MEDICARE 

PROVIDER 

EDUCATION

Oversight of Efforts to 

Reduce Improper 

Billing Needs 

Improvement

Report to the Chairman, Committee on 

Finance, U.S. Senate

March 2017

GAO-17-290

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-17-290, a report to the 

Chairman, Committee on Finance, U.S. 

Senate

March 2017

MEDICARE PROVIDER EDUCATION

Oversight of Efforts to Reduce Improper Billing 

Needs Improvement

What GAO Found

Medicare administrative contractors (MAC) process Medicare claims, identify 

areas vulnerable to improper billing, and develop general education efforts 

focused on these areas. MAC officials state that their provider education 

departments focus their educational efforts on areas vulnerable to improper 

billing; however, the Centers for Medicare & Medicaid Services’ (CMS)—the 

agency within the Department of Health and Human Services (HHS) that 

administers Medicare—oversight and requirements for these efforts are limited.

• CMS collects limited information about how these efforts focus on the 

areas MACs identify as vulnerable to improper billing. According to CMS 

officials, the agency has not required the MACs to provide specifics on 

their provider education department efforts in these reports because it 

does not want to be overly prescriptive regarding MAC provider 

education department efforts. Federal internal control standards state 

that management should use quality reporting information to achieve the 

entity’s objectives. Unless CMS requires sufficient MAC provider 

education department reporting, it cannot ensure that the departments’ 

efforts are focused on areas vulnerable to improper billing.

• CMS does not require MACs to educate providers who refer patients for 

durable medical equipment (DME), including prosthetics, orthotics, and 

supplies, and home health services on proper billing documentation, nor 

does it explicitly require MACs to work together to provide this education.

HHS has reported that a large portion of the high improper payment 

rates in these services is related to insufficient documentation. The 

absence of a requirement for MACs to educate referring providers about 

proper documentation for DME and home health claims is inconsistent 

with federal internal control standards, which state that in order to 

achieve an entity’s objectives, management should assign responsibility 

and delegate authority. Without an explicit requirement from CMS to 

educate these referring providers, billing errors due to insufficient 

documentation may persist.

Short-stay hospital and home health claims have been the focus of the MACs’ 

probe and educate reviews—a CMS strategy to help providers improve billing in 

certain areas vulnerable to improper billing. Under the probe and educate

reviews, MACs review a sample of claims from every provider and then offer 

individualized education to reduce billing errors. CMS officials consider the 

completed short-stay hospital reviews to be a success based on anecdotal 

feedback from providers. However, the effectiveness of these reviews cannot be 

confirmed because CMS did not establish performance metrics to determine 

whether the reviews were effective in reducing improper billing. Furthermore, 

GAO found the percentage of claims remained high throughout the three rounds 

of the review process, despite the offer of education after each round. Federal

internal control standards state that management should define objectives in 

specific and measurable terms and evaluate results against those objectives.

Without performance metrics, CMS cannot determine whether future probe and 

educate reviews would be effective in reducing improper billing. 

View GAO-17-290. For more information, 

contact Kathleen M. King at (202) 512-7114 or 

kingk@gao.gov.

Why GAO Did This Study

For fiscal year 2016, HHS reported an 

estimated 11 percent improper 

payment rate and $41.1 billion in 

improper payments in the Medicare 

fee-for-service program. To help 

ensure payments are made properly, 

CMS contracts with MACs to conduct 

provider education efforts. CMS cites

the MACs’ provider education 

department efforts as an important way 

to reduce improper payments.

GAO was asked to examine MACs’ 

provider education department efforts 

and the results of MACs’ probe and 

educate reviews. This report examines 

(1) the focus of MACs’ provider 

education department efforts to help 

reduce improper billing and CMS 

oversight of these efforts and (2) the 

extent to which CMS measured the 

effectiveness of the MAC probe and 

educate reviews. GAO reviewed and 

analyzed CMS and MAC documents

and MAC probe and educate review 

data for 2013-2016; interviewed CMS

and MAC officials; and assessed 

CMS’s oversight activities against 

federal internal control standards.

What GAO Recommends

GAO recommends that CMS should

(1) require sufficient detail in MAC 

reporting to determine the extent to 

which MACs’ provider education 

department efforts focus on vulnerable 

areas, (2) explicitly require MACs to 

work together to educate referring 

providers on proper documentation for 

DME and home health services, and

(3) establish performance metrics for

future probe and educate reviews.

HHS concurred with GAO’s 

recommendations.
Page i GAO-17-290 Medicare Provider Education

Letter 1

Background 5

MAC Officials State Their Provider Education Efforts Focus on 

Areas Vulnerable to Improper Billing; CMS Oversight and 

Requirements for These Efforts Are Limited 12

CMS Officials Consider Hospital Probe and Educate Reviews a 

Success, but Did Not Measure Effectiveness 20

Conclusions 22

Recommendations for Executive Action 23

Agency Comments 23

Appendix I Medicare Administrative Contractor Jurisdictions 25

Appendix II Comments from the Department of Health and Human Services 28

Appendix III GAO Contact and Staff Acknowledgments 31

Table

Table 1: Short-Stay Inpatient Hospital Probe and Educate 

Reviews: Number of Providers, Claims Reviewed, and 

Percent of Claims Denied, Fiscal Years 2014 and 2015 21

Figures

Figure 1: Relationship between Provider Education and Medical 

Review Departments within a Medicare Administrative 

Contractor and Their Respective Functions 7

Figure 2: Example of a Probe and Educate Review Process 10

Figure 3: Specificity of Provider Education Department Efforts in 

Improper Payment Reduction Strategy Reports 15

Figure 4: Education Provided by Medicare A/B and DME MACs 

and Claim Payment Process 17

Figure 5: Improper Payment Rates for Overall Medicare Fee-forService, Durable Medical Equipment, Prosthetics, 

Orthotics, and Supplies and Home Health Services for 

Fiscal Years 2010-2016 19

Contents
Page ii GAO-17-290 Medicare Provider Education

Figure 6: Part A/B Medicare Administrative Contractor 

Jurisdictions 25

Figure 7: Home Health and Hospice Medicare Administrative 

Contractor Jurisdictions 26

Figure 8: Durable Medical Equipment Medicare Administrative 

Contractor Jurisdictions 27

Abbreviations

CERT Comprehensive Error Rate Testing

CMS Centers for Medicare & Medicaid Services

CPAP continuous positive airway pressure

DME durable medical equipment

GPRA Government Performance and Results Act of 1993

HH+H home health and hospice

HHS Department of Health and Human Services

IPIA Improper Payments Information Act of 2002

IPRS Improper Payment Reduction Strategy

MAC Medicare administrative contractor

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Page 1 GAO-17-290 Medicare Provider Education

441 G St. N.W.

Washington, DC 20548

March 10, 2017

The Honorable Orrin G. Hatch

Chairman

Committee on Finance

United States Senate

Dear Mr. Chairman:

In fiscal year 2016, the Department of Health and Human Services (HHS)

reported that an estimated 11 percent of the payments made to health 

care providers under the Medicare fee-for-service program were made 

improperly, representing $41.1 billion in improper payments.1 Improper 

payments include payments made in error, such as payments that should 

not have been made; payments made in incorrect amounts, including 

overpayments and underpayments; and payments for claims that were 

not properly documented. Certain services in the Medicare fee-for-service 

program had higher improper payment rates, such as home health 

services, which had an estimated improper payment rate of 42 percent 

and represented an estimated $7.7 billion in improper payments, also as 

reported in fiscal year 2016.2 Insufficient documentation—one type of 

improper billing—was the most common source of improper payments in 

Medicare fee-for service, causing 65.2 percent of all improper payments 

in the same year.

To help ensure that payments are made properly, the Centers for 

Medicare & Medicaid Services (CMS), the agency within HHS that 

administers the Medicare program, contracts with Medicare administrative 

contractors (MAC). MACs—in addition to processing and paying 

 1

These figures are calculated from claims processed from July 2014 to June 2015. 

Department of Health and Human Services, FY2016 Agency Financial Report

(Washington, D.C.: Nov. 14, 2016). Medicare is the federally financed health insurance 

program for persons aged 65 and over, certain individuals with disabilities, and individuals 

with end-stage renal disease. Medicare fee-for-service, or original Medicare, consists of 

Medicare Parts A and B. Medicare Part A covers hospital and other inpatient stays. 

Medicare Part B is optional insurance and covers physician, outpatient hospital, home 

health care, certain other services, and the rental or purchase of durable medical 

equipment, prosthetics, orthotics, and supplies.

2

Department of Health and Human Services, The Supplementary Appendices for the 

Medicare Fee-for-Service 2016 Improper Payments Report (Washington, D.C.: Dec. 16, 

2016).

Letter
Page 2 GAO-17-290 Medicare Provider Education

Medicare claims—conduct education efforts intended to improve billing 

practices for the Medicare program. These efforts are in addition to 

CMS’s own education for providers on proper billing. MACs’ provider 

outreach and education (which we hereafter refer to as provider 

education) departments play a significant role in these efforts. There were 

8 MACs that operated in 1 or more of the 20 total jurisdictions across the 

United States at the time of our review. Although the costs associated 

with a MAC’s provider education department account for a small portion 

of a MAC’s total costs, CMS cites provider education department efforts 

as an important way to help lower the improper payment rate. According 

to CMS, the fundamental goal of the provider education departments is to 

reduce the rate of improper payments by giving Medicare providers the 

information they need to understand the Medicare program, such as 

coverage and payment rules, and bill properly. For example, MACs’ 

provider education departments may distribute written guidance via email 

to educate providers on billing Medicare for physical therapy services or 

host a webinar to improve billing for Medicare radiology services.3

Providers can also be referred to the provider education department for 

education by MACs’ medical review departments.4 The medical review 

department may deny certain claims and refer certain providers to the 

provider education department for education if it finds errors in the 

providers’ billing documentation.

MACs also conduct probe and educate reviews as part of a CMS strategy 

to determine the extent to which providers understand recent policy 

changes for certain areas vulnerable to improper billing as identified by 

CMS and to help providers improve billing in these areas.5 CMS first 

began probe and educate reviews in 2013. Through these reviews, MACs 

analyze a small sample of claims from all providers who bill for inpatient 

hospital and home health services in order to identify and correct billing 

 3

Webinars are seminars that are broadcast via the internet and allow a large audience to 

participate from various locations. Participants may take part in the seminar in real-time or 

sometimes afterwards if recorded.

4

One role of the MAC’s medical review department is having staff with medical training 

review medical records associated with specific Medicare claims to determine if the 

service provided was medically necessary and documented properly.

5

Improper billing includes inaccurate or insufficient billing documentation. For purposes of 

this report, areas vulnerable to improper billing includes services, items, and providers or 

suppliers that either have a high improper payment rate or have been identified by the 

MACs as vulnerable to improper billing.
Page 3 GAO-17-290 Medicare Provider Education

issues through provider education, thereby reducing improper billing in 

those areas.

Given longstanding concerns about Medicare improper payments, you 

asked us to provide information about MACs’ provider education 

department efforts and the results of the MACs’ probe and educate 

reviews. This report examines

• the focus of MACs’ provider education department efforts to help 

reduce improper billing and the extent to which CMS oversees these 

efforts, and

• the extent to which CMS measured the effectiveness of the MAC 

probe and educate reviews in reducing improper billing.

To examine MACs’ provider education department efforts to reduce 

improper billing and the extent to which CMS oversees these efforts, we 

reviewed the first annual MAC Improper Payment Reduction Strategy 

(IPRS) report for the 8 MACs that had contracts as of July 1, 2016. These 

reports are intended to identify risks to Medicare and describe the 

planned interventions meant to ensure proper payments and address 

these risks. We reviewed 14 IPRS reports that covered 18 of 20 

jurisdictions.6 The submission dates for the IPRS reports we reviewed 

ranged from November 2015 to July 2016, based on variations in MACs’ 

contract years. We analyzed these reports to identify areas vulnerable to 

improper billing—often referred to as prioritized problem areas—that were 

common among the majority of MAC jurisdictions. We also analyzed 

these reports to determine the extent to which MACs listed specific 

provider education department efforts focusing on each of these areas 

vulnerable to improper billing. We reviewed CMS’s statements of work for 

the MACs, which outline the functions CMS expects the MACs to perform, 

including a brief description of what is expected from MACs’ provider 

education departments. We also reviewed the chapter of CMS’s Medicare 

Contractor Beneficiary and Provider Communications Manual related to 

the provider education department, which further outlines CMS’s 

 6

MACs’ contracts were not being renewed for two jurisdictions in 2016 and therefore those 

MACs did not have to submit IPRS reports for those jurisdictions. Contractors previously 

submitted an Error Rate Reduction Plan and a Medical Review Strategy separately. These 

two documents were combined and are now part of the IPRS. Elements of the previous 

Error Rate Reduction Plan document were incorporated into the IPRS, such as a 

comprehensive plan of medical review activities and other improper payment 

interventions.
Page 4 GAO-17-290 Medicare Provider Education

expectations for MACs’ provider education department efforts.7

Additionally, we interviewed CMS officials, MAC officials from each of the 

8 MACs that collectively serve all 20 jurisdictions nationally, and 9 

selected provider associations representing medical billers or specialties 

with both high and low improper payment rates, regarding MACs’ provider 

education department efforts and CMS’s oversight of these efforts. We 

also reviewed relevant federal standards for internal control in the federal 

government related to information and communications and the control 

environment.8

To examine the extent to which CMS measured the effectiveness of the 

MAC probe and educate reviews in reducing improper billing, we 

interviewed CMS officials about efforts they have undertaken to do so. 

We also reviewed relevant federal standards for internal control related to 

risk assessment and monitoring.9 To determine whether the results of the 

probe and educate reviews identified a resulting decrease in improper 

billing, we analyzed data CMS collected from the MACs about their 

reviews to better understand the extent of improper billing that existed 

before, during, and after the first completed probe and educate review. To 

date, CMS has required MACs to conduct two probe and educate 

reviews: a review of short-stay hospital claims, which has been 

completed, and a review of home health claims, which is ongoing.10 For 

both types of reviews, we analyzed the number of providers requiring 

review due to improper billing—including the change in the number of 

providers requiring review over the course of the reviews for the shortstay hospital reviews, the number of claims reviewed, and the denial rates 

for claims reviewed. The short-stay hospital review data was for fiscal 

years 2014 and 2015 and the preliminary home health review data was 

for fiscal year 2016. To assess the reliability of the data, we reviewed it to 

identify missing information and discrepancies, and interviewed CMS 

officials regarding the processes for collecting and verifying it. Based on 

 7

Centers for Medicare & Medicaid Services. Medicare Contractor Beneficiary and Provider 

Communications Manual, Internet-Only Manual: 100-09 (Baltimore, Md.: February 2015).

8

GAO, Standards for Internal Control in the Federal Government, GAO-14-704G 

(Washington, D.C.: September 2014). Internal control is a process effected by an entity’s 

oversight body, management, and other personnel that provides reasonable assurance 

that the objectives of an entity will be achieved.

9

GAO-14-704G.

10A hospital stay is considered “short” if it spans less than two midnights.
Page 5 GAO-17-290 Medicare Provider Education

these efforts, we determined that these data were sufficiently reliable for 

the purposes of our reporting objectives.

We conducted this performance audit from February 2016 to March 2017 

in accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.

MACs process and pay claims, conduct prepayment and postpayment 

claim reviews, and provide Medicare fee-for-service billing education to 

providers in their jurisdictions. For each type of Medicare claim, the 

number of jurisdictions and the number of MACs that handle that type of 

claim vary. For Medicare Part A and B claims—handled by A/B MACs—

there are 12 jurisdictions in which 8 MACs operated at the time of our 

review. Three of these MACs also processed home health and hospice 

claims in addition to Medicare A/B claims and therefore served as MACs 

for the four home health and hospice (HH+H) jurisdictions. For durable 

medical equipment (DME), including orthotics, prosthetics, and supplies—

handled by DME MACs—there are four jurisdictions in which two MACs 

operated at the time of our review.11 A MAC can operate in more than one 

jurisdiction and handle more than one type of Medicare claim. For 

example, a MAC can operate as an A/B MAC in one jurisdiction and a 

DME MAC in another. (For maps of the 20 jurisdictions, see app. I.)

The provider education department is part of a MAC’s provider customer 

service program, which is intended to provide timely information, 

education, and training to providers on Medicare fee-for-service billing, as 

outlined in CMS’s provider customer service program manual. The costs 

 11Claims for durable medical equipment, prosthetics, orthotics, and supplies are covered 

by Part B and are processed by the DME MACs. For the purposes of our report, we call 

these items ‘DME’.

Background

Medicare Administrative 

Contractors
Page 6 GAO-17-290 Medicare Provider Education

for MACs’ provider education departments average 2.1 to 3.3 percent of 

their total annual costs.12

MACs’ provider education department efforts are aimed at educating 

providers and their staff on Medicare program fundamentals, national and 

local policies and procedures, new Medicare initiatives, significant 

changes to the Medicare program, and issues identified through data 

analyses. Provider education departments provide education through a 

variety of methods, such as webinars, online tutorials available ondemand, ‘ask-the-contractor’ teleconferences, seminars at national 

conferences and association meetings, and website articles.13 These 

efforts are designed to educate many providers at the same time or 

individual providers via one-to-one education. Attendance at provider 

education department events is voluntary on the part of the providers. 

MACs are required to report their provider education department efforts 

monthly into the Provider Customer Service Program Contractor 

Information Database that CMS oversees and maintains. CMS also 

requires the MACs to submit a semi-annual Provider Customer Service 

Program Activities Report that summarizes and recounts Provider 

Customer Service Program activities, process improvements, and best 

practices during the reporting period.

MACs’ medical review departments identify areas vulnerable to improper 

billing, review medical records to determine whether Medicare claims are 

medically necessary and properly documented, conduct one-to-one 

education as a result of claim reviews, and provide referrals to the 

provider education department for further education. This department 

frequently works with the provider education department to conduct 

educational efforts focusing on correcting provider billing (see fig. 1).

 12These cost percentages come from total costs paid by CMS to the MACs that were 

reported between September 2011 and February 2014 for A/B MACs and December 2010 

and February 2014 for DME MACs. These percentages come from cost reports for the 

most recent full contract year for which data were available for 9 of the 12 A/B MACs and 

all four of the DME MACs that were in operation as of April 2014. Average A/B MAC 

percentages also include costs for the HH+H workload in those cases where the A/B MAC 

was also responsible for home health and hospice claims. The percentages represent an 

average $1.7 million and $1.0 million for an A/B MAC’s and DME MAC’s provider 

education department costs, respectively. The total annual average cost per MAC is $81.3 

million and $31.8 million for A/B and DME MACs, respectively.

13CMS also conducts national educational efforts for providers on billing through weekly 

newsletters, phone calls, and the Medicare Learning Network national education 

materials.
Page 7 GAO-17-290 Medicare Provider Education

Figure 1: Relationship between Provider Education and Medical Review 

Departments within a Medicare Administrative Contractor and Their Respective 

Functions

CMS requires each MAC to identify areas vulnerable to improper billing in 

its jurisdiction(s) to guide MAC efforts in medical review and provider 

education. Areas identified by the MACs are listed in their IPRS reports. 

MACs’ medical review departments identify these areas by analyzing 

various internal and external data, such as data from CMS’s 

Comprehensive Error Rate Testing (CERT) program, issues identified by 

recovery auditors, Office of Inspector General reports, comparative billing 

reports, and internal MAC data.14 The objective of the CERT program is 

to estimate the payment accuracy of the Medicare fee-for-service 

program, which results in a Medicare fee-for-service improper payment 

 14Recovery auditors are a type of contractor tasked by CMS to identify improper payments 

after they have been made. A comparative billing report contains data-driven tables and 

graphs with an explanation of findings that compare an individual provider’s billing and 

payment patterns to those of their peers on both a national and state level.
Page 8 GAO-17-290 Medicare Provider Education

rate.15 Improper payment rates are computed at multiple levels: 

nationally, by MAC, by service, and by provider type. According to CMS’s 

provider customer service program manual, MACs with improper payment 

rates a certain percentage above HHS’s target for determining progress 

toward one of its Government Performance and Results Act of 1993 

(GPRA) goals may be required by CMS to submit quarterly or monthly 

provider education department status updates.16 However, CMS officials 

told us that they have never required any MAC to submit these quarterly 

or monthly status updates and they are considering removing this 

requirement from the manual.

The probe and educate reviews are a CMS strategy to determine the 

extent to which providers understand recent policy changes for certain 

areas vulnerable to improper billing and help providers improve billing in 

these areas through a review of a sample of claims from every provider. 

Under the reviews, MAC medical review departments, with varying levels 

of coordination with the provider education departments, sample and 

review a certain number of claims from each provider to determine 

whether the claims were billed and documented properly. These reviews 

are resource intensive, because they involve manual review of associated 

medical records by trained medical review staff. Because of the resources 

involved, manual reviews are done infrequently in the Medicare program, 

with less than 1 percent of all Medicare claims receiving manual review. 

Following the first round of review, providers are informed of their results 

and those who billed and documented a specified percentage of claims 

 15CMS’s CERT program was developed as part of its Improper Payments Information Act

of 2002 (IPIA) compliance efforts. IPIA, as amended, requires executive branch agencies 

to annually identify programs susceptible to significant improper payments, estimate the 

amounts improperly paid, and report their estimates and actions taken to reduce them. 

Pub. L. No. 107-300, 116 Stat. 2350 (2002), as amended by the Improper Payments 

Elimination and Recovery Act of 2010, Pub. L. No. 111-204, 124 Stat. 2224 (2010), and 

the Improper Payments Elimination and Recovery Improvement Act of 2012, Pub. L. No. 

112-248, 126 Stat. 2390 (2013) (codified at 31 U.S.C. § 3321 note).

16Each year under the Government Performance and Results Act of 1993, as amended by 

the GPRA Modernization Act of 2010, agencies are required to establish performance 

goals and measure their performance, among other things. Pub. L. No. 103-62, 107 Stat. 

285 (1993). as amended by Pub. L. No. 111-352, 124 Stat. 3866 (2011). One of HHS’s

GPRA goals is to strengthen program integrity and responsible stewardship by reducing 

improper payments, fighting fraud, and integrating financial, performance, and risk 

management. One performance measure HHS uses for this goal is the reduction of the 

Medicare fee-for-services improper payment rate. Department of Health and Human 

Services, Fiscal Year 2017 Annual Performance Plan and Report (Washington, D.C.: 

February 2016).

Probe and Educate 

Reviews
Page 9 GAO-17-290 Medicare Provider Education

improperly are offered voluntary one-to-one education to learn why each 

claim was approved or denied. Providers that billed and documented a 

specified percentage of claims properly are excluded from subsequent 

rounds of review, if any. MACs may repeat this process for subsequent 

rounds of review using a new sample of claims.17 (See fig. 2.)

 17According to CMS officials, the number of probe and educate review rounds depends on 

several factors, which can include findings from previous rounds, other medical review 

initiatives that are taking place, and provider/supplier performance.
Page 10 GAO-17-290 Medicare Provider Education

Figure 2: Example of a Probe and Educate Review Process

In addition to the areas vulnerable to improper billing identified by the 

MACs, CMS identified two areas vulnerable to improper billing—shortstay hospital visits and home health services—and required MACs to 

conduct probe and educate reviews for each of these areas. The first 
Page 11 GAO-17-290 Medicare Provider Education

probe and educate review examined short-stay hospital claims to 

determine the extent to which certain hospitals were properly applying the 

“two-midnight rule” that CMS implemented effective October 1, 2013. 

Under the rule, hospital stays for Medicare beneficiaries spanning two or 

more midnights should generally be billed as inpatient hospital claims. 

Conversely, hospital stays not expected to span at least two midnights 

should generally be billed as outpatient hospital claims. From October 1, 

2013, through September 30, 2015, 64,776 short-stay inpatient hospital 

claims were reviewed by the MACs over three rounds.18 Beginning on 

October 15, 2015, quality improvement organizations began conducting 

these reviews at the direction of CMS.19

At the direction of CMS, MACs began conducting probe and educate 

reviews of home health agency claims on October 1, 2015, for episodes 

of care that occurred on or after August 1, 2015.20 Round 1 was 

completed as of September 30, 2016, and the second round began on 

December 15, 2016. The purpose of these reviews is to ensure that home 

health agencies understand the new patient certification requirements 

that became effective January 1, 2015. These requirements stipulate that 

the referring physician, also referred to as the ordering or referring 

provider, must certify a patient’s eligibility for home health services as a 

condition of payment. As part of the certification, the referring provider 

must document that a face-to-face patient encounter occurred within a 

certain time frame. In addition, the patient’s medical record must support 

the certification of eligibility.

 18As part of the probe and educate reviews for short-stay inpatient hospital visits, MACs 

drew a sample of 10 claims from small hospitals and 25 claims from large hospitals per 

round. CMS officials reported that large hospitals were those with $100 million or greater 

in Medicare payments annually. A small hospital was considered to be billing properly if no 

more than 1 of the 10 claims sampled was denied and a large hospital was considered to 

be billing properly if no more than 2 out of the 25 claims sampled were denied. 

19Quality improvement organizations are a type of CMS contractor composed of health 

quality experts, clinicians, and consumers who work to improve the quality of care for 

Medicare beneficiaries. According to CMS officials, quality improvement organizations 

have previous experience conducting hospital reviews, and they believe quality 

improvement organizations’ positive working relationships with hospitals will be beneficial 

in helping to educate providers.

20An episode of home health care is 60 days. For the probe and educate review of home 

health services, MACs sampled five claims from each home health agency per round. A 

home health provider was considered to be billing properly if no more than one of five 

claims sampled was denied.
Page 12 GAO-17-290 Medicare Provider Education

MAC officials state that their provider education department efforts focus 

on areas vulnerable to improper billing. We found that these efforts are 

subject to limited oversight by CMS. Additionally, CMS does not require 

MACs to educate referring providers on documentation requirements for 

DME and home health services.

MAC officials told us that their provider education departments focus 

education on areas vulnerable to improper billing, including those they’ve 

identified and listed in their annual IPRS reports. There were 278 areas 

listed in the IPRS reports we reviewed, and based on our analysis, some 

of these areas, such as skilled nursing facilities, ambulance services, and 

blood glucose monitors, were identified by a majority of MACs. A detailed 

description of the problem areas may also be identified in these IPRS 

reports, as illustrated by the examples below.

• Part A. A majority of Part A MACs reported claims from skilled 

nursing facilities and inpatient rehabilitation facilities as vulnerable to 

improper billing. Examples of reported problem areas within skilled 

nursing facilities included claims for individuals using an “ultrahigh” 

level of therapy and episodes of care greater than 90 days.

• Part B. A majority of Part B MACs reported claims for evaluation and 

management and ambulance services as areas vulnerable to 

improper billing.21 Examples of reported problem areas within the 

evaluation and management category included the incorrect level of 

 21Evaluation and management services are a type of physician visit.

MAC Officials State 

Their Provider 

Education Efforts 

Focus on Areas 

Vulnerable to 

Improper Billing; CMS 

Oversight and 

Requirements for 

These Efforts Are 

Limited

MAC Officials State Their 

Provider Education 

Department Efforts Focus 

on Areas Vulnerable to 

Improper Billing
Page 13 GAO-17-290 Medicare Provider Education

coding for office visits, hospital visits, emergency room visits, and 

home visits for assisted living and nursing homes.22

• DME. A majority of DME MACs reported claims for glucose monitors, 

urological supplies, continuous positive airway pressure (CPAP) 

devices, oxygen, wheelchair options and accessories, lower limb 

prosthetics, and immunosuppressive drugs as areas vulnerable to 

improper billing.23 An example of a reported problem area with oxygen 

billing was that the beneficiary medical record documentation did not 

provide support for symptoms that might be expected to improve with 

oxygen therapy.

• HH+H. Half of the HH+H MACs reported claims for home health 

therapy services and home health or hospice stays that were longer 

than average as areas vulnerable to improper billing. An example of a 

reported problem area with home health therapy services included 

claims from home health providers reporting a high average number 

of therapy visits for their patients as compared to their peers within the 

state and the MAC’s jurisdiction.

CMS collects limited information on MACs’ provider education department 

efforts that focus on areas vulnerable to improper billing. CMS officials 

told us that they oversee the extent to which MACs’ provider education 

department efforts focus on areas vulnerable to improper billing by 

reviewing MACs’ IPRS reports. Although the IPRS reports focus mainly 

on how the medical review departments will address the areas identified 

as vulnerable to improper billing, CMS’s instructions to the MACs state 

that they should also include information on related provider education 

department activities or provider education department referrals.24

 22Most evaluation and management services are billed using codes that define the 

complexity level of the visit, with higher level codes representing more complex visits. The 

complexity level of these visits corresponds to the amount of skill, effort, time, 

responsibility, and medical knowledge required of the physician. Medicare payment is 

based in part on the complexity of the visit, with higher complexity visits receiving a larger 

payment.

23A CPAP device uses mild air pressure to keep the airways open. CPAP devices are 

typically used by people who have breathing problems, such as sleep apnea.

24Although MACs report their provider education department efforts through several other 

reports, they do not demonstrate in these reports how their provider education department 

efforts are focused on the areas vulnerable to improper billing identified in the IPRS 

reports.

CMS Collects Limited 

Information on MACs’ 

Provider Education Efforts 

Focused on Areas 

Vulnerable to Improper 

Billing
Page 14 GAO-17-290 Medicare Provider Education

However, the IPRS reports we reviewed lacked specifics indicating how 

provider education department efforts focused on 74 percent of the 278 

MAC-identified areas vulnerable to improper billing. We considered a 

provider education department effort to be specific if it included one or 

more of the following: the month, day, and year the event occurred or 

would occur; the type or number of providers attending; or a description of 

the event. As an example of a provider education department description 

that met our definition of ‘specific,’ one MAC reported its provider 

education department would conduct webinars focused on the top 5 to 10 

denial reasons for oxygen equipment in the upcoming year. This MAC’s 

IPRS report in our analysis listed specific provider education department 

efforts for all areas vulnerable to improper billing. However, 74 percent of 

the areas vulnerable to improper billing listed in the 14 IPRS reports we 

reviewed lacked specifics—48 percent of the time the provider education 

department efforts listed were not specific and 26 percent of the time no 

provider education department efforts were included.25 As an example of 

a provider education department description that was not specific, one 

MAC reported that the medical review department would make provider 

referrals to its provider education department “as needed” for inpatient 

hospital and rehabilitation facilities admissions, but gave no additional 

detail (see fig. 3).

 25CMS does not require that a provider education department effort be included for each 

area vulnerable to improper billing listed in the IPRS report.
Page 15 GAO-17-290 Medicare Provider Education

Figure 3: Specificity of Provider Education Department Efforts in Improper Payment 

Reduction Strategy Reports

Note: We examined 14 Medicare administrative contractors’ (MAC) Improper Payment Reduction 

Strategy reports submitted to the Centers for Medicare & Medicaid Services from November 2015 

through July 2016 to determine the extent to which MACs’ reported provider education department 

efforts focused on the 278 areas they identified as vulnerable to improper billing. We considered 

provider education department efforts to be specific if they included one or more of the following: the 

month, day, and year the event occurred or would occur, the type or number of providers attending; 

or a description of the provider education department event. We considered provider education 

department efforts not specific if they mentioned provider education department efforts without these 

details.

According to CMS officials, they do not require IPRS reports to have a 

certain level of specificity regarding how provider education department 

efforts focus on areas vulnerable to improper billing because they do not 

want to be overly prescriptive regarding MACs’ provider education 

department efforts. As a result, CMS receives limited and varying degrees 

of information on the extent to which provider education department 

efforts are focused on the MAC-identified areas vulnerable to improper 

billing. CMS’s collection of limited information is inconsistent with federal 

internal control standards related to information and communications, 

which state that management should use quality information to achieve 

the entity’s objectives—CMS’s objective in this instance being the 

education of providers about proper billing.26 Unless CMS requires 

 26GAO-14-704G.
Page 16 GAO-17-290 Medicare Provider Education

sufficient MAC provider education department reporting, it cannot ensure 

that MACs’ provider education department efforts are focused on areas 

vulnerable to improper billing.

CMS does not require A/B MACs to educate referring providers on 

documentation requirements for ordering DME and home health services 

because referring providers do not bill for any DME or home health 

services on these orders. DME suppliers and home health agencies are 

responsible for submitting a proper written order from the referring 

provider to receive payment, and DME and HH+H MACs are required to 

educate DME suppliers and home health agencies—but not the referring 

provider—on a proper written order. However, when a DME supplier or 

home health agency accepts a written order, its payment may be denied if 

the claim is reviewed and the referring provider’s medical record 

documentation does not support the supply or service provided. See 

figure 4 for an example in the case of DME.

CMS Does Not Require 

MACs to Educate 

Referring Providers for 

Durable Medical 

Equipment and Home 

Health Services
Page 17 GAO-17-290 Medicare Provider Education

Figure 4: Education Provided by Medicare A/B and DME MACs and Claim Payment 

Process

Some MAC officials told us they have started working with other MACs 

voluntarily to provide education to referring providers regarding DME and 

home health services documentation requirements in some jurisdictions, 

although CMS has not specifically required this collaboration. As an 

example, officials from one DME MAC told us that they and three A/B 

MACs that operate within its jurisdiction co-hosted two webinars on 

documentation requirements when ordering durable medical equipment 

and prosthetics and orthotics in September 2015; these webinars focused 

on the medical records and orders that are part of the supplier 

requirement for documentation. However, this voluntary collaboration 
Page 18 GAO-17-290 Medicare Provider Education

does not ensure that referring providers are always being educated.27 For 

example, two A/B MACs reported that they have done little collaboration 

with the HH+H MAC that serves their jurisdiction for referring providers on 

proper billing documentation for home health services. CMS officials 

stated that they have not explicitly required the MACs to work together on 

this activity because it has not risen to a level of significant concern.

If education were provided, officials from two DME MACs told us there 

would still be a lack of incentive for referring providers to bill properly for 

DME and home health services because they do not experience any 

repercussions for insufficient documentation—one type of improper 

billing. Instead, when DME or home health claims are denied due to 

insufficient documentation, from either the supplier or the referring 

provider, the DME or home health provider loses the payment, while the 

referring provider does not.

This education gap is problematic because insufficient documentation is 

the most common reason for improper payments for home health 

services and DME, which have high improper payment rates. As reported 

for fiscal year 2016, DME had a 46.3 percent improper payment rate with 

the Medicare program paying an estimated $3.7 billion improperly; home 

health services had a 42.0 percent improper payment rate with the 

program paying an estimated $7.7 billion improperly (see fig. 5.). Of these 

improper payment amounts, 81 percent and 96 percent were the result of 

insufficient documentation for DME and home health services, 

respectively. Although the DME improper payment rate has decreased 

somewhat in recent years, both the home health and DME programs’ 

improper payment rates remain higher than the overall Medicare fee-forservice improper payment rate of 11.0 percent.28

 27Some MAC officials reported that similar issues exist with referring providers’ 

documentation for third party services such as radiology and labs. However, education in 

these cases is provided by the A/B MAC for both the service provider and the referring 

physician.

28Hospice services are reported separately from the home health services improper 

payment rate. In fiscal year 2016, hospice services had a 14.6 percent improper payment 

rate with the Medicare program paying an estimated $2.1 million improperly. See 

Department of Health and Human Services, The Supplementary Appendices.
Page 19 GAO-17-290 Medicare Provider Education

Figure 5: Improper Payment Rates for Overall Medicare Fee-for-Service, Durable 

Medical Equipment, Prosthetics, Orthotics, and Supplies and Home Health Services 

for Fiscal Years 2010-2016

Because referring physicians do not receive education from MACs for the 

required documentation to support referrals for DME and home health 

services, the risk is increased that DME suppliers or home health 

agencies will improperly submit claims with insufficient documentation 

from referring providers. Although both the A/B and DME MAC contracts 

contain a requirement for the MACs to share ideas and coordinate their 

efforts as necessary, they do not explicitly require collaboration between 

these MACs to address this education gap for referring providers. The 

absence of a requirement for MACs to educate referring providers about 

proper documentation for DME and home health claims is inconsistent 

with federal internal control standards, which state that in order to achieve 

an entity’s objectives, management should assign responsibility, and 

delegate authority.29 Without explicitly requiring that MACs educate 

 29GAO-14-704G.
Page 20 GAO-17-290 Medicare Provider Education

referring providers, the billing errors that result from referring providers’ 

insufficient documentation may persist.

Although CMS officials consider the MACs’ short-stay hospital probe and 

educate reviews to be a success, they did not measure the effectiveness 

of this new strategy in reducing improper billing. CMS officials consider 

the reviews to be a success based on feedback from providers who were 

happy with the education they received and based on the reduction in the 

number of providers from the first to third rounds who were billing and 

documenting claims improperly.

We found that the effectiveness of the MACs’ short-stay hospital probe 

and educate reviews cannot be confirmed because CMS did not establish 

performance metrics to determine whether the probe and educate 

reviews were effective in reducing improper billing. Although CMS stated 

the objective of the reviews was to determine the extent to which 

providers understood recent policy changes for certain services and were 

billing properly for those services, CMS officials told us they did not 

establish performance metrics that defined their objectives in measurable 

terms and would allow them to evaluate whether they met those 

objectives— for instance, specifying the percentage decrease they’d want 

to see in the number of providers reviewed from the first round to third 

rounds. This is inconsistent with federal internal control standards that 

specify management should define objectives in specific and measurable 

terms, establish appropriate performance measures for the defined 

objectives, and conduct ongoing monitoring to evaluate whether they are 

meeting those objectives.30

We reviewed the data provided by the MACs to CMS about the inpatient 

short-stay probe and educate reviews and found that the reviews may not 

have been a clear success. For instance, the percentage of providers 

who continued to require review remained high throughout the three 

rounds—over 90 percent.31 Additionally, the percentage of claims denied 

 30GAO-14-704G.

31Providers that continued to a subsequent round were considered to be providers that 

continued to require review, although they may not have had claims reviewed in the third 

round. This is because according to CMS officials, MACs were permitted to start a third 

round of short-stay inpatient hospital probe and educate reviews, but had to stop all 

reviews by the end of fiscal year 2015. Therefore, although CMS estimates that a certain 

number of providers advanced to the third round of review, only some of those providers 

had claims reviewed during this round.

CMS Officials 

Consider Hospital 

Probe and Educate 

Reviews a Success, 

but Did Not Measure 

Effectiveness
Page 21 GAO-17-290 Medicare Provider Education

in each round also remained high throughout the three rounds (see table 

1). CMS officials told us that because providers billing properly were 

removed after each round, they could not determine how much the overall 

denial rate effectively decreased from the first to third rounds, noting that 

the decrease in the claims denial rate could be greater than results 

indicate. However, the number of providers removed after each round 

was small. It is too early to say whether the home health probe and 

educate reviews are successful because only one round of reviews had 

been completed at the time of our review.32 CMS officials told us they 

have not established specific performance metrics for the home health 

reviews either.

Table 1: Short-Stay Inpatient Hospital Probe and Educate Reviews: Number of Providers, Claims Reviewed, and Percent of 

Claims Denied, Fiscal Years 2014 and 2015

Round

Number of providers 

requiring review

Percent of providers 

remaining from 

Round 1

Number of claims 

reviewed

Percent of total 

claims denied

1 4,846 _ 27,506 53%

2 4,745 98% 23,315 44

3a 4,527 93% 13,955 42

Source: GAO analysis of Medicare administrative contractor data collected by the Centers for Medicare & Medicaid Services | GAO-17-290

a

According to Centers for Medicare & Medicaid Services officials, Medicare administrative contractors 

were permitted to start a third round of short-stay inpatient hospital probe and educate reviews, but 

had to stop all reviews by the end of fiscal year 2015. Therefore, although the Centers for Medicare & 

Medicaid Services estimates that 4,527 providers advanced to the third round of review, only 2,866 

providers had claims reviewed during this round, which resulted in a lower number of claims reviewed 

compared to the first two rounds.

The probe and educate reviews are resource-intensive. Though their 

costs have not been quantified by CMS, the reviews require manual 

assessments of thousands of claims, as well as the offer of one-to-one 

education from the MACs to certain providers. The importance of 

measuring the effectiveness of these probe and educate reviews is 

highlighted by their resource-intensive nature, as well as by the fact that 

the percentage of providers requiring review and claims denied remained 

high throughout the three rounds of the probe and educate reviews of 

short inpatient hospital stays. Therefore, without performance metrics, 

 32In fiscal year 2016, the denial rate for the home health probe and educate review 

averaged 65 percent across the four HH+H MAC jurisdictions. During the first round, 

MACs reviewed 49,760 claims from 11,201 home health providers.
Page 22 GAO-17-290 Medicare Provider Education

CMS cannot determine whether future probe and educate reviews would 

be effective in reducing improper billing.

The MACs’ provider education departments play an important role in 

reducing the rate of improper payments by educating Medicare providers 

on coverage and payment policies so that they can bill properly. However, 

CMS has missed opportunities to improve the effectiveness and its 

oversight of those efforts. CMS needs sufficient reporting from the MACs 

to determine if their provider education department efforts are focusing on 

areas vulnerable to improper billing. Lack of detail in the MACs’ IPRS 

reporting provides CMS with insufficient information for oversight. Without 

sufficient reporting, CMS cannot assure that the MACs are focusing their 

provider education department efforts on reducing areas vulnerable to 

improper billing.

In order to reduce the high improper payment rates for home health and 

DME, education on proper documentation for providers who refer their 

patients for DME and home health services is necessary; however, MACs 

are not required to provide this education to the referring providers. To 

provide this education, collaboration is needed between the A/B MACs, 

which are the primary contacts for the referring providers, and the DME 

and HH+H MACs, which have expertise in the DME and home health 

billing areas. Without requiring MACs to work together to educate 

referring providers, CMS has little assurance that referring providers are 

being educated in order to help reduce improper billing in DME and home 

health services.

Finally, CMS has not determined the effectiveness of the probe and 

educate reviews. CMS does not have sufficient information to indicate 

whether the reviews help to reduce improper billing; establishing 

performance metrics would help CMS determine if the reviews are 

effective in doing so. Without performance metrics, little assurance exists 

that the probe and educate reviews are effective in reducing improper 

billing and whether they should be used for additional areas vulnerable to 

improper billing in the future.

Conclusions
Page 23 GAO-17-290 Medicare Provider Education

To ensure MACs’ provider education efforts are focused on areas 

vulnerable to improper billing and to strengthen CMS’s oversight of those 

efforts, we recommend that CMS take the following three actions:

1. CMS should require sufficient detail in MAC reporting to allow CMS to 

determine the extent to which MACs’ provider education department 

efforts focus on areas identified as vulnerable to improper billing.

2. CMS should explicitly require that A/B, DME, and HH+H MACs work 

together to educate referring providers on documentation 

requirements for DME and home health services.

3. For any future probe and educate reviews, CMS should establish 

performance metrics that will help the agency determine the reviews’ 

effectiveness in reducing improper billing.

We provided a draft of this product to HHS for comment. In its written 

comments, which are reprinted in appendix II, HHS concurred with our 

recommendations. HHS also provided technical comments, which we 

incorporated as appropriate. HHS acknowledged the role of referring 

providers in ensuring proper billing for Medicare services, stating it will 

ensure the MACs work together to educate referring providers on 

documentation requirements for DME and home health services. Further, 

HHS noted that it will work with the MACs on providing additional 

information related to their provider education department efforts. HHS 

also noted it is currently developing performance metrics to help measure 

the effectiveness of future probe and educate reviews.

Recommendations for 

Executive Action

Agency Comments
Page 24 GAO-17-290 Medicare Provider Education

As agreed with your offices, unless you publicly announce the contents of 

this report earlier, we plan no further distribution until 30 days from the 

report date. At that time, we will send copies to the Secretary of Health 

and Human Services, the Administrator of the Centers for Medicare & 

Medicaid Services, and other interested parties. In addition, this report is 

available at no charge on the GAO website at http://www.gao.gov.

If you or your staff has any questions about this report, please contact me 

at (202) 512-7114 or kingk@gao.gov. Contact points for our Offices of 

Congressional Relations and Public Affairs may be found on the last page 

of this report. GAO staff who made key contributions to this report are 

listed in appendix III.

Sincerely yours,

Kathleen M. King

Director, Health Care
Appendix I: Medicare Administrative 

Contractor Jurisdictions

Page 25 GAO-17-290 Medicare Provider Education

Figure 6: Part A/B Medicare Administrative Contractor Jurisdictions

Appendix I: Medicare Administrative 

Contractor Jurisdictions
Appendix I: Medicare Administrative 

Contractor Jurisdictions

Page 26 GAO-17-290 Medicare Provider Education

Figure 7: Home Health and Hospice Medicare Administrative Contractor Jurisdictions
Appendix I: Medicare Administrative 

Contractor Jurisdictions

Page 27 GAO-17-290 Medicare Provider Education

Figure 8: Durable Medical Equipment Medicare Administrative Contractor Jurisdictions
Appendix II: Comments from the Department 

of Health and Human Services

Page 28 GAO-17-290 Medicare Provider Education

Appendix II: Comments from the Department 

of Health and Human Services
Appendix II: Comments from the Department 

of Health and Human Services

Page 29 GAO-17-290 Medicare Provider Education
Appendix II: Comments from the Department 

of Health and Human Services

Page 30 GAO-17-290 Medicare Provider Education
Appendix III: GAO Contact and Staff 

Acknowledgments

Page 31 GAO-17-290 Medicare Provider Education

Kathleen M. King, (202) 512-7114 or kingk@gao.gov.

In addition to the contact named above, Lori Achman, Assistant Director; 

Teresa Tam, Analyst-in-Charge; Cathleen Hamann; Deborah Linares; 

Vikki Porter, and Jennifer Whitworth made key contributions to this report.

Appendix III: GAO Contact and Staff 

Acknowledgments

GAO Contact

Staff 

Acknowledgments

(100675)
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