DEPARTMENT OF HEALTH & HUMAN SERVICES 	 Office of Inspector General 

Washington, D.C. 20201 

TO: 	 Donald M. Berwick, M.D. 

Administrator 

Centers for Medicare & Medicaid Services 

FROM: Stuart Wright 

Deputy Inspector General 

for Evaluation and Inspections 

SUBJECT: 	 Memorandum Report: Payments/or Medicare Part B Services During 

Non-Part A Nursing Home Stays in 2008, OEI-06-07-00580 

This memorandum report provides information regarding the extent to which Medicare paid for 

Part B services during non-Part Al nursing home2 stays (hereinafter referred to as non-Part A 

stays) in 2008. We used resident assessment data from the Minimum Data Set (MDS) to identify 

all nursing home stays nationwide during 2008 and reviewed Part B claims that occurred during 

non-Part A stays. 

SUMMARY 

This study is part of the Office oflnspector General's (OIG) activities to address section 313(d) of 

the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA).3 

BIPA required the Secretary of Health & Human Services, through OIG, to monitor 

Part B payments for items and services fumished to nursing home residents during stays not 

covered by Part A to guard against excessive services. To facilitate identification of areas where 

such vulnerability may occur, this study provides an overview of Part B services that occurred 

during non-Part A stays. Insights into payment and utilization pattems, as well as geographic 

differences, may suggest possible areas for further review by OIG and the Centers for Medicare & 

Medicaid Services (CMS). 

I Nursing home stays not paid for by Part A constitute non-Part A stays. Part A covers posthospital skilled nursing facility (SNF) care to eligible 


benefi ciaries for up to 100 days in SNFs, during which Part A will pay for most services as part of the nursing home's daily rate. After the 


100 days or if the beneficiary does not qualify for a Part A stay, Part B may provide coverage for some services. 


2 For purposes of this evaluation, the term "nursing home" refers to any nursing home regardless of primary payer (e.g., Medicare, Medicaid, or 


private resources). 


3 P.L. 106-554. 


OEI-06-07-00580 Payments for Medicare Part B Services During Non-Part A Nursing Home Stays in 2008 
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OEI-06-07-00580 Payments for Medicare Part B Services During Non-Part A Nursing Home Stays in 2008

We found that Medicare paid $4.9 billion for Part B services during non-Part A stays in 2008. 

Three service categories, therapy services, evaluation and management, and major and minor 

medical procedures, made up 58 percent of the total payment. In addition, Part B services were 

rendered in a variety of places, with 54 percent of payments for services rendered inside nursing 

homes and 46 percent of payments for services rendered outside of nursing homes 

(e.g., outpatient hospitals and physician offices). 

On average, Medicare paid $16.75 per day per beneficiary for Part B services across all service 

categories and all beneficiaries. However, the average varied widely across service categories

and States in which the services occurred; the highest average daily payments were for dialysis 

services and services in Louisiana. Examining average daily payments across nursing homes, 

we found that payments to some nursing homes exceeded three times the national average daily 

payment within certain service categories, most prominently drugs and biologicals and durable 

medical equipment, prosthetics, orthotics, and supplies (DMEPOS). 

The variation and unusual patterns found in this review raise concerns of potential fraud, waste, 

and abuse. Therefore, items and services billed under Part B for nursing home residents during 

non-Part A stays continue to warrant specialized monitoring. To facilitate such monitoring, we 

plan to undertake additional reviews and in-depth analyses focusing on specific service types. 

BACKGROUND 

The BIPA requirement for special monitoring reflects vulnerabilities with Medicare payments for 

Part B services during non-Part A stays that generally do not exist for the same services provided 

during Part A stays. During a Part A stay, Medicare requires consolidated billing: nursing homes 

must arrange for and submit all Medicare claims for the services that their residents receive,

4

including services and supplies delivered by providers other than the nursing home.5

 For example, 

if a Medicare beneficiary receives a wheelchair and oxygen tanks from different suppliers 

following a hospital stay, Medicare requires the nursing home to collect, consolidate, and submit 

bills for payment under Part A. Once paid by Medicare, the nursing home is responsible for 

reimbursing the suppliers their portion of the payment. Consolidated billing ensures that the 

nursing home is aware of services provided to its residents, which helps it to coordinate care for 

beneficiaries and to safeguard against excessive services by providers. 

When Part A does not cover a Medicare beneficiary’s nursing home stay (a non-Part A stay), 

individual providers, rather than the nursing home, may bill Medicare directly for Part B services, 

4 Social Security Act, §§ 1862(a)(18) and 1842(b)(6)(E).

5 Pursuant to Section 1888(e)(2)(A)(ii) and (iii) of the Social Security Act, services excluded from consolidated billing requirements during 

Part A covered SNF stays include physicians’ professional services, certain dialysis-related services, certain drugs, and certain ambulance 

services. Section 1888(e)(2)(A)(ii) of the Social Security Act specifies that physical therapy, occupational therapy, and speech-language 

pathology services for SNF residents are always subject to consolidated billing requirements regardless of whether they are furnished by (or 

under the supervision of) a physician or other health care professional. A full listing of excluded services may be accessed at 

https://www.cms.gov/SNFPPS/05_ConsolidatedBilling.asp. 
Page 3 – Donald M. Berwick, M.D. 

OEI-06-07-00580 Payments for Medicare Part B Services During Non-Part A Nursing Home Stays in 2008

creating particular vulnerabilities for program integrity. For example, although nursing homes are 

likely aware of the services provided to their residents, they may never see the claims submitted to 

Medicare by outside providers and therefore not have an opportunity to verify the accuracy of 

claims. 

 

Related Work 

Several recent OIG reports found improper payments and other vulnerabilities for Part B services 

that occurred during non-Part A stays. For example, one report found improper payments of 

$30 million made by Part B for durable medical equipment during non-Part A stays in 2006.6

 

Suppliers incorrectly listed these items for use in beneficiaries’ homes when usage actually 

occurred in the nursing home, a place of service not covered by Part B unless the nursing home 

qualifies as the beneficiary’s home. Because these nursing homes were providing primarily skilled 

care or rehabilitation, they could not be considered the beneficiaries’ homes. Additionally, OIG

found problems related to coding, medical necessity, and maintaining adequate documentation for 

enteral nutrition therapy services7 and mental health services,

8 resulting in $39 million and 

$74 million, respectively, in improper payments during 2006. 

METHODOLOGY

Scope

We identified Medicare payments for, and beneficiaries’ utilization of, Part B services during 

non-Part A stays in 2008. We did not examine (1) any Part B service that occurred during a 

Part A covered stay or (2) the medical appropriateness of any Part B service. 

Identification of Part B Services During Non-Part A Stays

We utilized several databases obtained from CMS to identify Part B payments for services during 

non-Part A stays. These databases included the MDS; the Online Survey, Certification, and 

Reporting System; the Enrollment Database; and the National Claims History. (See Appendix A 

for a detailed description of the databases and the methods used to identify Part B services during 

non-Part A stays in 2008.) 

Service Categorization

To facilitate analysis of all services paid for by Part B during non-Part A stays, we developed a 

comprehensive categorization of services by modeling service categories after the American 

Medical Association’s Current Procedural Terminology code delineations and the Berenson-Eggers 

Type of Service system. (See Appendix B for further details regarding the creation and structure of 

the categorization.) This categorization organized the more than 14,000 Healthcare Common 

Procedure Coding System (HCPCS) codes using a structure that resulted in 14 broad service 

categories. The categorization also included a category of “other” services that we were unable to 

6 OIG, Part B Services During Non-Part A Nursing Home Stays: Durable Medical Equipment (OEI-06-07-00100), July 2009. 

7 OIG, Medicare Part B Services During Non-Part A Nursing Home Stays: Enteral Nutrition Therapy (OEI-06-07-00090), June 2010. 

8 OIG, Medicare Part B Services During Non-Part A Nursing Home Stays: Mental Health (OEI-06-06-00580), July 2010. 
Page 4 – Donald M. Berwick, M.D. 

OEI-06-07-00580 Payments for Medicare Part B Services During Non-Part A Nursing Home Stays in 2008

classify into a particular category. We further divided these 14 categories into subcategories to 

provide more specificity when analyzing services within categories. 

Analysis of Payments and Utilization

We reviewed 8,195 unique HCPCS codes representing the Part B services paid for during 

non-Part A stays in 2008. After categorizing these codes, we conducted several types of analyses 

to provide an overview of payments and utilization. 

Payment analysis. We calculated the following summary statistics for each of the 14 service 

categories: total Part B payments, percentage of total Part B payments, number of beneficiaries 

who received a service in the category, percentage of total beneficiaries who received a service in 

the category, and average Part B payments per beneficiary. For many of the highest dollar service 

categories, we also identified the subcategories in which the majority of payments were made. In 

addition, we examined Part B payments across places of service for each of the 14 service 

categories. 

States’ payment patterns. To identify potential differences in States’ payment patterns, we

computed the payment percentage for each service category within a State. For example, if a State

received $100 million in total Part B payments for services, and the category of evaluation and 

management accounted for $50 million, the payment percentage of the evaluation and management 

category was 50 percent. Therefore, summing the percentages across each of the 14 service 

categories yielded 100 percent within a State. After computing payment percentages for each 

State, we compared these rates against the national rate to identify States that had high payment 

rates. 

Comparative payment analysis. By accounting for the duration of beneficiary nursing home stays, 

we computed a measure for comparing cost differences among service categories, States, nursing 

homes, and beneficiaries. This standardizing measure, the average daily payment, identifies the 

average that Medicare paid per day for services during a beneficiary’s nursing home stay. For 

example, a beneficiary who receives $1,000 in Part B services during a 100-day nursing home stay 

has an average daily payment of $10. To determine the national average across Part B services, we

computed an average daily payment rate for each beneficiary within our review and then averaged 

these rates. To determine average daily payment across service categories, States, and nursing 

homes, we first sorted beneficiaries by these groupings and then calculated average daily payments

among beneficiaries who received such services. 

Standards

This study was conducted in accordance with the Quality Standards for Inspection and Evaluation

issued by the Council of the Inspectors General on Integrity and Efficiency. 
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OEI-06-07-00580 Payments for Medicare Part B Services During Non-Part A Nursing Home Stays in 2008

RESULTS

Medicare Paid $4.9 Billion for Part B Services During Non-Part A Stays in 2008, With Three 

Service Categories Accounting for 58 Percent of the Total Payments 

During non-Part A stays in 2008, Part B paid for a variety of services for 1.5 million beneficiaries 

who resided in 16,059 nursing homes. Of the 14 Part B categories we reviewed, therapy services, 

evaluation and management, and major and minor medical procedures together accounted for 

$2.8 billion—more than half of the $4.9 billion paid by Part B. Table 1 contains payment amounts 

and utilization statistics for each of the service categories. (See Appendix C for additional payment 

and utilization statistics for Part B services during non-Part A stays in 2008.) 

Table 1: Payment and Utilization Statistics for 14 Part B Service Categories During 

Non-Part A Stays in 2008

Service Category Part B 

Payment

Total Part B 

Percentage 

of Payment

Number of 

Beneficiaries

Who Received 

These Services

Percentage of 

Beneficiaries

Who Received 

These Services

Average 

Payment per 

Beneficiary

Therapy services $1,314,988,128 27% 731,356 48% $1,798

Evaluation and management $1,049,333,598 21% 1,415,945 94% $741

Major and minor medical procedures $464,983,013 10% 1,290,463 85% $360

Pathology and laboratory $394,283,013 8% 1,286,796 85% $306

Transportation services $374,453,747 8% 339,282 22% $1,104

Radiology and imaging $286,748,086 6% 862,805 57% $332

Dialysis services $264,308,170 5% 31,254 2% $8,457

Enteral and parenteral therapy $224,110,762 5% 55,677 4% $4,025

DMEPOS $212,940,491 4% 374,099 25% $569

Drugs and biologicals $211,725,750 4% 420,721 28% $503

Endoscopy $45,997,999 1% 130,716 9% $352

Oncology $26,110,191 1% 12,614 1% $2,070

Anesthesia $10,271,963 <1% 62,789 4% $164

Other $381,402 <1% 2,958 <1% $129

Total $4,880,636,313 100%* 1,511,974** — —

Source: OIG analysis of paid Part B services during non-Part A stays in 2008.

* The column does not total to 100% because of rounding.

** The total number of unique nursing home Medicare residents who received any Part B service during non-Part A stays in 2008.

Therapy services, the highest paid service category with $1.3 billion, accounted for 27 percent of 

the total Part B payment. Forty-eight percent of beneficiaries utilized at least one therapy service. 

The category of therapy services includes physical therapy, occupational therapy, speech-language 

pathology services, hydration and prophylactic therapy, alternative therapies (e.g., acupuncture), 

and other forms of physical medicine and rehabilitation. Of these subcategories, physical therapy,

occupational therapy, and speech-language pathology services accounted for 99 percent 

($1.3 billion) of the Part B payment for the therapy services category. Additionally, therapeutic 

exercise, the highest paid individual HCPCS code within the therapy services category, was also 

the highest paid HCPCS code among all Part B services, with $383 million in total payment. 
Page 6 – Donald M. Berwick, M.D. 

OEI-06-07-00580 Payments for Medicare Part B Services During Non-Part A Nursing Home Stays in 2008

Evaluation and management, the second-highest paid category with $1 billion, accounted for 

21 percent of the total Part B payment. Nearly all beneficiaries—94 percent—utilized at least one

service in this category. The evaluation and management category encompasses services such as

medical visits (e.g., nursing home, emergency, office or other outpatient, hospital, and home visits),

psychiatry and alcohol/drug treatment, consultations, special evaluation and management, and 

preventive medicine. Of these subcategories, nursing home visits accounted for 57 percent 

($593 million) of the evaluation and management category payment. Additionally, four HCPCS 

codes (99307–99310), corresponding to a group of services encompassing visits lasting between 

10 and 35 minutes called subsequent nursing home care, accounted for 53 percent ($553 million) of 

the amount paid for this category. 

Major and minor medical procedures, the third-highest paid category with $465 million, accounted 

for 10 percent of the total Part B payment. Eighty-five percent of beneficiaries utilized at least one 

service in this category. The category of major and minor medical procedures consists of surgical 

and other medical procedures grouped according to body systems, such as the cardiovascular, 

integumentary (e.g., skin), vision and hearing, musculoskeletal, and nervous systems. The vast 

majority of these services involve complex and skilled procedures to repair damaged body parts, 

remove malignancies, or treat dysfunctions. Of the body systems, cardiovascular ($168 million), 

integumentary ($126 million), and vision and hearing ($89 million) together accounted for 

83 percent of major and minor medical procedures. Furthermore, services generally provided by

podiatrists represent 21 percent ($96 million) of the amount paid for services in this category. 

Three Places of Service Comprised 76 Percent of the Total Payment Made by Part B During 

Non-Part A Stays in 2008 

Nursing homes, outpatient hospitals, and end-stage renal disease (ESRD) treatment facilities 

together made up $3.7 billion, or 76 percent of the $4.9 billion paid by Part B (see Table 2). 

Nursing homes, the places of service associated with the highest overall payment, accounted for 

54 percent ($2.6 billion) of the total Part B payment. Outside of nursing homes, several places of 

service together accounted for the remaining 46 percent ($2.3 billion) of the total payment made by 

Part B during non-Part A stays in 2008. 

Table 2: Payments Across Places of Service for Part B Services During Non-Part A 

Stays in 2008

Place of Service Part B Payment Total Part B Percentage of Payment

Nursing home $2,631,865,410 54%

Outpatient hospital $630,212,887 13%

ESRD facility $451,148,936 9%

Ambulance $360,129,994 7%

Physician office $294,137,372 6%

Other* $310,896,613 6%

Independent laboratory $202,245,101 4%

Total $4,880,636,313 100%**

Source: OIG analysis of paid Part B services during non-Part A stays in 2008.

* Other included a variety of settings, such as the home, ambulatory surgical centers, emergency rooms, custodial care facilities, mobile units, 

intermediate care facilities, assisted living facilities, community mental health centers, and home health agencies.

** The column does not total to 100% because of rounding.
Page 7 – Donald M. Berwick, M.D. 

OEI-06-07-00580 Payments for Medicare Part B Services During Non-Part A Nursing Home Stays in 2008

Certain service categories were primarily associated with a nursing home place of service, 

whereas others were primarily associated with places of service outside of a nursing home. 

Most payments for the categories of enteral and parenteral therapy (98 percent), therapy services 

(97 percent), and evaluation and management (67 percent) were for services rendered within 

nursing homes (see Table 3). Conversely, most payments for the following service categories were

for services rendered outside of nursing homes: major and minor medical procedures (72 percent), 

pathology and laboratory (92 percent), transportation services (99 percent), dialysis services 

(99 percent), drugs and biologicals (95 percent), endoscopy (95 percent), oncology (99 percent), 

and anesthesia (99 percent). Payments for the remaining service categories, radiology and imaging

and DMEPOS, were nearly evenly distributed between the nursing home and places outside of the 

nursing home. (See Appendix D for payment statistics across Part B service categories for all 

places of services during non-Part A stays in 2008.) 

Table 3: Payment (in Millions) Across Places of Service for 14 Part B Service 

Categories During Non-Part A Stays in 2008

Service Category

Within Nursing Homes Outside of Nursing Homes Total

Part B 

Payment

Percentage of 

Payment Within 

Service Category

Part B 

Payment

Percentage of 

Payment Within 

Service Category

Part B 

Payment

Therapy services $1,271 97% $44 3% $1,315

Evaluation and management $704 67% $345 33% $1,049

Major and minor medical 

procedures $130 28% $335 72% $465

Pathology and laboratory $32 8% $362 92% $394

Transportation services <$1 <1% $374 >99% $374

Radiology and imaging $149 52% $138 48% $287

Dialysis services <$1 <1% $264 >99% $264

Enteral and parenteral therapy $220 98% $4 2% $224

DMEPOS $114 53% $99 47% $213

Drugs and biologicals $11 5% $201 95% $212

Endoscopy $2 5% $44 95% $46

Oncology <$1 <1% $26 >99% $26

Anesthesia <$1 <1% $10 >99% $10

Other <$1 5% <$1 95% <$1

Total* $2,632 54% $2,249 46% $4,881

Source: OIG analysis of paid Part B services during non-Part A stays in 2008.

* These totals represent the aggregate across all service categories. 

Some States Had Much Higher Payment Rates Than the National Rate for Certain Part B 

Service Categories

The following States exhibited much higher payment rates: Tennessee, Minnesota, Nevada, 

California, Arkansas, the District of Columbia, South Carolina, Alaska, and North Dakota (see 
Page 8 – Donald M. Berwick, M.D. 

OEI-06-07-00580 Payments for Medicare Part B Services During Non-Part A Nursing Home Stays in 2008

Table 4).9

 For example, payments for the category of enteral and parenteral therapy in

Tennessee totaled 20 percent of Tennessee’s total Part B payment, which is 4.4 times higher than 

the national rate of 4.6 percent. Possible explanations for geographic differences may include 

differences in fraud, waste, and abuse or differences in the levels of patient wellness (i.e., the 

degree to which patients’ care needs are defined). 

Table 4: States With Higher Payment Rates Than the National Rate Across Part B 

Service Categories During Non-Part A Nursing Home Stays in 2008

State Service Category Service 

Payment

Total Part B 

Payment

State

Payment

Rate

National 

Payment 

Rate

State to 

National 

Percentage 

Ratio

Tennessee Enteral & parenteral therapy $28,407,009 $139,698,220 20.3% 4.6% 4.4 : 1

Minnesota Enteral & parenteral therapy $10,039,756 $50,272,634 20.0% 4.6% 4.3 : 1

Nevada DMEPOS $2,153,130 $13,745,084 15.7% 4.4% 3.6 : 1

California DMEPOS $59,510,343 $407,222,450 14.6% 4.4% 3.3 : 1

Arkansas DMEPOS $7,636,268 $58,557,303 13.0% 4.4% 3.0 : 1

District of Columbia Dialysis services $1,111,627 $7,159,009 15.5% 5.4% 2.9 : 1

South Carolina Transportation services $12,563,748 $58,910,790 21.3% 7.7% 2.8 : 1

Alaska Dialysis services $246,590 $1,629,854 15.1% 5.4% 2.8 : 1

Alaska Pathology & laboratory $352,567 $1,629,854 21.6% 8.1% 2.7 : 1

North Dakota Drugs & biologicals $1,628,904 $14,208,702 11.5% 4.3% 2.7: 1

Source: OIG analysis of paid Part B services during non-Part A stays in 2008.

On Average, Medicare Paid $16.75 per Day for Beneficiaries’ Part B Services During 

Non-Part A Stays in 2008 

Aggregating across all Part B services paid for and averaging across all beneficiaries during 

non-Part A stays in 2008, we found that the average daily payment was $16.75 (see Table 5 on 

page 9). This figure served as a reference point when comparing service categories and States. 

Aggregating across service categories, dialysis services exhibited the highest average daily 

payment of $49.74 during non-Part A stays in 2008. Two factors influenced the average daily 

payment of any given service category: relative cost per beneficiary (or “expensiveness” of the 

service category) and the duration of beneficiaries’ nursing home stays. The category of dialysis 

services was the most expensive at $8,457 per beneficiary (see Table 1 on page 5). Further, 

beneficiaries who received a service in this category exhibited short nursing home stays compared 

to beneficiaries who received other services, potentially because of their low survival rate (the 

measure of how long patients live after initial diagnosis).10

9 Although Puerto Rico and the U.S. Virgin Islands exhibited unusual payment patterns for certain Part B service categories, we did not include 

them in the analysis because payments for services in each territory totaled less than $50,000.

 We attribute this to the chronic nature 

10 As indicated in a 2007 study by the U.S. Renal Data System, the 90-day survival rates of dialysis patients are 92.1, 88.5, 83.6, and 79 percent 

for patients ages 65–69, 70–79, 80–84, and over 85, respectively. However, these survival rates drop significantly by the end of the first year of 

dialysis to 79.4, 72.5, 63.9, and 57.5 percent for the same age groups. U.S. Renal Data System, USRDS 2010 Annual Data Report: Atlas of 

Chronic Kidney Disease and End-Stage Renal Disease in the United States, National Institutes of Health, National Institute of Diabetes and 

Digestive and Kidney Diseases. Accessed at http://www.usrds.org on May 23, 2011. 
Page 9 – Donald M. Berwick, M.D. 

OEI-06-07-00580 Payments for Medicare Part B Services During Non-Part A Nursing Home Stays in 2008

of ESRD, which requires frequent, expensive dialysis treatments (e.g., three times a week for 

3 hours or more per visit) or a kidney transplant.11 

Table 5: Average Daily Payment Across 14 Part B Service 

Categories During Non-Part A Nursing Home Stays in 2008 

Average Daily Payment

Across All Part B Services $16.75

Service Category

Dialysis services $49.74

Oncology $20.77

Enteral and parenteral therapy $16.42

Therapy services $11.25

Transportation services $8.71

Evaluation and management $3.91

DMEPOS $3.39

Drugs and biologicals $3.27

Endoscopy $2.50

Radiology and imaging $2.04

Major and minor medical procedures $1.77

Pathology and laboratory $1.52

Anesthesia $1.25

Other $1.06

Source: OIG analysis of paid Part B services during non-Part A stays in 2008.

Aggregating across States, Louisiana exhibited the highest average daily payment of 

$19.13 during non-Part A stays in 2008. Many of the States located along the Gulf of Mexico 

and the Midwest exhibited relatively high average daily payments (see Figure 1). Conversely, 

States located in the north-central part of the country exhibited relatively low average daily 

payments. 

11 National Institute of Diabetes and Digestive and Kidney Diseases, Treatment Methods for Kidney Failure: Hemodialysis, December 2006. 

Accessed at http://kidney.niddk.nih.gov/kudiseases/pubs/hemodialysis/ on May 23, 2011. 
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OEI-06-07-00580 Payments for Medicare Part B Services During Non-Part A Nursing Home Stays in 2008

Drugs and biologicals appeared the category most vulnerable to high average daily payments

among nursing homes; however, DMEPOS may be of greater concern. On average, Medicare 

paid $3.27 per day during non-Part A stays in 2008 for the category of drugs and biologicals (see 

Table 5 on page 9). However, of the nursing homes associated with paid for drugs and 

biologicals services, 14 percent (1,247) exhibited an average daily payment greater than $9.81, 

which is triple the national average (see Table 6). There may be reasonable explanations for

such high average daily payments. For example, one nursing home had an average daily 

payment of $37.49; yet, upon further review, we found that the nursing home operated an onsite 

dialysis unit and ESRD drugs drove the average daily payment. Such nursing home 

specializations may explain high billing in a particular service type. 

The 3 percent of nursing homes with average daily payments higher than triple the national 

average for DMEPOS may be of greater concern. Nursing homes may exhibit high average daily 

payments because of a specialization unit, such as an onsite dialysis unit, but explanations are 

limited for extremely high average daily payments for DMEPOS. For example, at one nursing 
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OEI-06-07-00580 Payments for Medicare Part B Services During Non-Part A Nursing Home Stays in 2008

home with an average daily payment of $40, there were 23 beneficiaries who received

DMEPOS. Of those, nine had average daily payments ranging from $34 to $160—higher than 

the national average of $3.39. Such high average daily payments lend themselves to concerns of 

potential fraud, waste, and abuse. 

Table 6: Percentage of Nursing Homes That Exceeded Triple the National Average 

Daily Payment Across 14 Part B Service Categories

Categories

National 

Average 

Daily 

Payment

Triple the

National

Average 

Daily 

Payment

Nursing Homes That Exceeded 

Triple the National Average Daily 

Payment

Percentage of 

Nursing 

Homes

Maximum

Average Daily 

Payment

Across All Part B Services* $16.75 $50.25 <1% $76

Service Category * **

Drugs and biologicals $3.27 $9.81 14% $71

DMEPOS $3.39 $10.17 3% $45

Endoscopy $2.49 $7.47 2% $22

Transportation services $8.71 $26.13 2% $76

Major and minor medical procedures $1.77 $5.30 1% $37

Therapy services $11.25 $33.75 <1% $59

Evaluation and management $3.91 $11.72 <1% $47

Pathology and laboratory $1.52 $4.56 <1% $14

Radiology and imaging $2.04 $6.12 <1% $11

Anesthesia $1.25 $3.76 <1% $5

Oncology $20.77 $62.31 None exceeded $37

Dialysis services $49.74 $149.21 None exceeded $69

Enteral and parenteral therapy $16.42 $49.27 None exceeded $26

Other $1.06 $3.18 None exceeded $2

Source: OIG analysis of paid Part B services during non-Part A stays in 2008.

* To provide meaningful comparisons among nursing homes, we only analyzed data for those nursing homes with more than 50 beneficiaries who 

received Part B services.

** To provide meaningful comparisons between service categories, we only included beneficiaries who had a nursing home stay longer than 

14 days and nursing homes that had at least 10 beneficiaries who received a service in the service category (e.g., nursing homes with at least 

10 beneficiaries who received services in the category of drugs and biologicals). 

CONCLUSION 

Medicare made payments totaling nearly $5 billion for Part B services provided to nursing home 

residents during non-Part A stays in 2008. This analysis of utilization and payments provides an 

overview of the depth and breadth of the services billed to Part B. We found significant 

variation in payment and utilization among different Part B service categories, places of service, 

States, and nursing homes. We also found unusual payment and utilization patterns that greatly 

exceeded national norms. Such variation and unusual patterns raise concerns of potential fraud, 

waste, and abuse. Therefore, services billed under Part B for nursing home residents continue to 

warrant monitoring by OIG and CMS. 

To facilitate such monitoring, we plan to undertake additional reviews and in-depth analyses 

focusing on specific service types. Utilizing stay dates from the MDS, our data matches not only 
Page 12 – Donald M. Berwick, M.D. 

OEI-06-07-00580 Payments for Medicare Part B Services During Non-Part A Nursing Home Stays in 2008

allow us to identify Part B services provided to beneficiaries, but also demographic information 

for the nursing homes, providers, and beneficiaries associated with the claims. Such 

demographic information will allow us to perform detailed reviews to detect nursing homes that 

exhibit questionable billing patterns and the providers who furnish services to the residents of 

these nursing homes. For example, identifying a nursing home with beneficiaries who exhibit 

unusually high average daily payment rates for services may also identify providers who are 

billing for unnecessary Part B services. A subsequent review of these providers’ claims would 

distinguish between those who have reasonable explanations for questionable billing patterns and 

those who warrant further investigation.

Additionally, we encourage CMS’s continued use of its wide range of program integrity 

resources (e.g., Medicare Administrative Contractors and Recovery Audit Contractors) to 

scrutinize provider and supplier billing associated with this vulnerable patient population. 

This report is being issued directly in final form because it contains no recommendations. If you 

have comments or questions about this report, please provide them within 60 days. Please refer 

to report number OEI-06-07-00580 in all correspondence.
Page 13 – Donald M. Berwick, M.D. 

OEI-06-07-00580 Payments for Medicare Part B Services During Non-Part A Nursing Home Stays in 2008

APPENDIX A

Identification of Medicare Part B Services During Non-Part A Nursing Home Stays 

To identify Part B services during non-Part A stays, we utilized information from four Medicare 

program databases. 

Minimum Data Set. The Minimum Data Set (MDS) forms the foundation of the comprehensive 

assessment for all residents of long-term care facilities certified to participate in Medicare or 

Medicaid. It includes information about each resident’s health, as well as admission and discharge 

dates. We used the MDS (version 2.0) to identify all nursing home residents in 2008 and their 

Social Security numbers (SSN), related nursing homes, and stay dates. To determine resident stay 

dates between January 1 and December 31, 2008, we extracted all nursing home admission and 

discharge dates for each resident. We used assessment dates as proxies for missing admission or 

discharge dates according to the following assumptions: 

• Missing admission date. If the resident was in the nursing home on January 1, 2008 

(determined from subsequent assessments that the nursing homes conducted), we used the date 

of the first assessment conducted in 2007 as the admission date. 

• Missing discharge date. We defined the date of the last assessment conducted by nursing 

homes and received by OIG through March 2009 as the discharge date. 

Online Survey, Certification, and Reporting System. The Online Survey, Certification, and 

Reporting System (OSCAR) database contains nursing home facility demographic information, as 

well as survey results from nursing home certification and complaint surveys. To obtain 

information about nursing homes (e.g., facility name, address, number of beds, and certification

status), we linked the MDS facility identification numbers with the facility numbers maintained in 

OSCAR. 

Enrollment Database. The Enrollment Database (EDB) includes beneficiary-level data (e.g., name, 

SSN, and Medicare Health Insurance Claim Number (HICN)). Using this database, we matched 

SSNs contained in the MDS file to SSNs in the EDB to identify Medicare beneficiaries and their 

associated HICNs. We excluded beneficiaries who had no matching SSN from further analysis. 

National Claims History. We used the National Claims History (NCH), a data reporting system 

that includes both Part A and Part B claims, to identify all claims allowed by Part B during 

non-Part A stays. To identify claims associated with Medicare beneficiaries with nursing home 

stays (identified earlier), we first matched their HICNs to the claims data. To identify claims for 

services provided only during non-Part A stays, we then removed all claims for Part A paid skilled 

nursing facility (SNF) stays and inpatient hospital stays by matching the stay dates from the MDS 

to the SNF and inpatient hospital claims in the NCH. The resulting dataset comprised all Part B 

claims for which billing was allowed for beneficiaries during non-Part A stays in 2008. 
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OEI-06-07-00580 Payments for Medicare Part B Services During Non-Part A Nursing Home Stays in 2008

APPENDIX B

Categorization of Medicare Part B Services

To facilitate analysis of all Part B services utilized by beneficiaries during non-Part A nursing 

home stays, we developed a comprehensive and systematic categorization of services. This 

categorization organized the more than 14,000 services and their related Healthcare Common 

Procedure Coding System (HCPCS) codes into 14 broad service categories. In addition, each 

category includes subcategories for further detailed analysis across service types. For example, 

the evaluation and management category includes subcategories of office visits, consultations, or 

alcohol/drug treatment. To develop the categorization, we adapted three coding systems used by 

the Centers for Medicare & Medicaid Services (CMS) for billing, payment, and analysis: 

Current Procedural Terminology (CPT), Berenson-Eggers Type of Service (BETOS) system, and 

HCPCS. 

1. CPT codes are developed, maintained, and copyrighted by the American Medical Association 

(AMA) and are used to identify services and procedures provided by physicians and other 

health care professionals. 

2. The BETOS coding system covers all HCPCS codes; CMS uses it to analyze the growth in 

Medicare expenditures. 

3. HCPCS Level I numerical codes are identical to CPT codes and are used by CMS when 

services and procedures involve Medicare beneficiaries. HCPCS Level II codes are 

alphanumeric codes, consisting of a letter followed by four numbers. These codes, which CMS 

developed, represent products, supplies, and services used outside a physician’s office 

(e.g., ambulance services and durable medical equipment). 

We began the categorization by modeling some of the service categories after AMA’s CPT code 

delineations: evaluation and management, anesthesia, surgery (which we modified and renamed 

major and minor medical procedures), radiology and imaging, pathology and laboratory, and 

medicine (which we modified and renamed therapy services). We then added eight categories—

many of which were derived from the BETOS system and others that we created for this review— 

representing a variety of services that allowed for a detailed description of Part B services: 

endoscopy; oncology; dialysis services; transportation services; drugs and biologicals; enteral and 

parenteral therapy; durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS); 

and other. Listed below are the 14 service categories, including an other category for codes that do 

not readily fit into the previous 13 categories, and the number of HCPCS codes associated with 

each service category during 2008: 

1. Evaluation and management comprised 240 HCPCS codes and includes services occurring 

during medical visits. These may include visits to physician offices, outpatient facilities, 

emergency rooms, nursing homes, etc. 

2. Anesthesia comprised 213 HCPCS codes relating to anesthesia services necessary for a wide 

range of surgical and medical procedures. These services are organized by body location, 

such as upper body, lower body, and systemic. 
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OEI-06-07-00580 Payments for Medicare Part B Services During Non-Part A Nursing Home Stays in 2008

3. Major and minor medical procedures comprised 3,166 HCPCS codes for services ranging 

from minor surgery (e.g., nail debridement) to organ transplants. We sorted the services in 

this category by the body systems in which the services were associated, such as 

integumentary (i.e., skin), musculoskeletal, and respiratory. 

4. Endoscopy comprised 387 HCPCS codes related solely to endoscopy and related services, 

sorted primarily by the related body systems. 

5. Oncology comprised 102 HCPCS codes and includes cancer treatments, such as radiation 

therapy and chemotherapy. 

6. Dialysis services comprised 16 HCPCS codes and includes all nonsurgical services related to 

the provision of hemodialysis and peritoneal dialysis. 

7. Radiology and imaging comprised 587 HCPCS codes and includes all imaging modalities 

and related supplies. 

8. Pathology and laboratory comprised 1,091 HCPCS codes arranged by type of testing 

(e.g., therapeutic drug testing and urinalysis). 

9. Transportation services comprised 18 HCPCS codes sorted by type and purpose of transport 

(e.g., nonemergency transport, air ambulance, and advanced life support). 

10. Drugs and biologicals comprised 556 HCPCS codes divided by type of drug or biological, 

route of administration, purpose of administration, and dosage. 

11. Therapy services comprised 117 HCPCS codes and includes those services subject to 

consolidated billing requirements regardless of Part A coverage, such as physical therapy, 

occupational therapy, and speech-language pathology services, as well as other therapies, 

such as acupuncture. 

12. Enteral and parenteral therapy comprised 36 HCPCS codes divided by feeding type 

(i.e., enteral or parenteral). All codes associated with these services fall under this category, 

including pumps and supplies, as they can only be utilized for these specific services. 

13. DMEPOS comprised 1,589 HCPCS codes, including a variety of products (e.g., crutches and

pacemakers). 

14. Other comprised 76 HCPCS codes and includes all services not in another category, such as 

miscellaneous codes that end in 99, the Not Otherwise Classified codes. 
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OEI-06-07-00580 Payments for Medicare Part B Services During Non-Part A Nursing Home Stays in 2008

APPENDIX C 

Table C-1: Payment and Utilization Statistics for 14 Medicare Part B Service Categories 

and Their Subcategories During Non-Part A Stays in 2008* 

Service Category Part B Payment

Total Part B 

Percentage 

of Payment

Number of 

Beneficiaries Who 

Received These 

Services 

Percentage of 

Beneficiaries Who 

Received These 

Services

Average 

Payment per 

Beneficiary

Therapy services $1,314,988,128 27% 731,356 48% $1,798

Physical therapy, occupational 

therapy, and speech-language 

pathology services ** $1,299,187,587 26.62 674,006 44.54 $1,928

Hydration, therapeutic, 

prophylactic $14,142,113 0.29 126,311 8.35 $112

Alternative therapies $1,255,790 0.03 5,229 0.35 $240

Other physical medicine and 

rehabilitation $263,954 0.01 255 0.02 $1,035

Evaluation and management $1,049,333,598 21% 1,415,945 94% $741

Nursing home visits $592,916,446 12.15 1,302,679 86.09 $455

Psychiatry and alcohol/drug 

treatment $177,587,963 3.64 365,799 24.17 $485

Emergency room visits $100,104,236 2.05 329,957 21.80 $303

Office visits or other outpatient 

visits $95,877,111 1.96 494,338 32.67 $194

Consultations $48,098,605 0.99 314,471 20.78 $153

Hospital visits $16,606,655 0.34 59,380 3.92 $280

Home visits $8,384,883 0.17 51,193 3.38 $164

Special evaluation and 

management services $5,647,600 0.12 1,517 0.10 $3,723

Preventive medicine services $2,902,604 0.06 26,339 1.74 $110

Care plan oversight services $877,306 0.02 5,806 0.38 $151

Prolonged services $236,244 <0.01 2,687 0.18 $88

Major and minor medical 

procedures $464,983,013 10% 1,290,463 85% $360

Cardiovascular system $168,377,920 3.45 1,164,323 76.94 $145

Integumentary system $126,353,521 2.59 803,733 53.11 $157

Eye and ocular adnexa $88,995,776 1.82 381,048 25.18 $234

Musculoskeletal system $21,382,578 0.44 64,989 4.29 $329

Nervous system $19,092,286 0.39 31,783 2.10 $601

Urinary system $12,871,508 0.26 65,632 4.34 $196

Digestive system $10,402,129 0.21 25,409 1.68 $409

Respiratory system $8,348,420 0.17 44,709 2.95 $187

Auditory system $6,235,558 0.13 89,904 5.94 $69

Male genital system $1,121,210 0.02 1,738 0.11 $645

Female genital system $941,551 0.02 4,614 0.30 $204

Hemic and lymphatic systems $515,118 0.01 1,336 0.09 $386

General $187,754 0.00 1,231 0.08 $153

Endocrine system $151,870 0.00 196 0.01 $775
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OEI-06-07-00580 Payments for Medicare Part B Services During Non-Part A Nursing Home Stays in 2008

Table C-1 (continued)

Service category Part B Payment

Total Part B 

Percentage 

of Payment

Number of 

Beneficiaries Who 

Received These 

Services 

Percentage of 

Beneficiaries Who 

Received These 

Services

Average 

Payment per 

Beneficiary

Pathology and laboratory $394,283,013 8% 1,286,796 85% $306

Chemistry $113,034,126 2.32 992,918 65.62 $114

Organ or disease oriented 

panels $66,282,999 1.36 1,120,218 74.03 $59

Hematology and coagulation $65,504,531 1.34 1,087,294 71.85 $60

Microbiology $52,014,953 1.07 703,114 46.46 $74

Specimen procurement and 

other lab procedures $39,719,213 0.81 695,837 45.98 $57

Therapeutic drug assays $20,704,983 0.42 275,428 18.20 $75

Surgical pathology $13,110,663 0.27 79,319 5.24 $165

Transfusion medicine $9,558,217 0.20 27,558 1.82 $347

Urinalysis $7,376,217 0.15 670,406 44.30 $11

Immunology $3,566,365 0.07 86,812 5.74 $41

Cytopathology $1,858,331 0.04 15,337 1.01 $121

Drug testing $840,328 0.02 6,414 0.42 $131

Cytogenetic studies $377,898 0.01 999 0.07 $378

Other procedures $298,535 0.01 9,857 0.65 $30

Transportation services $374,453,747 8% 339,282 22% $1,104

Basic life support $197,279,881 4.04 235,926 15.59 $836

Air ambulance $105,453,234 2.16 268,504 17.74 $393

Transportation unit charges $65,337,634 1.34 336,973 22.27 $194

Advanced life support $4,877,542 0.10 13,347 0.88 $365

Other ambulance $1,499,312 0.03 1,121 0.07 $1,337

Radiology and imaging $286,748,086 6% 862,805 57% $332

Radiology $266,513,508 5.46 843,767 55.76 $316

Nuclear medicine $11,870,967 0.24 26,513 1.75 $448

Ultrasound $7,912,786 0.16 82,264 5.44 $96

Ultrasound guidance $450,826 0.01 8,098 0.54 $56

Dialysis services $264,308,170 5% 31,254 2% $8,457

Miscellaneous dialysis 

procedures $233,599,442 4.79 28,622 1.89 $8,162

End-stage renal disease 

services $29,054,327 0.60 26,086 1.72 $1,114

Other dialysis modality $1,208,890 0.02 220 0.01 $5,495

Hemodialysis $421,458 0.01 1,672 0.11 $252

Enteral and parenteral therapy $224,110,762 5% 55,677 4% $4,025

Enteral formulae and enteral 

medical supplies $223,584,867 4.58 55,650 3.68 $4,018

Parenteral nutrition solutions 

and supplies $525,895 0.01 35 0.00 $15,026

Durable medical equipment, 

prosthetics, orthotics, and 

supplies

$212,940,491 4% 374,099 25% $569

Medical supplies and surgical 

dressings $82,401,913 1.69 127,697 8.44 $645

Durable medical equipment $56,776,856 1.16 194,421 12.85 $292
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OEI-06-07-00580 Payments for Medicare Part B Services During Non-Part A Nursing Home Stays in 2008

Table C-1 (continued)

Service category Part B Payment

Total Part B 

Percentage 

of Payment

Number of 

Beneficiaries Who 

Received These 

Services 

Percentage of 

Beneficiaries Who 

Received These 

Services

Average 

Payment per 

Beneficiary

Orthotic devices $38,647,969 0.79 104,649 6.92 $369

Medical supplies and surgical 

dressings $35,113,752 0.72 14,680 0.97 $2,392

Drugs and biologicals $211,725,750 4% 420,721 28% $503

Drugs and biologicals 

administration $169,857,996 3.48 117,280 7.75 $1,448

Chemotherapy drugs $26,032,007 0.53 8,852 0.58 $2,941

Vaccines and toxoids $6,537,200 0.13 306,501 20.25 $21

Immunization administration for 

vaccines $6,383,368 0.13 326,012 21.54 $20

Nonprescription drugs $1,457,997 0.03 8,725 0.58 $167

Oral medications $747,470 0.02 673 0.04 $1,111

Pharmacy fees $699,934 0.01 10,116 0.67 $69

Endoscopy $45,997,999 1% 130,716 9% $352

Digestive system $25,053,556 0.51 37,679 2.49 $665

Urinary system $12,137,564 0.25 17,614 1.16 $689

Eye and ocular adnexa $4,892,780 0.10 71,526 4.73 $68

Respiratory system $2,710,009 0.06 11,197 0.74 $242

Musculoskeletal system $651,917 0.01 295 0.02 $2,210

Female genital $514,498 0.01 667 0.04 $771

Oncology $26,110,191 1% 12,614 1% $2,070

Radiation oncology $22,223,359 0.46 4,840 0.32 $4,592

Chemotherapy administration $3,886,832 0.08 8,500 0.56 $457

Anesthesia $10,271,963 <1% 62,789 4% $164

Upper body $7,339,343 0.15 43,844 2.90 $167

Lower body $2,432,080 0.05 17,412 1.15 $140

Systemic $500,540 0.01 4,215 0.28 $119

Other $381,402 <1% 2,958 <1% $129

Total $4,880,636,313 100% 1,511,974*** — —

Source: Office of Inspector General analysis of paid Part B services during non-Part A stays in 2008.

* We only included those subcategories with total payments greater than $100,000.

** Physical therapy, occupational therapy, and speech-language pathology services include all services subject to consolidated billing requirements 

regardless of Part A coverage.

*** The total number of unique nursing home residents who received any Part B service during non-Part A stays in 2008.
Page 19 – Donald M. Berwick, M.D. 

OEI-06-07-00580 Payments for Medicare Part B Services During Non-Part A Nursing Home Stays in 2008

APPENDIX D

Table D-1: Payment (In Millions) Across Places of Service For 14 Medicare Part B Service 

Categories During Non-Part A Stays in 2008

Service Category Nursing 

Home

Outpatient 

Hospital

End-Stage Renal 

Disease 

Treatment 

Facility

Ambulance Physician 

Office

Independent 

Laboratory Other* Total

Therapy services $1,271 $20 $13 $0 $5 <$1 $7 $1,315

96.6% 1.5% 1% 0% <1% <1% 0.5% 100%

Evaluation and 

management 

$704 $118 $52 <$1 $96 <$1 $80 $1,049

67.1% 11.2% 4.9% <1% 9.1% <1% 7.6% 100%

Major and minor 

medical procedures

$130 $186 <$1 <$1 $93 $9 $46 $465

28% 40.1% <1% <1% 20.1% 2% 9.9% 100%

Pathology and 

laboratory

$32 $131 $1 <$1 $9 $193 $28 $394

8.1% 33.2% <1% <1% 2.3% 48.9% 7.1% 100%

Transportation 

services

<$1 $12 $0 $360 <$1 $0 $2 $374

<1% 3.2% 0% 96.2% <1% 0% <1% 100%

Radiology and 

imaging

$149 $83 <$1 $0 $26 <$1 $29 $287

51.8% 28.9% <1% 0% 9.2% <1% 10% 100%

Dialysis services <$1 $4 $259 $0 <$1 $0 <$1 $264

<1% 1.6% 98% 0% <1% 0% <1% 100%

Enteral and 

parenteral therapy

$220 <$1 <$1 $0 $0 $0 $4 $224

98.1% <1% <1% 0% 0% 0% 1.8% 100%

Durable medical 

equipment, 

prosthetics, orthotics, 

and supplies

$114 $1 $1 <$1 <$1 $0 $97 $213

53.3% <1% <1% <1% <1% 0% 45.6% 100%

Drugs and biologicals $11 $24 $124 <$1 $45 <$1 $8 $212

5% 11.5% 58.6% <1% 21.3% <1% 3.6% 100%

Endoscopy

$2 $30 <$1 $0 $7 $0 $6 $46

4.7% 65.5% <1% 0% 15.7% 0% 14% 100%

Oncology <$1 $14 <$1 $0 $11 $0 $1 $26

<1% 54.5% <1% 0% 42.5% 0% 2.8% 100%

Anesthesia <$1 $7 $0 $0 <$1 $0 $3 $10

<1% 69.2% 0% 0% <1% 0% 30% 100%

Other <$1 <$1 <$1 $0 <$1 <$1 <$1 <$1

4.8% 31.4% 22% 0% 34.3% <1% 7.3% 100%

Total $2,632 $630 $451 $360 $294 $202 $311 $4,881

53.9% 12.9% 9.2% 7.4% 6.0% 4.1% 6.4% 100%

Source: Office of Inspector General analysis of paid Part B services during non-Part A stays in 2008.

* Other included a variety of settings, such as the home, ambulatory surgical centers, emergency rooms, custodial care facilities, mobile units, intermediate care facilities, 

assisted living facilities, community mental health centers, and home health agencies.