review protocol. We 

ii 
� 

agree that information gained in the pilot projects is important and should be 

considered in any proposal to expand review in outpatient sites. 

The full text of their comments is included in Appendix E. 

... 111�
TABLE OF CONTENTS 

EXECUTIVESUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..i


INTRODLKXION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...1


FINDINGS


Quality of Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...4


Medical Necessity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...5


Appropriateness ofSetting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...5


Procedure Coding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...6


RECOMMENDATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7


AGENCY COMMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8


APPENDICES


A. Procedure Codes by Placeof Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1


B. Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B.:�

C, Medical Review Worksheet. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . c.:


D. Differences in Allowable Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D-1


E. Health Care Financing Administration Comments . . . . . . . . . . . . . . . . . . E-1

INTRODUCTION 

PURPOSE 

To evaluate the appropriateness of the surgical setting, the medical necessity of the 

surgery, and quality of care for selected surgical procedures performed in physicians’ 

offices. 

BACKGROUND 

The volume of outpatient surgery continues to increase as reimbursement regulations 

change for inpatient surgical procedures. As medical technology improves, more 

surgeries are performed in outpatient se~tings. These settings include ambulatory 

surgical centers (ASCS), emergency centers, and single/multi-specialty physicians’ 

offices. Surgeries in these settings can be as simple as laceration repair and as 

complex as cataract surgery. The following illustrates the recent increases in the total 

number of surgeries allowed by Medicare and performed in physicians’ offices. 

FISCAL YEAR ALLOWED PROCEDURES ALLOWED CHARGES 

1987 24,397,912 $1,387,857,158 

1989 30,010,156 $1,768,395,391 

1991 38,475,582 $2,027,877,728 

The Health Care Financing Administration (HCFA) is concerned that the services 

provided to Medicare beneficiaries may not be reasonable and necessary. Section 

1862(a)(l)(A) of the Social Security Act states that “Notwithstanding any other 

provision of this title, no payment may be made under part A or part B for any 

expenses incurred for items or services which ...are not reasonable and necessary for 

the diagnosis or treatment of illness or injury or to improve the functioning of a 

malformed body member.” However, neither the Social Security Act nor the Medicare 

regulations specifically define quality of care for particular services performed in an 

office setting. 

Section 1154(a)(4)(A) of the Social Security Act required that “Each peer review 

organization (PRO) shall provide that . . . a reasonable allocation of such [quality 

review] activities is made among the different cases and settings (including post-acutecare settings, ambulatory settings, and health maintenance organizations) except that 

PRO review in physician offices could not begin before January 1, 1989. In 

establishing such allocation, the organization shall consider (i) whether there is reason 

to believe that there is a particular need for reviews of particular cases and settings 

because of previous problems regarding quality of care, (ii) the cost of such reviews 

and the likely yield of such reviews in terms of number and seriousness of quality of 

1 
care problems likely to be discovered as a result of such reviews, and (iii) the 

availability and adequacy of alternative quality review and assurance mechanisms.” 

Currently, HCFA is conducting two pilot projects invoking a total of 10 PROS which 

address peer review of services provided in a physicians’ offices. The Delmarva 

Foundation (Maryland PRO) is working on a pilot project with two PROS, reviewing 

primary-care services provided in physician offices. The scheduled completion date for 

this project is September 1993. The other project, The Wisconsin Ambulatory Review 

Project (WARP), involves seven PROS. This project will develop and assess a system 

for monitoring the quality and cost effectiveness of ambulatory medical care for officebased practices. The WARP began December 1, 1989, and was scheduled to last for 

two years. It was extended through November 1992. 

METHODOLOGY 

We selected a sample of 364 surgeries. We drew the sample from 1989 Part B 

Medicare Annual Data (BMAD) which showed these surgeries were performed in 

physicians’ offices. We chose seven procedure codes for bunionectomies, dilation and 

curettage (D & C), and the excision of a breast lesion to represent the more complex 

surgeries completed in physicians’ offices. According to BMAD data, these 

procedures had general anesthesia claims associated with at least 25 percent of the 

surgeries. A chart showing the place of service of the selected codes is shown in 

Appendix A. 

We obtained copies of medical records for the selected surgeries. We worked with 

Medicare carriers to get copies of claims, beneficiary payment histories, and names 

and mailing addresses of physicians who performed office surgeries. We obtained 

medical records for 247 surgeries. For a variety of reasons, we were not able to 

obtain the medical records for the remaining 117 surgeries. A detailed explanation of 

the 117 surgeries is in Appendix B. 

Based on our review of these records, we determined that 91 surgeries had been


performed in hospitals or ASCS. The medical records for the remaining 156 surgeries


were sent to Forensic Medical Advisory Service (FMAS), a medical review contractor.


The FMAS, working with the Office of Inspector General (OIG), developed


worksheets to review the medical records. The worksheets contained a variety of data


elements that focused on preoperative, operative, and postoperative care. Separate


worksheets were used for each of the three surgical groups. The FMAS used surgeons


who were experts in their specialty to develop current evaluative criteria for each of


the procedures. The reviewers, using professional judgement, completed a narrative


summary and a worksheet for each case. An example of a medical review worksheet


is in Appendix C.


In their review, FMAS found that 14 of the 156 surgeries were not performed in the


office setting, but in a hospital or ASC. Also, FMAS did not complete all of the


2 

i 
information in the medical review worksheets for 20 surgeries because these particular 

surgeries did not match one of the procedure codes in this study. The medical review 

worksheets were completed for the remaining 122 surgeries. 

We also obtained allowable charge information on certain procedure codes from 11 

Medicare carriers. 

We conducted our review according to the Quality Standards for Inspections issued by 

the President’s Council on Integrity and Efficiency. 

3

FINDINGS


One-Fifih of Medical Recor& Revz”ewedDid Not Document Reasonable Quality of Care 

The physician reviewers found in 25 of the 122 surgical cases (20 percent) that the 

medical records did not document reasonable quality of care. We found that these 

cases involved surgeries in each of the three surgical groups. Eighteen were 

bunionectomy cases, four were D & C cases, and three cases involved the excision of 

breast lesions. This projects nationally, for physician office medical records that do 

not document reasonable quality of care, to: 

The physician reviewers found that in 16 of the 25 cases the preoperative evaluations 

were not adequate. In one case, the physician reviewer stated “there is a marked lack 

of information regarding a preoperative history and physical evaluation and laboratory 

studies.” In another case, the reviewer noted “the preoperative evaluation is lacking 

for indications for surgical intervention as well as documentation of vascular status and 

overall history and physical.” 

The reviewers also found that 3 of the 25 cases had postoperative complications. In a 

case involving a breast lesion, the patient developed a postoperative hematoma, 

(a localized swelling filled with blood) which took several months to heal. In a 

bunionectomy case a procedure was performed while an existing infection of the skin 

was present. A cast was applied despite the infection. The patient was put on an 

antibiotic regimen, but complications ensued. 

A distribution of the preoperative and postoperative issues is shown in the table on 

the next page. 

4

DISTRIBUTION OF PREOPERATIVE AND POSTOPERATIVE ISSUES


II Bunionectomy 18 14 2 I I r I 

Breast Lesion 3 2 1 

1 I

It

II 

D&C I 4 101 0 II 

Thirteen Percent of the Medical Records Did Not Document an Indication For Sugery 

The physician reviewers found in 16 of the 122 surgeries (13 percent) the medical 

records did not document an indication for surgery, and therefore were not medically 

necessary. For example, one reviewer noted there is no evidence documenting the 

indication for correction of a bunion. In another case a reviewer stated that there was 

no documentation of the necessity for the removal of a breast lesion. 

The 16 surgeries involve 14 bunionectomies and 2 excisions of breast lesions. Nine of 

these 16 cases are also among the 25 cases where the reviewers determined that the 

medical records did not document a reasonable quality of care. 

The physicians were paid a total of $6,030.58 for the 16 surgeries. Because of our 

sampling of records for only seven procedure codes, this projects nationally to only 

$603,058 (~52.3%) for medically unnecessary surgery in physician offices. Therefore, 

this estimate can vary by $315,441 for a range of $287,617-$918,499 at the 90 percent 

confidence level. 

l%e Physician Of/ice WW Not An Appropriate Semhg for A Small Number of Surgeries 

The physician reviewers found that in 6 of 122 surgeries, the physician’s office was not


an appropriate setting for the surgeries. The office setting was inappropriate due to


the patient’s level of illness or the type of anesthesia administered. The reviewers also


found 1 of the 6 cases not to be medically necessary, and all 6 cases are among the 25


cases where the reviewers determined that the medical records did not


document a reasonable quality of care.


Level of Illness


For three cases, the physician reviewers found the setting was not appropriate for the


type of procedure given the patient’s level of illness. For example, one case involved
 A. 

an 80 year-old female that underwent a bunion procedure. The physician reviewer 

stated that according to the medical record, the patient had smalj vessel disease in the 

5

lower extremities. For this reason, the reviewer stated that the setting for the surgery 

was not appropriate. 

Type of Anesthesia 

Physician reviewers determined for three D & C cases that the setting was not 

appropriate due to the type of anesthesia administered, In each of these cases, the 

type of anesthesia included an IV sedative/hypnotic and local anesthesia. In one of 

the three cases, the type of anesthesia also included an IV narcotic. The physicians 

administered the anesthesia in these cases. 

The reviewers stated in each of these cases that the setting was not appropriate 

because of insufficient monitoring of anesthesia and inadequate recording of vital 

signs. The medical records did not document the existence of the necessary additional 

medical staff to conduct these activities. A reviewer commented: 

“It is important that the patient be monitored carefully, not necessarily 

by an anesthesiologist or anesthetist, but by a nurse or physician assistant 

who could appropriately record the vital signs of the patient before, during, 

and after the procedure.” 

In 16 Percent OJOur SampIe Cases, Procedure Codes Did Not Match the Surgeries 

Pe@x_tned 

! 

The physician reviewers found that in 20 cases the surgeries documented in the 

medical records did not match one of the procedure codes in this study. For each of 

these cases, the physician reviewers identified the correct procedure code. 

Through the carriers, we obtained allowable charge information for the revised 

procedure codes. We requested allowable charges for these physicians for 1989, the 

year in which the surgeries were performed. 

Allowable charge information was obtained for 17 of the 20 cases. We found that 

upcoding occurred in 16 cases and downcoding occurred in 1 case. We were unable to 

determine a dollar amount for the remaining three cases. For example, a carrier 

could not provide allowable charge information because the provider never billed the 

procedure code in question and prevailing information had been purged for 1989. 

We compared the original allowable charges with the allowable charges for the revised 

procedure codes. We found upcoding in the 16 cases because the allowable charges 

for the original procedure codes were higher than the allowable charges for the 

revised procedure codes. The total net overpayment amounts to $3,130.98 as shown in 

Appendix D. Again, our use of only seven procedure codes in this study allows us to 

project our results only for those codes. This results in a modest national projection 

of upcoding of $313,098 (f44.6%). This estimate can vary by $139,709 for a range of 

$173,389-$452,807 atthe 90 percent confidence level. 

6 
RECOMMENDATIONS


PROS Shouki &end Their Review to Stugery Performed in Phyn”cians’Offices 

We recognize that the role of PROS and to some degree Medicare carriers, in 

conducting the quality assurance function, is evolving from a case-by-case review to 

general studies of medical practice. We believe, however, that physician office surgery 

involving complex procedures once provided only in an institutional setting deserves 

attention. 

The results of this inspection confirm that quality assurance and peer review activities 

are needed in physicians’ offices, for the reasons cited in section 1154 of the Social 

Security Act. As discussed in section 1154, (1) we have demonstrated problems exist 

regarding quality of care, (2) the yield in terms of numbers and seriousness of quality 

of care problems is apt to be significant, and (3) there is no other source of quality 

review, quality assurance, or peer review. 

The findings of this inspection relating to quality of care should be compared with the


findings of the PRO pilot projects, to determine whether only surgical cases or ~


medical and surgical cases should be subject to the review allocation required by


section 1154.


Such PRO review should include: (1) assurance that medical records document


reasonable quality of care (both in the sense that documentation is adequate and that


quality care is rendered), (2) that physicians perform only those procedures


appropriate for an office setting, (3) that physicians perform only medically necessary


procedures, and (4) that accurate procedure codes are used to submit claims for


physician services.


7

AGENCY COMMENTS


We received comments from HCFA which generally concur with the findings in the 

report. The full text of their comments are included in Appendix E. 

The HCFA has indicated that they wish to defer comment on the recommendation 

that PRO review be extended to surgery performed in physicians’ offices pending the 

completion of two PRO pilot projects to test the feasibility of physician office review 

and the development of a review protocol. We agree that information gained in the 

pilot projects is important and should be considered in any proposal to expand review 

in outpatient sites. 

The HCFA also expressed concern regarding our estimates and our ability to 

distinguish between poor quality of care and poor documentation. The following 

information provides additional clarification of these points. 

Projections of dollars paid for unnecessary surgery: The projected dollars associated 

with medically unnecessary surgery are conservative in that they were based on our 

original sample of 328 claims rather than the 122 cases for which we obtained records. 

The 206 cases which we did not review were assumed to represent medically-necessary 

surgery. 

Projections for poor quality care: The projection for poor quality surgeries in 

physicians’ offices is based on the 122 cases for which we obtained records. While it is 

true that 206 out of our original sample of 328 did drop out, due to either miscoding 

of place of service or non-response to our request for records, the remaining 122 cases 

are still a random sample. The distribution of this resultant sample represents a 

subset of the original. Therefore, the estimates of poor quality of care and the 

precision given in the report are based on this subset of the original sample. 

The HCFA also questioned whether poor documentation is sufficient proof of poor 

quality of care or lack of an indication for surgery. We agree that it is possible that 

appropriate care was given in some cases but not documented. However, the vast 

majority of cases reviewed were almost certainly unnecessary or of poor quality. For 

example, medical review of quality of care revealed that in 18 cases the care was poor 

regardless of the presence or absence of information. In seven cases the care may 

have been appropriate, but missing information in the medical records made it 

impossible to tell. In all cases including the last seven, the missing information would 

hamper appropriate care in cases in which another physician renders care following 

the original procedure, and must use an inadequate record of indications, test results, 

or other pertinent information. HCFA agrees that even percentages smaller than 

those we report represent serious problems. 

The HCFA acknowledges the dangers of administering anesthesia in physician office 

settings but feels it cannot determine the relative danger because the offices vary 

8 
greatly instandard ofcare, equipment, and personnel training. Our inspection report, 

“Surgery in Outpatient Settings: A Four-State Study” (OEI-07-91-01470), released in 

1992, identified this danger and recommended that States examine their licensure rules 

to ensure the quality of high-risk outpatient procedures, such as those performed 

under general anesthesia or intravenous sedation. 

The HCFA also suggested clarifications of some details in the report; we have made 

pertinent modifications. 

9

APPENDIX A


1989 BMAD Procedure Codes by Place of Service 

Excision of cyst, 

etc., from breast 

Bunionectomy, 

Silver type 

Bunionectomy, 

Keller, McBride 

or Mayo type 

Bunionectomy, 

resection of joint 

with implant 

Bunionectomy, 

with metatarsal 

osteotomy 

8.2 23.8 63.2 4.2 

24.5 24.9 37.0 12.8 

27.3 22.9 39.9 8.9 

13.6 26.1 48.6 10.9 

22.3 25.4 42.4 8.6 

Bunionectomy, by 

phalanx 

osteotomy 45,5 14.8 32.1 6.8 

Dilation and 

curettage, (nonobstetrical) 9,9 29.1 55.4 5.1 

A -1

APPENDIX C 

MEDICAL REVIEW WORKSHEET 

EXAMPLE 

c-1 
---- . .. —.- - .- —.-—. . . . . . .3 

D~S TASK ORDER 26: PHYSICIAN OFFICE SURGERY STUDY 

EXC1S1ON OF BREAST LESION 

MEDICAL REVIEW WORKSHEET 

I. PATIENT IDENTIFICATION/DE140GRAPHIC ELEMENTS: 

Unfque identifier code 

;: I-IIC number 

3. Surgical setting 

4. Date of surgery 

5. Age of patient 

6. Race of patient 

7. Sex of patient 

8. Surgical procedure (use HCPCS codesj 

(Code for procedure actually done as documented; not necessarily 

what was submitted to HCFA for reimbursement. ) 

II”. QUALITY OF CAkE ELEMEXTS


PREOPERATIVE


1.	 Indication for surgery documented? 

(Describe in dictated narrative if not Indicated. ) 

a.	 Presence of palpable lump. 14ust be demonstrated by 

palpation on physical examination. Includes limp which has 

not completely subsided after needling with production of 

fluid or has recurred after needling with production of 

fluid 

b. Other indication 

(Specffy)


(Describe in dictated narrative. )


2.	 Generally not indicated? 

(Describe f.n dictated narrative. ) 

a.	 Not appropriate procedure for lump which has subsided after 

needling with production of fluid, L.s3. , a zesolve~ 

cyst 

1

)

,~d.,refb[~” l’l~UICd[ tiUIJfSC)r~ ~)e~-i;(cf~ 

unique identifier code 

b.	 Other non-indication 

(Specify) 

3. Preoperative Screening 

a. Mammography or sonography performed? 

i.	 If yes, did lesion appear to be a cyst? . . 

ii.	 Did le9ion feel like a cyst upon physical examination? 

iii.	 If lesion appeared to be a cyst on mammogram or 

sonogram or appeared to be a cyst by 

physical examination (yes to -3ai. or 3aLi.) was an 

aspiration biopsy performed? 

b.	 Is there documentation of historical questioning regarding 

bleeding or coagulation problems? 

i..	 If yes, was a bleeding or coagulation problem 

identified? 

ii. If yes, were coagulation studies done? 

c.	 IS there documentation of historical questioning regarding 

cardiac or pulmonary disease? 

i.	 If yes”, was a signiff.cant cardiac or pulmonary disease 

identified? 

ii.	 If 3cL = yes and if patient is >40 and received 

anesthesia, was an ECG done within three weeks prior to 

procedure? 

iii.	 If 3ci. = yes and patient >40 and received anesthesia, 

was a chest x-ray done within three weeks prior to 

procedure? 

4. Preoperative Iiistory and Physical 

a.	 Is there documentation of a history and physical having been 

done by the operating surgeon? 

b. Is there documentation concerning a history and physical or 

medical clearance from the patient’s general medical 

physician? 

2

Unique identifier code


c.	 Was an anesthesiologist or CRNA indicated for this case? 

(Answer yes if an anesthesiologist or CRNA was present or 

there was a need for monitoring or supervision by 

anesthesiologist or CilNA.) 

i.	 If yes, is preoperative anesthesia review 

documented? 

ii. If yes, adequate? 

iii. Performed by anesthesiologist?


iv. Performed by CRNA? 

d.	 Were the preoperative evaluations adequate? 

(If IV sedation or general anesthesia, should have either a 

history and physical by surgeon or medical clearance or 

history and physical by general medical physician within one 

week prior to procedure. Local anesthesia requires only a 

brief history and physical. If inadequate, describe in 

dictated narrative. ) 

5. Consent form in record?


6. If IV sedation or general anesthesia: 

a. Was preoperative blood pressure documented? 

b. Was preoperative pulse documented?


c. Was preoperative temperature documented? 

d.	 If yes, were vital signs appropriately stable prior to 

procedure? 

7.	 If IV sedation or general anesthesia, was patient NPO prior to


procedure?”


~ If no, describe In dictated narrative. ) 

8.	 Appropriateness of setting: 

(If any no, describe in dictated narrative. ) 

a.	 Was the setting appropriate for the type of procedt~re given 

the patient’s level of illness? 

b.	 Was the’type of anesthesia administered appropriate for the 

patient? 

c.	 Was the setting appropriate for the type of anesthesia 

administered? 

3 
Unique identifier code


d. Was a mass present only on mammogram or sonogram, i.e., not


on	 palpation? 

(In that case would require needle localization in” x-ray 

department, and would not be’ appropriate for office 

setting..)


OPERATIVE


1.	 If IV sedation or general anesthesia, did patient have IV


inserted for duration of procedure?


2. Total operating (procedure) time: min.


3.	 Total anesthesia time: min. 

(If no anesthesia time was documented and the anesthesiologist or 

CRNA was not present, enter N/A for not applicable. ) 

4. Type of anesthesia: Administered by:


a. Intravenous narcotic 

b. Intravenous sedative/hypnotic


c. Local 

d. General 

5.	 If IV sedation or general anesthesia, does record document vital 

signs during surge~? 

a. If yes, completed by: 

i.. Anesthesiologist 

ii. Surgeon 

iii.. CRNA 

iv. Other RN 

v.	 Other 

(Specify) 

4

~-o[e~ic Medical Adukorg Se,~vLce 

unique identifier code


6.	 Intraoperative complications? 

(Describe in dictated narrative. ) 

a. If yes, was procedure completed?


b. If complication, appropriate intenention?


c. If yes to any above, related to anesthesia?


d. If yes to any above, related to setting?


7. If procedure was begun under local, was it necessary to advance 

to	 IV sedation or general anesthesia?


(If yes, describe in dictated narrative. )


8. Pathological diagnosis documented? 

a.	 If yes, list pathological diagnoses below and describe in 

dictated narrative. 

POSTOPERATIVE


1.	 Complications? (If yes, check any that apply. Describe in dictated narrative. ) 

a.


b.


c.


d.


e.


f. 

9* 

h.


i.


Infection


Inci.sional skin slough


Incomplete removal


Severe postoperative pain


Significant postoperative deformity


Significant hematoma


Other


(Specify)


(Describe in dictated narrative. )


If yes to any above, related to anesthesia?


If yes to any above, related to setting?


5

Unique identifier code


2.	 Was there documentation of postoperative instructions being 

given? 

3. Were postoperative medications hdicated? 

a. If yes, were they appropriately administered?


4.	 Surgical followup (postoperative visit) within 10 days after 

surgery? 

5. Was a postoperative management plan documented? 

6. Was there a postoperative note prior to discharge? 

a.	 If yes, documented by: 

i.” Anesthesiologist 

ii. Surgeon 

iii. CRNA


iv. Other RN


v.	 Other


(Specify)


7. a. If IV sedation or general anesthesia given: 

i. Was postoperative blood pressure documented? 

ii. Was postoperative pulse documented?


b. If yes, were vital signs appropriately stable before
 discharge?


(If no, describe in dictated narrative. )


8. Patient alive?


(Describe death or transfer in dictated narrative. )


a. If yes, patient released home?


(Answer yes if nursing home resident returns to nursing


home. )


b.	 If yes, patient transferred to hospi.ta~? (Yes,
 if direct admit.)


6 
c. If yes, patient transferred (not to hospital)?


9. 

10.


11.


d.	 If transferred, specify location.
-


Admitted to hospital within 15 days (related to procedure)?


(Describe in dictated narrative. )


Did patient have followup surgery within 15 days related to


previous procedure?.


(Describe in dictated narrative. )


Overall, was a reasonable quality of care documented in this


pati,ent’s medical record?


(If no, describe in dictated narrative and indicate “need for


second reviewer under Part 111.2.)


PART III: RKVIEW INFORMATION


1. Reviewer ID:


2. 

3. 

4. 

5. 

6. 

Second reviewer needed? *[[


(Second reviewer needed if j% above is no or for other
 significant quality or medical necessity issues. )


If yes, second reviewer ID


Does second reviewer agree with the opinion of the first 

reviewer? 

( lf no, describe in dictated narrative. ) 

Date of first revj.ew: / I —— — 

Date o“fsecond review: _/_/_.


7 
1

2

3

4

5

6

~-ofenslc
~edicaf Adukory Seruice 

Answers to questions are indicated according to the following code


unless othemise specified:


1 = YES


2 = NO


3 = NOT DOCUMENTED OR CANNOT TELL ( N/D) 

4= NOT APPLICABLE (.
N/A )


Exceptions:


Identification/Demographic Question 3 . 

~ = office 

2 = Other 

Demographic Information Quest-ion 6 

= l?hite 

= Black 

= Asian 

= American Indian 

= Spanish origin/Hispanic 

= Not Documented 

Demographic Information Question 7 

1 = Male 

2 = Female 

3 = Unknown 

Operative Questions z. 

minutes. 

and 3. 

are indicated with actual time in

Operative Questions 4a., 4.b., 4.c. and”.4 d


legend: . . have the following


Administered by:


a. = Mesthesiologist


b“. = Surgeon


c. = CRNA


d. . other RN


e. “ Other


f. = Not documented or camot tell


9* = Not applicable


Reviewer Information Questions 1 and 3 = Three digit coded physician 

number. 

Reviewer Information Questions 5 and 6 = mm/dd/yy.


8

,.

APPENDIX D


DIFFERENCES IN ALLOWABLE CHARGES 

%%;%:($fi:’::$i:$~;j..”j”..;,”(pe;:;;;g:g: $i$::(.~i’”;?: %$:(@?;”;”:?:’ ::%”:i{’::.::(~)’l:.;!!”:’.’”

$“DIlj!FEREg$x 

:<.:qQQE”?&@;q~GR ‘;;:$ .$F:”?eY!3g@:<:: ~g@ggQ’:, gg~~pg~gj	 ~R.GYis.8Q2” ?’!

w~QqE}\’ ‘:““”’i$.L’L?w@’E;”ETw@N’ .,. : .@ ,.,. .;:&!>cm$@:? P).i’ ..’ .,, ,.. ,.. ,,. ., :’,,,.;i,;~;; j;: x:.;,::.:(P):.&(. 

28293 779.00 28285 339.30 439.70 

28292 565.50 28110 295.00 270.50 

28292 848.25 28285 510.30 337.95 

28292 475.10 28110 307.50 167.60 

58120 280.07 57800 57.97 222.10 

58120 264.20 58100 292.03 (27.83)3 

58120 212.80 58100 54.10 1.58.70 

58120 203.60 58100 40.80 162.80 

58120 130.00 57500 49.80 80.20 7 

58120 239.20 58100 50.40 188.80 

58120 210.00 58100 55.20 154.80 

58120 165.99 58100 52.15 113.84 

58120 224.02 58100 49.30 174.72 

58120 249.60 58100 40.70 208.90 

19120 400.00 11402 100.00 300.00 

19120 226.10 11401 75.00 151.10 

19120 75.00 11400 47.90 27.10 

TOTALS $5,548.43 $2,417.45 $3,130.98 

1 Allowable charge fortheprocedurecodebilled. 

2 Allowable charge fortheprocedure codematching thesurgeryperformed. 

3 The Medicare carrier advised thatthephysician neverbilled therevised procedure

D-1

APPENDIX E 

HEALTHCARE FINANCINGADMINISTRATION COMMENTS 

E-1 
-2

.

7 DEPARTMENT OF HEALTH & HUMAN SERVICES Financing Administration 

~‘.. -iii 

-. 

,,,0 . .+,,, Memorandum 

Date 

From ‘~T~%’,@ - ‘R 2 G ~ Acting Administrator 

. Subject Office ofinspector General(OIG)-Draft- Report: - “Physician Officesurgery’­


(OEI-07-91-00680)


TO BryanB.Mitchell


Principal Deputyinspector
 Genera


We reviewed the above-referenced report which evaluates theappropriateness 

of the surgical setting, the medical necessity of the surgeqr, and quality of care for 

selected surgical procedures performed in physicians’ offices. The report concludes 

that physician office surgery suffers from both quality and utilization problems. As a 

result, OIG recommends that the Peer Review Organizations (PRO) extend their 

review to surgery performed in physicians’ offices. The report further suggests that 

its findings be compared to findings from PRO pilot projects on physician office 

review. 

LVe WOU{L1liketo~e[erComnlenton the recommendation.The PRO pilot 

projects lver-e designed to test the feasibility of physician office review and to aid in 

[he development of a revieiv protocol. These pilot projects are still ongoing anti the 

results are preliminary. After- these projects are completed, we plan to develop 

irnplemen[a(ion options \vhich would relate to the monitoring of both medical 

services and surglcai procedures and, at that time, will take into account OIG’S 

recommendation. our detailed comments are attached for your consideration. 

Thank you for the opportunity to review and comment on this draft report. 

Please advise us if you agree with our position on the report’s recommendation at 

your earliest convenience. 

Attachment 
Comments of the Health Care Financin~ Administration (HCFA)


on Office of Inspector General (OIG\ Draft Report:


Phvsician Office Survey


0EI-07-91-O0680


Recommendation 

PROS should extend their review to surgery performed in physicians’ offices. 

HCFA Response 

Because Peer Review Organization (PRO) review of physician office care is an 

important and complex area, careful attention in the development of good review 

methods is necessary before implementing this new PRO review system. Recognizing 

the uncertainty of how such review could best be performed, beginning in 1989, 

HCFA funded pilot projects to expiore alternative approaches to physician office 

review. We believe that we must await the results of these projects and develop 

options for implementation before we can conduct a review of medical and/or 

surgical services provided in physicians’ offices. We hope to be ready to implement 

such review beginning with the Fifth PRO Contract Cycle in 1996. 

Although \ve agree that the physician office is a likely and appropriate setting for 

further PRO review, our ability to move forward with sucil reviews wiIl also depend 

largely on obtaining additional funding. The cost of the PRO program would 

dramatically increase with the inclusion of physician office review, even if limited to 

surgical procedures. The actual cost increase would be based on the Ievel and type 

of review required. In the current cost cutting environment, HCFA may have a 

difficult time obtaining additional funds for the PRO program without substantial 

outside support. [n light of the medical community’s resistance to PRO physician 

office review, this support may be difficult to secure. 

Genera] Comments 

Executive summary, page i, Background, third paragraph, second sentence 

should read: “Section 1154(a)(4)(A) . . . except that PRO review in physician 

offices could not begin before January 1, 1989.” 

Introduction, page 2, first paragraph, sixth sentence, after “years” an additional 

sentence should be added to read - “It was extended for 1 more year.” 

pages 2-3, we have some concern over the small size of the sample, as well as its 

randomness after so large a number of cases selected were removed from the 

sample prior to (or during) the actual review. 
Page 2 

�	 The purpose of the study is stated as: ‘To evaluate the appropriateness of the 

surgical setting, the medical necessity of the surge~, and quality of care for 

selected surgical procedures performed in physicians’ offices.” In the findings 

section of the report, under the heading One-fifth of Medical Records Rew”ewed 

Did Not Document Reasonable Qualitv of Care (pages 4-5), the report states 

that the medical records did not document reasonable quality of care in 

20 percent (25 of 122) cases. Under the heading Thirteen Percent ofOffice 

Sur~eries Were Not Medicallv Necessan(page5), thereport states that the 

medical records did not document an indication for surgexy in 13 percent 

(16 of 122) cases. 

OIG apparently assumes that poor documentation proves that a poor quality of 

care em”sted and that an indication for surgery was not, in fact, present. This 

may have been the case. However, since the physician reviewers did not request 

additional information from the physicians under review, it is difficult to assess 

whether the concerns encountered reflected poor quality of care and lack of 

medical necessity or simply poor documentation. Although good documentation 

can establish the medical necessity and good quality of care for a procedure, it is 

not necessarily true that poor documentation proves that the medical necessity 

for a procedure was not present or that a poor quality of care was rendered. 

Therefore, it is reasonable to assume that the true figure for poor quality of care 

is below 20 percent and thut the true figure for a lack of medicaI necessity for 

the procedure is less than 13 percent. We would agree, however, that 

percentages considerably less than these figures are still a significant cause for 

concern. 

�	 OIG projects that Medicare paid $603,058 for medically unnecessary 

bunionectomies and excisions of breast lesions (presumably in 1989) (page 5). 

Again this figure is likely to be somewhat inflated since thephysician reviewers 

in the study made their decisions according to the documentation in the medical 

record alone and did not request additional information. 

�	 The report states that 6 of 122 surgeries were performed in an inappropriate 

setting (page 5). This figure points up a problematic area in the review of care 

rendered to Medicare beneficiaries. Presently, there is no routine way of 

identi~ing these cases for medical rew”ew. If, after office surge~, a patient is 

admitted to a hospital, some of these cases may be identified by the PRO in the 

course of its review of its sample cases. 
Page 3 

The report states thatthreecases weredetermined tohavebeenperformed in

an inappropriate setting duetothetypeofanesthesia involved (page6).Itk

difficult todetermine therelative dangers oftheadministration ofanesthesiain 

office settings. Physicians’ offices arenotroutinely inspected orcertified by any 

grouporagency.Therefore, thestandard ofcare, presenceof necessary 

equipment, andthetraining ofpersonnelvarygreatly. 

~	 The report states that procedure codes did not match the surgery performed in 

20 cases (page 6). In 16 of the cases, the procedure was determined to be 

upcoded. For the 7 procedures, OIG projects a cost of upcoding at $313,098. 

This finding presents one of the difficulties inherent in reviewing office 

procedures from a cost containment perspective. The medical review of office 

records by the clinicians necessa~ to make the determinations involved is an 

expensive process. To limit the costs of review, it is usually performed on a 

focused or targeted basis. Thus, it is expected that a certain amount of upcoding 

in the general population of claims will not be identified.