Department of Health and Human Services


OFFICE OF


INSPECTOR GENERAL


INAPPROPRIATE MEDICARE PAYMENTS


FOR WORK-RELATED DISABiliTY


EXPENSES


MANAGEMENT ADVISORY REPORT 

.. SERVIC'E 

to'" 

JU GIBBS BROWN 

Inspector General


:tltcl3G AUGUST 1994 

06-89-00903 
PUS~


To determine if the Heath Care Financing Administrtion could use the Social Security Administrtion s workers' compensation information to detect inappropriate Medicare 

payments for medica expenses incurred becuse of work-related disabilties. 

BACKGR()UN 

The Social Security Administrtion (SSA) provides disabilty payments to certn persons 

with work-related disabilties. After receiving disabilty payments for 24 months, disabled 

workers become entitled to Medicae benefits. The Medicae progra, which pays for 

varous medica expenses, is administered by the Heath Care Financing Administrtion 

(HCFA). 

Disabled workers ca additionaly qualfy for workers' compensation (WC) benefits under 

State progras. Under the Social Security Act, the Medicae progra canot pay for medica expenses covered under a WC agreement. 

FIINGS 

RCF A could detect more beneficiaries with WC involvement by using SSA records. 

HCF A was unaware of the WC involvement of 45 percent of the SSA disabilty 

beneficiares in our saple. 

There is a strong probabilty of erroneous Medicare payments due to undetected WC 

involvement. Estimated savings to Medicae from an SSA-HCFA data exchange rage from $14 millon to $96 mion. 

The effectivenes of an SSAIHCF A exchange of WC inormation could be maximed 

by appropriate selection criteria. Diagnosis coes, as well as Workers Computation 

coes ca be used to more effectively identify SSA disabilty beneficiares with potential 

WC involvement. 

C()NCLUSI()N 

In light of the findings, we believe that a renewed data exchange between SSA and HCF 

would be productive. However, we have not prepared a detaled examination of the 

feaibilty, cost of, or alternatives to a data exchange. At this juncture we suggest that 

HCF A and SSA furter explore the possibilties. Given the magnitude of potential 

savings, a one-yea pilot might be the best way to test out results, quantify costs and 
benefits, and reach a final determination on whether to renew the data exchange, and in what form. 

We are wiling to conduct further analysis if HCFA would consider more OIG work 

useful. For now , we are ceasing work and reportng our results because we believe that 

our data provides ample grounds for administrtive action. 
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

TABLE OF CONTENTS


EXECUT SUMARY


INODUCTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

FINDINGS . . . . . . . . . . . . 4

Undtected Beneficiaries With WC Involvement. 
 . . . . . . . . . . . . . . . . . . . . 4

E"oneous Medicare Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Exchange Of Workers Compensaton Informaton 

CONCLUSION . . . . . . . . . 6
computer matches under negotiation. In 16 States no match wil be possible because of 

State privacy law, data collection and storage problems , or lack of State resources. 

The advantage that SSA has over HCF A in obtaning WC information is that SSA 

collects the information shorty, if not immediately, after the injury has ocurred. 

Beuse SSA disabilty beneficiares receive Medicae benefits after 24 months of 

disabilty entitlement, the HCF A has at least that long before a beneficiar submits the 

first Medicae claim. 

Potental Federal Losses


There are approximately 310 00 SSA disabilty beneficiares with known WC 

involvement. The average duration of entitlement to disabilty benefits is eight yeas, so it 

is very liely most of the WC beneficiares wil also become entitled to Medicare. 

fisca yea 1993 , as shown on HCFA reports, approximately $111 milion were saved by 

Medicare becuse WC progras covered medica expenses that would otherwise have 

been paid by Medicae. Although the number of beneficiares is small, the WC related 

costs involved can be substatial.


METHOOOLOGY 

Intervews 

We interviewed HCFA personnel, contrctor personnel, and SSA disabilty beneficiares. 

The HCF A and contrctor personnel were interviewed to determine the extent of exchange 

of WC information between HCF A and SSA and between Medicare contrctors and 

agencies. The beneficiares were interviewed to determine the accuracy of the diagnosis 

and WC information in SSA records. 

Record Reviews


We use thee sets of records to detect discrepancies, and the related potential 

overpayments, between the WC information in the SSA and HCFA beneficiar records. 

The recrds use were SSA disabilty records, Medicare claims records , and HCF A 

primar payer records. 

The SSA recrds were taen from a one percent sample used by SSA to analyze data for 

the disabilty population. They included disabilty beneficiares with dates of entitlement 

from 1986-1988. From these records we selected beneficiares whose SSA recrds 

contaned the offset coes OP , PE, RJ, or WP. These coes are used by SSA to indicate 

if a beneficiar s payment is being reduced or offset becuse of recipt of WC or State or 

loc public disabilty benefits. Table 1 , which follows, explais the meaings of each 

coe use. We selecte 768 beneficiares. 
Estimate on the basis of our sample results, savings through a SSA-HCFA exchange 

would be $14.425 millon. This estimate does not include claims paid by carers , such as 

physician and durable medical equipment bils, and is probably too low for this reason. 

Estimated on the basis of past recoveries, savings would be over $96 millon. Based on 

our saple results , HCFA is aware of 55 percent, or 170 500, of the 310 

beneficiares whom SSA reports as having WC involvement. HCFA avoided $111 milion 

in payments in 1993 for those beneficiares. If that rate of recovery applied to the 45 

percent, or 139 500, of beneficiares unknown to HCFA as having WC involvement 

HCF A would have saved an additional $96 milion. 

Th Effectiveness Of An SSA/HCFA Exchange Of Workers Compensation Information 

Could Be Maximized By Appropriate Selection Criteria 

Exchanges of information between SSA and HCF A ended about four yeas ago. 

Respondents indicate that leads generated through the matches were not productive. 

While past exchanges might have produced nonproductive leads, the leads could be made 

more productive by using different selection criteria. For example, we used the diagnosis 

code, in addition to the WC codes, to select the initial 25 beneficiares for whom the 

likelihoo of an overpayment existed. Furtermore, if SSA began to distinguish between 

WC and public disabilty benefits in their OP, PE and RI offset codes, HCF A could 

furter improve the selection criteria. 
CONCLUSION


In light of the findings, we believe that a renewed data exchange between SSA and HCF 

would be productive. However, we have not prepared a detaled examination of the 

feaibilty, cost of, or alternatives to a data exchange. At this juncture we suggest that HCFA and SSA furter explore the possibilties. Given the magnitude of potential 

savings, a one-yea pilot might be the best way to test out results, quantify costs and 

benefits, and reach a final determination on whether to renew the data exchange , and in what form. 

We are willng to conduct furter analysis if HCFA would consider more OIG work 

useful. For now, we are cesing work and reportg our results becuse we believe that 

our data provides ample grounds for administrtive action.