Department of Health and Human Services
 

OFFICE OF 

INSPECTOR GENERAL 

ABERRANT BILLING IN 


SOUTH FLORIDA FOR 


BENEFICIARIES WITH HIV/AIDS
 

Daniel R. Levinson
 

Inspector General 


September 2007
 

OEI-09-07-00030
 
Office of Inspector General 
 http://oig.hhs.gov 

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

as amended, is to protect the integrity of the Department of Health and Human Services 

(HHS) programs, as well as the health and welfare of beneficiaries served by those 

programs. This statutory mission is carried out through a nationwide network of audits, 

investigations, and inspections conducted by the following operating components: 

Office of Audit Services 

The Office of Audit Services (OAS) provides all auditing services for HHS, either by 

conducting audits with its own audit resources or by overseeing audit work done by others. 

Audits examine the performance of HHS programs and/or its grantees and contractors 

in carrying out their respective responsibilities and are intended to provide independent 

assessments of HHS programs and operations. These assessments help reduce waste, 

abuse, and mismanagement and promote economy and efficiency throughout HHS. 

Office of Evaluation and Inspections 

The Office of Evaluation and Inspections (OEI) conducts national evaluations to provide 

HHS, Congress, and the public with timely, useful, and reliable information on 

significant issues. Specifically, these evaluations focus on preventing fraud, waste, or 

abuse and promoting economy, efficiency, and effectiveness in departmental programs. 

To promote impact, the reports also present practical recommendations for improving 

program operations. 

Office of Investigations 

The Office of Investigations (OI) conducts criminal, civil, and administrative 

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

and of unjust enrichment by providers. The investigative efforts of OI lead to criminal 

convictions, administrative sanctions, or civil monetary penalties. 

Office of Counsel to the Inspector General 

The Office of Counsel to the Inspector General (OCIG) provides general legal services to 

OIG, rendering advice and opinions on HHS programs and operations and providing all 

legal support in OIG's internal operations. OCIG imposes program exclusions and civil 

monetary penalties on health care providers and litigates those actions within HHS. 

OCIG also represents OIG in the global settlement of cases arising under the Civil False 

Claims Act, develops and monitors corporate integrity agreements, develops compliance 

program guidances, renders advisory opinions on OIG sanctions to the health care 

community, and issues fraud alerts and other industry guidance. 
Δ EXECUTIVE SUMMARY 

OBJECTIVE 

1.	 To identify claims patterns associated with HIV/AIDS infusion 

therapy that may indicate fraudulent or abusive activity in three 

South Florida counties. 

2.	 To assess the effectiveness of past and current efforts to control 

inappropriate payments to infusion therapy providers in three 

South Florida counties. 

BACKGROUND 

In June 2003, the program safeguard contractor alerted the Centers for 

Medicare & Medicaid Services (CMS) that providers in three South 

Florida counties (Miami-Dade, Broward, and Palm Beach) were billing 

aberrantly for infusion therapy services for beneficiaries with 

HIV/AIDS. Related investigations found that many of the services 

billed by these aberrant providers were not medically necessary or 

feasible. In May 2004, CMS issued a National Medicare Fraud Alert 

describing the “infusion therapy scam.” By 2005, the three South 

Florida counties accounted for 72 percent of submitted charges for 

beneficiaries with HIV/AIDS nationwide, though only 8 percent of such 

beneficiaries lived there. Most of these charges were for drugs used in 

infusion therapy. 

CMS is responsible for paying Medicare claims and ensuring the 

integrity of those payments. The agency uses contractors to execute 

those responsibilities. CMS and the contractors have a number of tools 

available to control aberrant billing, including payment suspensions and 

preenrollment provider site visits. 

We used Medicare Part B National Claims History data from 2006 to 

analyze beneficiary and provider claims patterns in South Florida. In 

addition, we interviewed staff from CMS and its contractors and 

reviewed documents related to infusion fraud to assess the efforts to 

control aberrant billing. 

FINDINGS 

In the last half of 2006, three South Florida counties accounted for 

half the total amount, and 79 percent of the amount for drugs, billed 

nationally for Medicare beneficiaries with HIV/AIDS. Most of the 

charges originating in these counties were for nonoral drugs; drug 

 O E I - 0 9 - 0 7 - 0 0 0 3 0 ABERRANT BILLING IN S OUTH F LORIDA FOR BENEFICIARIES WITH HIV/AIDS i 
EXECUTIVE SUMMARY 

claims represented just 16 percent of the submitted charges in other 

geographic areas. Aberrant claims patterns differentiated South 

Florida providers and beneficiaries from those in the rest of the country. 

Other metropolitan areas exhibit patterns of billing similar to South 

Florida but to a lesser extent. CMS and its contractors have identified 

aberrant billers of infusion therapy outside of South Florida. Our data 

analysis shows that some metropolitan areas in other geographic 

regions have patterns of billing for beneficiaries with HIV/AIDS that are 

somewhat similar to those seen in South Florida. 

CMS has had limited success in controlling the aberrant billing 

practices of South Florida infusion therapy providers. CMS and its 

contractors have used multiple approaches, but none has proven effective 

over time. The most common tools include payment suspensions, 

revocations, and claims-processing edits. CMS has taken limited action 

to strengthen the enrollment process for new providers. 

RECOMMENDATIONS 

CMS has had limited success controlling aberrant billing by infusion 

clinics in South Florida. Therefore, we recommend that CMS: 

Mandate site visits for certain providers in high-risk jurisdictions. 

Site visits are essential in high-risk areas to confirm that providers 

have physical addresses and report accurate information in their 

applications. 

Afford contractors more time to review new applications from 

certain providers in high-risk jurisdictions. Contractor standards 

require that 80 percent of new applications be processed within 60 days 

of receipt. CMS should set alternative standards in high-risk 

jurisdictions for certain provider types and/or geographic areas that are 

vulnerable to fraud. 

Modify the Statement of Work for the jurisdiction that includes 

South Florida to require enhanced activities to fight fraud and 

abuse. CMS intends to release the Statement of Work for the Medicare 

Administrative Contractor for Jurisdiction 9, which includes Florida, 

Puerto Rico, and the U.S. Virgin Islands, later this year. The agency 

should require and fund the new contractor to conduct enhanced 

provider enrollment, data analysis, and claims-editing activities in the 

portion of this area identified as high-risk. 

 O E I - 0 9 - 0 7 - 0 0 0 3 0 ABERRANT BILLING IN S OUTH F LORIDA FOR BENEFICIARIES WITH HIV/AIDS ii 
EXECUTIVE SUMMARY 

Require extensive review of all reassignments in high-risk areas to 

confirm that they are legitimate. To minimize the chances that a 

legitimate provider is associated with a fraudulent one, CMS should 

take steps to ensure that all reassignments in high-risk areas are 

legitimate and fund more extensive review of all new and existing 

reassignments in South Florida as well as other high-risk areas. 

Strengthen revocations to prevent further fraud and abuse. CMS 

should consider shortening the 30-day notice period for revocations. In 

addition, CMS should require prepayment review on all claims from 

providers that have effective or pending revocations. 

AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 

RESPONSE 

CMS generally concurred with our recommendations and stated that 

our analysis will be useful to its continued efforts to prevent fraudulent 

payments for infusion therapy. CMS noted that our recommendations 

to mandate site visits and afford contractors more time to review new 

applications in high-risk jurisdictions have been incorporated into a new 

demonstration project. 

CMS stated that our recommendations demonstrate that CMS’s current 

actions are working. CMS also stated that the decline in Medicare 

payments in Florida from 2004 to 2006, despite increased amounts 

billed, demonstrates the effectiveness of corrective actions. However, 

we find that the continued aberrant billing and payment patterns 

documented in our report demonstrate the need for improved provider 

enrollment controls to prevent the entry of unqualified providers into 

the Medicare program. CMS acknowledged the need for improvement 

in the provider enrollment process and described recent actions it has 

taken to strengthen this process. 

CMS’s positive response to our recommendations, including its 

initiation of the new demonstration project, indicates that the agency is 

now moving toward strategies that should more effectively protect the 

integrity of Medicare payments in South Florida. 

 O E I - 0 9 - 0 7 - 0 0 0 3 0 ABERRANT BILLING IN S OUTH F LORIDA FOR BENEFICIARIES WITH HIV/AIDS iii 
Δ TABLE OF CONTENTS 

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

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

FINDINGS ................................................ 12 
 

Aberrant South Florida claims patterns .................... 12 
 

Aberrations in other geographic areas ...................... 15 
 

Limited success in controlling billing....................... 16 
 

RECOMMENDATIONS ..................................... 25 
 

APPENDIXES ............................................. 29 
 

A: Detailed Methodology for Table 3 ....................... 29 
 

B: Agency Comments .................................. 30 
 

ACKNOWLEDGMENTS .................................... 34 
 
Δ INTRODUCTION 

OBJECTIVES 

1.	 To identify claims patterns associated with HIV/AIDS infusion 

therapy that may indicate fraudulent or abusive activity in 

three South Florida counties. 

2.	 To assess the effectiveness of past and current efforts to control 

inappropriate payments to infusion therapy providers in three 

South Florida counties. 

BACKGROUND 

Medicare Spending for Beneficiaries With HIV/AIDS 

Based on our analysis, Medicare paid approximately $1 billion in 

2005 for services for beneficiaries with a diagnosis of HIV or AIDS. 

Claims for nonoral drugs1 accounted for $610 million of this amount, 

while claims for other services, primarily evaluation and management 

services, accounted for the remainder. Together, two codes generated 

about one-third of the reimbursement for drugs: J9310 (Rituximab, 

100 milligrams) and J2353 (Ocreotide, depot form, 1 milligram). 

Medicare paid approximately $100 million for each of these codes in 

2005. 

In 2005, about 8 percent of Medicare beneficiaries with HIV/AIDS lived 

in three South Florida counties (Miami-Dade, Broward, and Palm 

Beach), but 72 percent of submitted charges for beneficiaries with 

HIV/AIDS appeared on claims originating there. Providers in the three 

counties submitted bills totaling $2.5 billion to Medicare (of which 

Medicare paid $653 million) on behalf of beneficiaries with HIV/AIDS— 

more than twice the $978 million submitted ($311 million paid) by 

providers in all other areas of the country combined. 

As shown in Figure 1, most of the claims in South Florida were for 

nonoral drugs. South Florida providers submitted bills totaling more 

than $2.2 billion ($568 million paid) for nonoral drugs for beneficiaries 

with HIV/AIDS in 2005, about 22 times the $100 million submitted 

($42 million paid) for such claims in the rest of the country. 

1 As identified in the “Current Procedural Terminology” (2006 edition) or “Healthcare 

Common Procedure Coding System” (2006 edition). 

 O E I - 0 9 - 0 7 - 0 0 0 3 0 ABERRANT BILLING IN S OUTH F LORIDA FOR BENEFICIARIES WITH HIV/AIDS 1 
INTRODUCTION 
 

FIGURE 1 

Submitted charges 

for beneficiaries 

with HIV/AIDS, 

by location 

Drugs 

$2,210 

Other Services 

$258 

Drugs 

$100 

Other Services 

$878 

$0 

$500 

$1,000 

$1,500 

$2,000 

$2,500 

Millions 

South Florida Rest of Country 

Source: Office of Inspector General analysis of a 1-percent sample of 2005 Medicare Part B National Claims 

History data, 2007. 

Infusion Therapy for HIV/AIDS Patients 

The National Institutes of Health defines AIDS as “a disease of the 

body’s immune system caused by the human immunodeficiency virus 

(HIV). AIDS is characterized by the death of CD4 cells (an important 

part of the body’s immune system), which leaves the body vulnerable to 

life-threatening conditions, such as infections and cancers.”2 According 

to the Kaiser Family Foundation, approximately 438,000 individuals in 

the United States and its territories were living with AIDS at the end of 

2005.3 Medicare claims data show that about 99,300 beneficiaries had 

at least one claim that referenced a diagnosis of HIV/AIDS in 2005.4 

2 “Glossary of HIV/AIDS-Related Terms,” 5th ed., October 2005. Available online at 

http://aidsinfo.nih.gov/contentfiles/GlossaryHIV-relatedTerms_FifthEdition_en.pdf. 

Accessed June 6, 2007. 

3 The Henry J. Kaiser Family Foundation, “Estimated Number of Persons Living with 

AIDS, All Ages, at the End of 2005.” Available online at http://www.statehealthfacts.org/cgibin/healthfacts.cgi?action=compare&category=HIV%2fAIDS&subcategory=Persons+Living+with+AIDS 

&topic=Persons+Living+with+AIDS+All+Ages. Accessed March 14, 2007. 

4 Office of Inspector General analysis of a 1-percent sample of 2005 Medicare National 

Part B Claims History data. 

 O E I - 0 9 - 0 7 - 0 0 0 3 0 ABERRANT BILLING IN S OUTH F LORIDA FOR BENEFICIARIES WITH HIV/AIDS 2 
INTRODUCTION 

Although no cure for AIDS exists, many treatments currently are 

available. At some point in their treatment, persons with AIDS may 

require intravenous infusion therapy: the gradual administration of a 

drug or other solution into the body through a vein. For AIDS patients, 

infusion therapy is most commonly used to provide antibiotics, antiviral 

or antifungal medications (such as those paid for by Medicare under 

Part B), parenteral (nonoral) nutrition, hydration, and electrolyte 

repletion. Patients usually receive infusion therapy in a hospital, but 

outpatient therapy—at a clinic or at home—is appropriate for some 

patients. 

Medicare Administration and Oversight in South Florida 

The Centers for Medicare & Medicaid Services (CMS) is responsible for 

paying Medicare claims and ensuring the integrity of those payments. 

Contractors of different types perform these functions for CMS in 

defined geographic areas. Medicare carriers process Part B physician 

claims and also handle provider enrollment, customer service, and 

education and training. Program safeguard contractors (PSCs) conduct 

data analysis and other activities to help reduce fraud, waste, and 

abuse. First Coast Service Options (FCSO) is the Medicare carrier for 

Florida (and Connecticut). Electronic Data Systems Corporation (EDS) 

became the PSC for Florida in March 2005 after taking over the 

contract from TriCenturion. 

CMS’s Office of Financial Management (OFM) has the overall 

responsibility for ensuring the fiscal integrity of all CMS programs. As 

such, OFM manages contractors’ program integrity efforts through its 

Program Integrity Group. The CMS Regional Offices, including the 

Atlanta Regional Office that covers Florida, also play a role in 

protecting Medicare from fraud, waste, and abuse. Also, because of 

concerns about Medicare fraud in South Florida, CMS established the 

Miami Satellite Division in 1995. The Satellite Division reports to 

OFM; is responsible for community outreach regarding fraud, waste, 

and abuse; and provides support to law enforcement agencies in the 

area. 

Other Government agencies also have a role in protecting Medicare in 

South Florida. The Office of Inspector General (OIG) investigates cases 

of health care fraud and levies civil monetary penalties where 

appropriate and can exclude problem providers from Medicare. Often in 

coordination with OIG, the Department of Justice also investigates and 

 O E I - 0 9 - 0 7 - 0 0 0 3 0 ABERRANT BILLING IN S OUTH F LORIDA FOR BENEFICIARIES WITH HIV/AIDS 3 
INTRODUCTION 

prosecutes health care fraud. Florida’s Agency for Health Care 

Administration licenses clinics and enforces statutes related to the 

provision of health care. 

Fraud Involving HIV/AIDS Patients in South Florida 

In June 2003, TriCenturion reported to CMS that it had identified a 

scheme in which providers in South Florida, mainly in Miami, billed for 

infusion therapy services that were “not medically necessary or feasible” 

for beneficiaries with HIV/AIDS.5 The PSC found that “[p]roactive data 

analysis revealed that infusion therapy providers could quickly move 

from start-up to a high billing provider,” and “claims are being paid 

because these egregious providers are circumventing the system edits 

by submitting claims using allowable diagnosis codes and not the 

diagnosis found in the medical records.”6 On June 27, 2003, staff from 

TriCenturion and CMS’s Miami satellite office conducted the first of 

20 onsite visits to aberrantly billing infusion therapy providers to 

review records. None of the services reviewed met Medicare payment 

requirements, and payments to the provider were suspended. 

Investigations of the remaining 19 providers also resulted in payment 

suspensions.7 

CMS issued a National Medicare Fraud Alert to its contractors, regional 

offices, and other government agencies on May 19, 2004, characterizing 

the South Florida situation as the “infusion therapy scam.” According 

to this alert, medical record review and investigative findings identified 

the following characteristics of the scam, among others: 

•	 services that are poorly documented or undocumented; 

•	 documentation that indicates that patients received “vitamin 

therapy,” not infusion of the expensive drugs billed; 

•	 multiple providers billing for the patients on the same date or on 

alternating dates; 

•	 providers submitting bills for days when the clinic is closed for 

business; 

5 TriCenturion, LLC, “June 2003 Monthly Status Report” and “Infusion Project Progress 

Report.” September 9, 2004. 

6 Ibid. 

7 Ibid. 

 O E I - 0 9 - 0 7 - 0 0 0 3 0 ABERRANT BILLING IN S OUTH F LORIDA FOR BENEFICIARIES WITH HIV/AIDS 4 
INTRODUCTION 

•	 providers under prepay medical review circumventing the 

review by obtaining new provider numbers; and 

•	 providers under payment suspension opening new clinics with 

new provider numbers. 

Federal and State authorities have investigated and prosecuted several 

cases involving infusion providers. The Chief Financial Officer of 

Florida cited a scam in which a Tampa man used offers of $100 cash and 

$50 grocery cards to recruit patients to seek treatment at a local clinic 

as 1 of the top 10 fraud cases in the State for 2005–2006.8 State and 

Federal law enforcement investigations have revealed similar schemes 

in which “runners” recruit patients with offers of cash to go to particular 

infusion clinics for treatment. The clinic then bills for expensive drug 

infusion treatments for these patients that they do not receive.9 

Investigations by CMS’s contractors and OIG revealed that perpetrators 

of infusion fraud schemes sometimes appropriate the identities of 

legitimate providers to submit claims to Medicare. 

Provider Enrollment and Sanction Authority 

Federal regulations and CMS policy define the process for enrolling 

providers in Medicare and enumerate the rights and responsibilities of 

participating providers. Pursuant to 42 CFR § 424.510(d)(1), 

prospective providers must submit completed application forms and 

supporting documentation to CMS to obtain billing privileges. This 

form solicits identifying information about the applicant, any adverse 

legal history (such as felony convictions for financial crimes or the 

8 Florida Department of Financial Services, “Annual Top 10 Fraud List,” June 20, 2006. 

Available online at http://www.fldfs.com/PressOffice/ ViewConsumerAlert.asp?ID=2360. 

Accessed January 16, 2007. 

9 The United States Attorney’s Office, Southern District of Florida, “Miami Clinic Owner 

Convicted of Health Care Fraud Involving HIV Infusion Treatments,” September 29, 2006. 

Available online at http://www.usdoj.gov/usao/fls/PressReleases/060929-01.html. Accessed 

October 25, 2006. The United States Attorney’s Office, Southern District of Florida, “Jury 

Convicts Two in HIV-Clinic Fraud,” October 2, 2006. Available online at 

http://miami.fbi.gov/dojpressrel/pressrel06/mm20061002.htm. Accessed October 25, 2006. 

Office of the Attorney General of Florida, “Miami Men Arrested for $1.4 Million Medicare 

Fraud Through Bogus HIV Clinic,” September 6, 2006. Available online at 

http://myfloridalegal.com/newsrel.nsf/newsreleases/E4CDEA6773BA9E3A852571E1006C66 

DE. Accessed October 25, 2006. “Meeting Minutes: Medical Fraud Committee, Florida 

Board of Medicine, September 26, 2005.” Available online at 

http://www.doh.state.fl.us/mqa/medical/min_09-26-05Fraud.pdf. Accessed June 6, 2007. 

 O E I - 0 9 - 0 7 - 0 0 0 3 0 ABERRANT BILLING IN S OUTH F LORIDA FOR BENEFICIARIES WITH HIV/AIDS 5 
INTRODUCTION 

revocation of a Medicare billing number), the provider’s practice 

location, names of individuals having ownership or managing control of 

the business, and the billing agent for the provider, if one exists. Clinics 

with multiple practice locations must identify each location on the 

application. By signing and submitting the application form, the 

applicant agrees to follow all Medicare laws, regulations, and program 

instructions. The CMS “Program Integrity Manual,” Chapter 10, 

Section 2.1, stipulates that carriers must process 80 percent of new 

applications within 60 days, 90 percent within 120 days, and 99 percent 

within 180 days of receipt. Pursuant to 42 CFR § 424.80(b)(2), providers 

may reassign their billing privileges to certain other entities, such as 

clinics with which they have contractual relationships; providers 

request reassignment by submitting reassignment applications to CMS. 

In Florida, the carrier issues a separate billing number for each 

reassignment or clinic practice location. 

Preenrollment site visits can help protect the Medicare program from 

fraud and abuse. Regulations at 42 CFR § 424.510(d)(8) permit CMS to 

perform onsite inspections to verify that the information on the 

enrollment applications is correct and to determine whether the 

applicants comply with enrollment requirements; onsite visits are 

required for independent diagnostic testing facilities (IDTFs), Indian 

Health Service facilities that supply durable medical equipment under 

Part B, and community mental health centers.10 CMS stated in an 

April 25, 2003, proposed rule that in 1998 and 1999, it had funded 

320 site visits to various types of new and existing providers that 

carriers had identified as potentially problematic.11 About one-third of 

the providers visited had their applications denied or provider numbers 

revoked or were referred to contractor fraud units. CMS cited this effort 

in the proposed rule and stated, “[w]e believe that site visits are an 

important component of provider enrollment.” In August 2005, CMS 

staff from the Miami and Los Angeles Satellite Divisions reported that 

contractors in their jurisdictions had terminated the billing privileges of 

87 of 180 providers based on recent site visits. They estimated that the 

10 CMS, “Program Integrity Manual,” Chapter 10, sections 4.19.6, 11.9.2, and 12.1.1(B). 

11 “Medicare Program: Requirements for Establishing and Maintaining Medicare Billing 

Privileges.” 68 FR 22064, 22065 (proposed April 25, 2003). 

 O E I - 0 9 - 0 7 - 0 0 0 3 0 ABERRANT BILLING IN S OUTH F LORIDA FOR BENEFICIARIES WITH HIV/AIDS 6 
INTRODUCTION 
 

FIGURE 2 

Empty office found 

on a 2005 site visit. 

If not for the visit, 

this provider’s 

application would 

have been approved. 

California visits had saved at 

least $9 for each $1 spent.12 

From September through 

December 2005, the California 

carrier, National Heritage 

Insurance Corporation (NHIC), 

conducted targeted 

preenrollment site visits of 

95 non-IDTF providers; only 

28 of the applications were 

approved.13 As shown in Figure 

2, some of the visits revealed 

completely empty offices. The 

carrier further noted that “. . . 

these applications would have 

been approved and the provider 

could have submitted false 

Source: “NHIC CA Provider Enrollment On-Site Verification 

claims had it not been for the Program,” 2007. 

site visits.” 

Providers must comply with all Medicare laws and regulations as a 

condition of their continued enrollment; several authorities exist to 

remove noncompliant providers from the program if necessary. The 

Social Security Act specifies circumstances under which the Secretary of 

the Department of Health and Human Services (HHS) must exclude 

certain entities from Medicare and others under which the Secretary 

may, at his or her discretion, exclude entities.14 In addition, 

42 CFR § 424.535 gives five reasons CMS may revoke the billing 

privileges of a provider: (1) noncompliance with enrollment 

requirements, (2) exclusion from Federal programs, (3) certain felony 

convictions, (4) submitting false or misleading information on an 

enrollment application, or (5) determination of the onsite review that 

12 “Special Rules for Special Places,” a position paper submitted by staff from CMS’s 

Miami Satellite Division and Los Angeles Satellite and Regional Offices for Regions 2, 4, 

and 9 to the CMS central office in August 2005. 

13 NHIC, “NHIC CA Provider Enrollment On-Site Verification Program,” 2007. 

14 Social Security Act § 1128. The Secretary of HHS has delegated the exclusion 

authority to OIG. 

 O E I - 0 9 - 0 7 - 0 0 0 3 0 ABERRANT BILLING IN S OUTH F LORIDA FOR BENEFICIARIES WITH HIV/AIDS 7 
INTRODUCT INTROD ION UCT

the provider is not operational or does not satisfy enrollment 

requirements. Providers must be given prior notice of exclusions or 

revocations and have the right to appeal. Providers may also submit 

plans of corrective action to avert pending revocations. 

In addition to the authority to revoke providers’ billing privileges, 

Federal regulations also define CMS’s authority to suspend Medicare 

payments to providers. Pursuant to 42 CFR § 405.371, CMS may 

suspend approved payments if it suspects that it has overpaid a 

provider or that a provider has engaged in fraud or willful 

misrepresentation of claims. Generally, CMS must inform the provider 

of the intent to suspend payments, explain the reasons for the action, 

and allow the provider to submit a rebuttal statement contesting the 

decision to suspend payments.15 In cases of suspected fraud or 

misrepresentation, or if it is likely to harm Medicare Trust Funds, CMS 

need not provide prior notice.16 In these cases, the provider may submit 

a rebuttal statement once the suspension is in effect.17 Providers may 

not appeal further if CMS upholds the suspension after considering a 

rebuttal.18 Suspensions last for an initial period of 180 days, which 

CMS may extend by another 180 days at the request of the carrier or a 

law enforcement agency.19 

Previous Studies 

In a 2006 report, the Government Accountability Office (GAO) assessed 

CMS’s allocation of Medicare Integrity Program (MIP) funds between 

fiscal years 1997 and 2005 and concluded that “the agency’s funding 

approach is not geared to target MIP resources to the activities with the 

greatest impact on the program and to ensure that the contractors have 

funding commensurate with their relative workloads and risk of making 

improper payments.”20 GAO also noted that “one PSC received about 

4 cents for conducting benefit integrity work for each $100 in paid 

claims . . . in a jurisdiction that included Florida, which is at high risk 

15 42 CFR § 405.372 (b)(1). 

16 42 CFR § 405.372 (a)(3) . 

17 42 CFR § 405.372 (b)(2). 

18 42 CFR § 405.375 (c). 

19 42 CFR § 405.372 (d). 

20 GAO, “Medicare Integrity Program: Agency Approach for Allocating Funds Should Be 

Revised,” September 2006, p. 21. 

O E I - 0 9 - 0 7 - 0 0 0 3 0 ABERRANT BILLING IN S OUTH F LORIDA FOR BENEFICIARIES WITH HIV/AIDS 8 
INTRODUCTION 

for fraudulent billing. In contrast, PSCs received the same level of 

funding to conduct benefit integrity work in states at lower risk for 

fraudulent billing, including Iowa, Montana, Pennsylvania, and 

Wyoming.” 

In March 2007, OIG published the results of 1,581 unannounced site 

visits to durable medical equipment suppliers in South Florida in a 

report entitled “South Florida Suppliers’ Compliance With Medicare 

Standards” (OEI-03-07-00150). We found that 31 percent of the 

suppliers visited “did not maintain a physical facility or were not open 

and staffed during business hours.” We recommended that CMS 

strengthen the enrollment process for durable medical equipment 

suppliers. CMS concurred with most of our recommendations and 

stated that it will take several steps to improve provider enrollment, 

including conducting more unannounced site visits and more rigorous 

background checks of applicants. 

METHODOLOGY 

Claims Patterns Analysis 

To analyze beneficiary and provider claims patterns, we first defined 

the population from which to construct profiles as, respectively, 

beneficiaries with at least one claim referencing a diagnosis of 

HIV/AIDS (ICD-9 code 042) during a specified time period and providers 

that submitted at least one claim with an HIV/AIDS diagnosis during 

the same time period. During preliminary data analysis, we determined 

that the dollar amounts submitted and reimbursed for beneficiaries 

with HIV/AIDS in the three South Florida counties, especially for drugs, 

were significantly less in the second half of 2006 than in the first. 

Therefore, to concentrate on more current billing patterns, we defined 

our time period to be claims received in the third or fourth quarters of 

2006 (July through December). We also learned from OIG investigators 

and from CMS contractors that although CMS adjusts claims data 

based on monies due from calculated overpayments, participants in 

infusion fraud rarely actually pay back any of the overpayment 

amounts. Because we wanted to assess how much money CMS paid to 

providers, we limited our data set to the original actions that CMS took 

on the claims. 

 O E I - 0 9 - 0 7 - 0 0 0 3 0 ABERRANT BILLING IN S OUTH F LORIDA FOR BENEFICIARIES WITH HIV/AIDS 9 
INTRODUCTION 

To create the profiles, we first obtained from CMS the Medicare Part B 

National Claims History data files containing all claims received in the 

third and fourth quarters of 2006.21 We then identified all beneficiaries 

and providers appearing on at least one claim referencing an HIV/AIDS 

diagnosis as either the principal diagnosis on the claim or the line item 

diagnosis for a particular service. Next, we matched these lists of 

beneficiaries and providers back to the data sets containing all Part B 

claims from the third and fourth quarters of 2006. Thus, we created two 

analysis data sets of claims received in the third or fourth quarter of 

2006. The first contained all claims received for beneficiaries with at 

least one claim referencing HIV/AIDS in that period, and the second 

contained all claims received from providers that submitted at least one 

claim referencing HIV/AIDS during that period. We then used the SAS 

statistical software package to analyze the data. 

Our analysis often compares the three South Florida counties to other 

areas of the country. We defined a claim as originating from South 

Florida if the provider’s ZIP Code (as it appeared on the claim) was in 

Miami-Dade, Broward, or Palm Beach Counties in Florida. We defined 

a beneficiary as a South Florida beneficiary if more than half of the 

beneficiary’s claims originated from South Florida and a provider as a 

South Florida provider if more than half of the provider’s claims 

originated there. 

In addition to analyzing data from 2006, we examined historical trends 

from 2001 through 2005 using 1-percent samples of the Medicare Part B 

National Claims History data. Since the 1-percent samples are 

compiled by the date of service rather than the date of receipt, we used 

a slightly different process to create our analysis sets. First, we 

identified all beneficiaries and providers in a given year with at least 

one claim referencing a diagnosis of HIV/AIDS. Then, we identified all 

claims submitted for those beneficiaries or by those providers. We then 

summarized the combined claims data from the 5 years by the month in 

which the claim was received and by geographic location (the three 

South Florida counties, the rest of Florida, or the rest of the country). 

21 The data were taken from CMS weekly claims-processing cycles, so the dates do not 

correspond exactly to the starting and ending dates of the third and fourth quarters of 2006. 

Also, the data did not have the receipt date variable available, only the processing date. 

The claims in our set spanned processing dates from June 29 to December 28, 2006. 

 O E I - 0 9 - 0 7 - 0 0 0 3 0 ABERRANT BILLING IN S OUTH F LORIDA FOR BENEFICIARIES WITH HIV/AIDS 10 
INTRODUCTION 

Assessment of Controls 

We interviewed staff from CMS and its contractors in South Florida 

(FCSO and EDS) about infusion fraud and actions taken to address it. 

We also obtained documents from CMS and its contractors pertaining to 

infusion fraud, including monthly reports the PSCs submitted to CMS 

from January 2003 through November 2006. FCSO provided data on 

provider number revocations, and CMS, FCSO, and EDS provided data 

on overpayments. We also interviewed staff and obtained documents 

from CMS’s Part B carrier in California to learn about antifraud efforts 

in another vulnerable area, Southern California. We did not 

independently verify the information obtained from these interviews 

and documents. We reviewed applicable laws, regulations, and policies, 

as well as CMS provider enrollment applications and related materials. 

Standards 

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

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

Efficiency and the Executive Council on Integrity and Efficiency. 

 O E I - 0 9 - 0 7 - 0 0 0 3 0 ABERRANT BILLING IN S OUTH F LORIDA FOR BENEFICIARIES WITH HIV/AIDS 11 
Δ FINDINGS 

In the last half of 2006, three South Florida counties 

accounted for half the total amount, and 79 percent 

of the amount for drugs, billed nationally for 

Medicare beneficiaries with HIV/AIDS 

Our analysis shows that Medicare 

received bills totaling $976 million, 

of which it paid $240 million, for 

services claimed for beneficiaries 

with HIV/AIDS in the last half of 

2006. Although in the second half of 2006 about 10 percent of Medicare 

beneficiaries with HIV/AIDS lived there, claims originating in 

Miami-Dade, Broward, and Palm Beach Counties constituted 50 percent 

of the submitted charges and 37 percent of the paid amount. Nearly 

61 percent of the total charges originating in the three South Florida 

counties were for nonoral drugs; nonoral drug claims represented just 

16 percent of the submitted charges in other geographic areas. Overall, 

the three counties accounted for 79 percent of the amount submitted to 

Medicare nationally for drug claims involving HIV/AIDS patients. 

Furthermore, as shown in Figure 3, the South Florida proportion was 

FIGURE 3 

The amount submitted for beneficiaries with HIV/AIDS in South Florida exceeded 

the amount submitted for beneficiaries in the rest of the country for 2 years 

$0 

$200 

$400 

$600 

$800 

$1,000 

$1,200 

$1,400 

Jan–Jun 

2002 

Jul–Dec 

2002 

Jan–Jun 

2003 

Jul–Dec 

2003 

Jan–Jun 

2004 

Jul–Dec 

2004 

Jan–Jun 

2005 

Jul–Dec 

2005 

Jan–Jun 

2006 

Jul–Dec 

2006 

Millions 

South Florida Drugs South Florida Other 

Rest of Country Drugs Rest of Country Other 

Source: OIG analysis of 1-percent samples of 2001 through 2005 Medicare Part B National Claims History data and 2006 Medicare Part B 

National Claims History data, 2007. 

 O E I - 0 9 - 0 7 - 0 0 0 3 0 ABERRANT BILLING IN S OUTH F LORIDA FOR BENEFICIARIES WITH HIV/AIDS 12 
FINDINGS 

even higher in previous periods. According to CMS staff who oversee 

the area, neither CMS nor its contractors have identified any clinical 

explanation for the high level of billing in South Florida. 

Aberrant claims patterns differentiate providers in South Florida from those 

in the rest of the country 

As displayed in Table 1, Medicare Part B claims data show that the 

claims patterns of providers that billed for HIV/AIDS services in the 

three South Florida counties in the last half of 2006 differed 

significantly from those of providers in the rest of Florida or in other 

States.22 For example, although the overall mean amount submitted to 

Medicare per provider was comparable in all locations, the mean 

amount submitted per provider specifically for beneficiaries with 

HIV/AIDS in the three counties was about 16 times higher than in the 

rest of Florida and 39 times higher than in all other States. Even 

greater disparities existed among drug claims: the mean submitted per 

provider in the three counties for such claims was about 64 times higher 

than in the rest of Florida and about 518 times higher than the mean in 

all other States. High billing for beneficiaries with HIV/AIDS was 

relatively widespread in the three counties—about 5.9 percent of South 

Florida providers that billed for HIV/AIDS patients submitted more 

than $1 million each for those patients in the last half of 2006 compared 

to less than 0.5 percent in the rest of Florida or in all other States. 

Sixteen of the top twenty billers of services for beneficiaries with 

Table 1: Significant differences exist between South Florida providers and others 

Provider attribute
 South Florida Rest of Florida Rest of country
 

Mean amount submitted $711,753 $614,679 $414,922 

Mean amount submitted for beneficiaries with HIV/AIDS $267,653 $16,343 $6,878 

Mean amount submitted for drug codes for beneficiaries $197,453 $3,070 $381 with HIV/AIDS 

Percentage of submitted charges for beneficiaries with 38% 2.7% 1.7% HIV/AIDS 

Percentage of submitted charges for beneficiaries with 74% 19% 6% HIV/AIDS that are for drug codes 

Mean number of beneficiaries with HIV/AIDS 42 17 

Source: OIG analysis of claims received in the third or fourth quarter 2006 in the Medicare Part B National Claims History data, 2007. 

22 In this finding, the term “provider” refers to any entity that submitted at least one 

Medicare Part B claim in the last half of 2006 that referenced an HIV/AIDS diagnosis. 

 O E I - 0 9 - 0 7 - 0 0 0 3 0 ABERRANT BILLING IN S OUTH F LORIDA FOR BENEFICIARIES WITH HIV/AIDS 13 

10 
FINDINGS 

HIV/AIDS were located in South Florida, and all of the top 40 billers for 

drugs for these patients were located there. 

In addition to mean billed amounts, two elements of the claims patterns 

of providers in the three South Florida counties were notable. First, 

38 percent of the total charges South Florida providers submitted to 

Medicare in the last half of 2006 were for AIDS patients; beneficiaries 

with HIV/AIDS accounted for less than 3 percent of providers’ 

submitted charges in the rest of Florida or in all other States. Second, 

74 percent of the charges South Florida providers submitted for 

beneficiaries with HIV/AIDS were for drugs, compared with 19 percent 

in the rest of Florida and 6 percent in all other States. Furthermore, of 

the 78 South Florida providers that billed more than $1 million for 

beneficiaries with HIV/AIDS, 58 (74 percent) submitted more than half 

of their charges for drugs for these patients. Only two of the five 

providers that billed $1 million or more for beneficiaries with HIV/AIDS 

in the rest of Florida and none of the 23 in other States shared this 

billing pattern. 

More reimbursement, especially for drugs, is claimed for beneficiaries with 

HIV/AIDS in South Florida than for those in the rest of the country 

As with providers, the claims patterns of beneficiaries with HIV/AIDS 

in South Florida differed greatly from those of beneficiaries in other 

regions in the last half of 2006. For example, average submitted 

charges per beneficiary with HIV/AIDS in South Florida were about 

nine times those in the rest of Florida or in all other States. The 

greatest differences were for drugs—South Florida beneficiaries were 

listed on drug claims more often, and for higher amounts, than those 

elsewhere. The average beneficiary in South Florida also was listed on 

claims for a greater number of unique drug codes and on claims from 

Table 2: South Florida beneficiaries with HIV/AIDS are associated with more and larger claims 

Beneficiary attribute South Florida Rest of Florida Rest of country 

Mean amount submitted $57,482 $6,532 $6,333 

Percentage of beneficiaries with at least one drug claim 66% 12% 10% 

Mean amount submitted for drug claims (all beneficiaries) $34,412 $904 $1,024 

Mean amount submitted for drug claims (beneficiaries with $52,505 $7,463 $9,778 at least one drug claim) 

Mean number of different drugs for which the beneficiary
 5.2 2.0 1.8 had claims (beneficiaries with at least one drug claim) 

Mean number of providers that submitted a claim per 16 8.5 8.1 beneficiary (all beneficiaries) 

Source: OIG analysis of claims received in the third or fourth quarter 2006 in the Medicare Part B National Claims History data, 2007. 

 O E I - 0 9 - 0 7 - 0 0 0 3 0 ABERRANT BILLING IN S OUTH F LORIDA FOR BENEFICIARIES WITH HIV/AIDS 14 
FINDINGS FINDINGS 

more providers than those in other areas. Table 2 displays some of the 

attributes that differentiated South Florida beneficiaries from others. 

Other metropolitan areas exhibit patterns of 

aberrant billing similar to South Florida but 

to a lesser extent 

CMS satellite division staff and 

contractors in South Florida reported 

concerns that as more controls are 

instituted in that region, the aberrant 

billing patterns observed there may spread to other geographic areas. 

In October 2004, the PSC identified some aberrantly billing providers 

outside of South Florida and, in response, requested that existing drug 

code edits be extended to two Gulf Coast counties.23 FCSO carried out 

this request on January 4, 2005.24 In 2005, the Miami Satellite 

Division’s analysis showed that the patterns were spreading into 

northern and western areas of the State and also to venues outside 

Florida.25 In late March 2007, CMS issued a National Medicare Fraud 

Alert because several providers in the greater Detroit metropolitan area 

billed for infusion therapy in the aberrant manner characteristic of 

South Florida providers. The alert stated that many of the individuals 

associated with these providers had recently moved from Florida and 

Puerto Rico. 

Our data analysis suggests that although the aberrant billing patterns 

are not widespread outside of South Florida, some other metropolitan 

areas share some characteristics with the three counties. We identified 

four attributes that characterize Medicare claims patterns for 

beneficiaries with HIV/AIDS in South Florida: (1) the percentage of the 

total amount submitted for beneficiaries with HIV/AIDS that is for 

drugs, (2) the mean amount submitted per provider for beneficiaries 

with HIV/AIDS, (3) the percentage of beneficiaries with HIV/AIDS who 

have at least one drug claim, and (4) the mean amount submitted for 

drugs per beneficiary with at least one drug claim. Table 3 shows the 

six other geographic areas where at least two of these characteristics 

23 TriCenturion, LLC, “October 2004 Monthly Status Report.” 

24 TriCenturion, LLC, “January 2005 Monthly Status Report.” 

25 “Special Rules for Special Places,” a position paper submitted by staff from CMS’s 

Miami Satellite Division and Los Angeles Satellite and Regional Offices for Regions 2, 4, 

and 9 to the CMS central office in August 2005. 

O E I - 0 9 - 0 7 - 0 0 0 3 0 ABERRANT BILLING IN S OUTH F LORIDA FOR BENEFICIARIES WITH HIV/AIDS 15 
FINDINGS F I N D I N G S INDINGS 

were at least twice the national level (excluding South Florida) and the 

total amount submitted for beneficiaries with HIV/AIDS was at least 

$1 million.26 

Table 3: Other areas share some of the claims characteristics of South Florida 

Mean amount 

Amount Mean Percentage of submitted for 

submitted for Percentage of submitted per beneficiaries drugs per 

beneficiaries submitted provider for with at least beneficiary with 

with HIV/AIDS amount for beneficiaries one drug at least one 

Geographic area (millions) drugs with HIV/AIDS claim drug claim 

All U.S. except South Florida $489 16% $7,482 11% $9,520 

South Florida $487 61% $267,653 66% $52,505 

Riverside-San BernardinoOntario, CA $14.3 73% $6,202 28% $4,223 

Nashville-DavidsonMurfreesboro, TN $5.9 60% $7,852 30% $13,023 

Providence-New Bedford-Fall 

River, RI-MA $5.3 70% $2,744 5% $158,899 

Nonmetropolitan Florida $4.7 62% $34,209 27% $15,229 

Kansas City, MO-KS $4.8 50% $7,347 12% $29,605 

Indianapolis, IN $2.9 43% $3,912 11% $53,817 

Source: OIG analysis of claims received in the third or fourth quarter 2006 in the Medicare Part B National Claims History data, 2007. 

CMS has had limited success in controlling the 

aberrant billing practices of South Florida 

infusion therapy providers 

CMS and its contractors have 

used multiple approaches in 

South Florida to try to control 

aberrant billing for 

beneficiaries with HIV/AIDS, but based on our data analysis and review 

of CMS materials, none has yet proven effective in eliminating it. 

Recent efforts show promise, but their long-term effectiveness is 

unknown. The most common tools used include payment suspensions, 

prepayment review, provider number revocations, claims-processing 

edits, and onsite investigations of existing providers. 

Administrative actions on billing numbers have significant limitations 

Payment suspensions. Suspending payments gives CMS an immediate 

and long-lasting way to prevent Medicare from paying suspected false 

infusion claims from a particular provider number. Once approved, 

suspensions take effect immediately, thereby stopping payments to 

26 See Appendix A for complete details on how we constructed Table 3. 

O E I - 0 9 - 0 7 - 0 0 0 3 0 ABERRANT BILLING IN S OUTH F LORIDA FOR BENEFICIARIES WITH HIV/AIDS 16 
F I NDING S 

suspected fraudulent providers. Because suspensions last a minimum 

of 180 days, and longer if extended, the payments remain stopped while 

the PSC and/or law enforcement investigates the provider. For these 

reasons, EDS’s benefit integrity staff described payment suspensions as 

the strongest tool available to them to deal with suspected fraudulent 

providers. 

Despite these strengths, administrative requirements limit the 

usefulness of suspensions in South Florida. All suspensions must be 

approved by CMS, so although their effect is immediate, the approval 

process can delay implementation, according to contractor personnel. 

Also, although aberrant billers often control multiple provider numbers, 

investigations have also found that they sometimes use other providers’ 

identities to submit claims. Hence, CMS will suspend provider numbers 

only when there is evidence of an overpayment or fraudulent activity 

involving those particular numbers, rather than all provider numbers 

associated with the aberrant biller. While this practice minimizes the 

chance of inadvertently suspending the billing number of a provider 

that is not involved in the aberrant billing, it also means that aberrant 

billers with multiple numbers can continue billing Medicare using 

unsuspended numbers. Lastly, because having a current payment 

suspension is not one of the reasons for which CMS may deny an 

enrollment application, a suspended provider that submits a new 

application that meets all requirements must be approved.27 

To address the last issue, in June 2006 CMS’s Program Integrity and 

Medicare Contractor Management groups instructed FCSO to set aside 

applications for new provider numbers from providers with active 

payment suspensions until the suspensions are resolved.28 However, 

CMS also stated that this set-aside applied only if the new applicant 

had the same business structure as the suspended provider. Hence, 

corporate providers could bypass the restriction by changing any 

element of their board structure. CMS staff told us that the agency 

verbally advised FCSO in late April 2007 that unless a suspended 

provider reapplies with a new tax identification number, any new 

application that lists, in any capacity, individuals that had ownership or 

27 42 CFR § 424.510. 

28 CMS, Joint Signature Memorandum, JSM-TDL-06505, June 23, 2006. 

 OEI-09-07-00030 ABERRANT BILLING IN S OUTH F LORIDA FOR BENEFICIARIES WITH HIV/AIDS 17 
FINDING 
 S 

management interest in the suspended provider also should be set 

aside. 

Prepayment review. If the PSC identifies a provider it suspects is 

submitting false claims, but the amount billed is not high enough or the 

level of evidence is not sufficient to justify a suspension, it often places 

the provider on prepayment review. This means that the PSC requests 

and reviews documentation to support all claims submitted by the 

provider before payment is made. Although prepayment review has 

fewer administrative requirements than payment suspension and has 

proven effective with individual providers, it has limitations. For 

example, although contractor personnel say most infusion therapy 

providers under prepayment review do not respond to documentation 

requests, there is potentially a significant administrative burden if 

many providers do respond. Also, prepayment medical review affects 

only future claims; unlike a suspension, it cannot stop payment on 

already-approved claims. Furthermore, similar to a suspension, the 

prepayment review requirement is applied only to provider numbers on 

which the aberrant activity was observed. 

Revocations. Revoking a billing number prevents a provider from 

submitting claims with that number, but administrative requirements 

limit the ability of revocations to control aberrant billing for infusion 

therapy. As such, PSC staff told us that they issue revocations as part 

of their normal investigative procedures, but do not use them as a 

primary tool. One limitation is that, like suspensions and prepayment 

reviews, revocations are applied only to particular provider numbers, 

not to the individual or corporation associated with the problem. CMS 

staff gave an example of one South Florida provider that had 

29 separate provider numbers; although 19 were revoked, the provider 

can still bill with the remaining numbers. Even if all of a provider’s 

billing numbers are revoked, the provider can regain the ability to bill 

Medicare. Pursuant to 42 CFR § 424.535, providers that have their 

billing privileges revoked may reapply by submitting new applications. 

CMS and contractor staff told us that as long as the provider meets all 

requirements, they must approve the new application. Our data 

analysis shows that CMS paid about $470,000 in 2006 to two South 

Florida providers that appear to have obtained new provider numbers 

after revocations. 

Requirements related to the effective dates of revocation also limit their 

value in controlling aberrant billing. Providers must be notified 30 days 

 O E I - 0 9 - 0 7 - 0 0 0 3 0 ABERRANT BILLING IN S OUTH F LORIDA FOR BENEFICIARIES WITH HIV/AIDS 18 
FINDINGS 

prior to the effective date of the revocation, allowing extra time to 

submit additional claims.29 Also, revoked providers can continue to bill 

for service dates prior to the effective date of the revocation.30 Hence, 

“. . . a fraudulent provider with a revocation date of September 1, 2005 

can continue to bill for dates of service going back to March 1, 2004. It 

also means that the same provider has until March 1, 2006, to bill for 

services rendered on August 31, 2005.”31 Although this is cited as 

vulnerability by several CMS and contractor staff, we did not find any 

payments made to infusion therapy providers in 2006 on claims received 

between the date of their revocation letters and the effective dates of the 

revocations. 

Claims-processing edits have been effective in the short term but have not 

had a lasting effect 

Service-level edits. According to monthly reports from the PSC to CMS, 

starting in March 2004, CMS began approving edits on specific drug 

codes that were targets of abuse in the three counties in South Florida. 

The first such edit was a prepayment edit implemented on 

March 3, 2004. The PSC reported that in its first month of operation, 

nearly 5,000 claims triggered this edit. Providers responded to the 

documentation requests for only about 26 percent of these claims, and 

more than 99 percent of reviewed services were denied. A “medically 

unbelievable edit,” which screens claims for services that are not 

clinically feasible, for this code was added on April 30, 2004, and also 

resulted in numerous payment denials. Later edits also have resulted 

in numerous denials. 

Although edits have reduced payments for particular codes, the 

tendency of aberrant billers to switch to new codes has undermined the 

edits’ overall effectiveness. The PSC noted in a 2005 strategy document 

submitted to CMS that “[a]s pre pay barriers have been erected, 

fraudulent providers have scurried in mass [sic] to other codes. 

Currently there are a number of new J codes which have been billed for 

29 42 CFR § 424.535(f). 

30 42 CFR § 424.535(b). 

31 “Special Rules for Special Places,” a position paper submitted by staff from CMS’s 

Miami Satellite Division and Los Angeles Satellite and Regional Offices for Regions 2, 4, 

and 9 to the CMS central office in August 2005. 

 O E I - 0 9 - 0 7 - 0 0 0 3 0 ABERRANT BILLING IN S OUTH F LORIDA FOR BENEFICIARIES WITH HIV/AIDS 19 
FINDINGS 

over $5 million in March 2005 by known aberrant providers.”32 

Although the PSC used claims data analysis to detect new codes likely 

to be abused, this process was too slow to respond adequately; the 

August 2004 PSC report to CMS noted that “the time span for us to 

identify a new code, draft an edit and have it implemented by [the 

carrier] allows weeks to go by while millions of dollars are paid out 

before the edits control the behavior.”33 Figure 4, which appeared in a 

September 2004 report from the PSC to CMS, shows South Florida 

providers’ quick response to the first prepayment edit that was 

implemented, a pattern that generally continued with later edits. 

FIGURE 4 

South Florida providers responded quickly to the first prepayment edit implemented 

(Note that the allowed amount in other Florida counties for these codes remained nearly constant over 

the same period.) 

Allowed Amount for Infusion Drugs 

$0 

$5,000,000 

$10,000,000 

$15,000,000 

$20,000,000 

$25,000,000 

$30,000,000 

$35,000,000 

Jul-03 Aug-03 Sep-03 Oct-03 Nov-03 Dec-03 Jan-04 Feb-04 Mar-04 Apr-04 May-04 Jun-04 Jul-04 

Month of Paid Date 

Code 1 

Code 3 

Code 2 

Edit 

implemented 

Source: TriCenturion LLC, “Infusion Therapy Project Report, September 9, 2004,” 2004. Modified to delete lines showing activity outside of 

South Florida, to add explanatory text, and to redact the codes involved. Note that the data underlying this chart are not limited to billings for 

beneficiaries with HIV/AIDS and include Miami-Dade and Broward Counties only. 

32 EDS, “Comprehensive Plan by EDS To Stop Infusion Fraud in South Florida,” 

submitted to CMS in early 2005. 

33 TriCenturion, LLC, “August 2004 Monthly Status Report.” 

 O E I - 0 9 - 0 7 - 0 0 0 3 0 ABERRANT BILLING IN S OUTH F LORIDA FOR BENEFICIARIES WITH HIV/AIDS 20 
FINDINGS F I N D I N G S INDINGS 

According to reports by TriCenturion, investigations conducted in 

2004 confirmed providers’ swift reactions to claims-level edits and their 

intent to defraud Medicare. In the summer of 2004, TriCenturion 

identified the 25 top aberrantly billing providers, including those that 

had switched codes after edits were implemented, and targeted them for 

site visits. The purpose of the visits was to apprise the providers of 

their aberrant billing activity and to determine possible reasons for the 

activity. Some providers claimed ignorance of their billing activity, but 

others “admitted that they had switched not due to medical necessity 

but due to Medicare not paying for the other code.”34 

As CMS contractors implemented new edits for drug codes, South 

Florida providers shifted their billing to other services. A new claims 

edit implemented in July 2006 appears to have limited the overall 

amount reimbursed for services claimed on behalf of beneficiaries with 

HIV/AIDS; based on our analysis, reimbursement for these beneficiaries 

Table 4: Increase in payments for nondrug services claimed for beneficiaries with HIV/AIDS 

Service 

Injection procedure for sacroiliac joint, arthrography, and/or 

anesthetic/steroid 

Transluminal balloon angioplasty, percutaneous; renal/visceral 

artery 

HCPCS 

code 

27096 

35471 

Payment 

1st half 2006 

$6,324 

$0 

Payment 

2nd half 2006 

$580,111 

$196,671 

Percent 

change 

9,073% 

-

Endovenous ablation therapy of incompetent vein, extremity 36475 $4,167 $894,496 21,368% 

Injection, anesthetic agent and/or steroid, facet joint or facet joint 

nerve; lumbar or sacral, single level 

Injection, anesthetic agent and/or steroid, facet joint or facet joint 

nerve; lumbar or sacral, additional level 

Injection, anesthetic agent and/or steroid, transforaminal epidural; 

cervical or thoracic, single level 

Destruction by neurolytic agent, paravertebral facet joint nerve; 

lumbar or sacral, single level 

Destruction by neurolytic agent, paravertebral facet joint nerve; 

lumbar or sacral, additional level 

64475 

64476 

64479 

64622 

64623 

$275,566 

$209,789 

$1,252 

$17,477 

$17,195 

$3,182,247 

$2,623,809 

$103,024 

$105,026 

$528,337 

1,055% 

1,151% 

8,126% 

501% 

2,973% 

Ultrasonic guidance for needle placement 76942 $9,688 $536,636 5,439% 

Combined right/retrograde left heart catheterization, for congenital 

cardiac anomalies 93531 $0 $121,023 -

Source: OIG analysis of 2006 Medicare Part B National Claims History data, 2007. 

Note: Although some of these codes also had significant growth in areas outside of South Florida, the growth rate in South Florida for each of these 

codes was at least three times that in the rest of the country. 

34 Ibid. and TriCenturion, LLC, “November 2004 Monthly Status Report.” 

O E I - 0 9 - 0 7 - 0 0 0 3 0 ABERRANT BILLING IN S OUTH F LORIDA FOR BENEFICIARIES WITH HIV/AIDS 21 
FINDING 
 S 

decreased by about 42 percent and reimbursement for drugs by 

73 percent from the first half of 2006 to the second half. Meanwhile, 

payments for services other than drugs increased 54 percent in the 

second half of 2006 compared to the first, growing from $37 million to 

$57 million. Ten service codes had particularly significant growth, as 

shown in Table 4; South Florida payment on behalf of beneficiaries with 

HIV/AIDS for each of these codes was greater than that for the rest of 

the country combined in the latter half of 2006. 

Beneficiary-level edits. In addition to claims-based edits, Medicare has 

employed beneficiary-based edits to combat fraud in South Florida. In 

June 2004, the PSC began another antifraud effort called the High 

Volume Claim Beneficiary Project. This automated edit denied all 

claims except for certain services, such as emergency services, beyond a 

certain dollar threshold for a group of 500 beneficiaries. However, most 

beneficiaries involved in aberrant billing for infusion therapy were not 

affected because beneficiaries with HIV/AIDS diagnoses were excluded. 

CMS later approved a separate project specifically targeted toward 

infusion beneficiaries called the High Volume Infusion Beneficiary 

Project (HVIBP). The HVIBP was implemented on January 3, 2005, 

and immediately resulted in many denials—the PSC claimed savings of 

$31 million in the edit’s first month of operation. Our analysis of 

Medicare claims data shows that overall reimbursement for South 

Florida beneficiaries with HIV/AIDS fell from about $51 million in 

December 2004 to $39 million in January 2005, and the mean 

reimbursement per beneficiary with HIV/AIDS was cut significantly, 

from $8,000 to $5,000. As with the claims-based edits, these effects 

were temporary; by April 2005, total reimbursement for beneficiaries 

with HIV/AIDS topped $150 million in South Florida, and the mean 

reimbursement per beneficiary surpassed $18,000. 

Onsite investigations of existing providers are effective in uncovering 

fraudulent activity but are relatively infrequent 

According to their monthly reports to CMS, the PSCs have 

intermittently used onsite visits to investigate suspicious infusion 

providers in South Florida. Between June and December 2003, the PSC 

visited 20 providers it had identified as aberrant billers of infusion 

therapy services. Payments to all 20 were suspended, and 5 were 

 O E I - 0 9 - 0 7 - 0 0 0 3 0 ABERRANT BILLING IN S OUTH F LORIDA FOR BENEFICIARIES WITH HIV/AIDS 22 
FINDINGS 

referred to law enforcement.35 Other targeted site visit efforts in 

October 2004 and September 2005 produced similar results. Apart from 

these larger efforts, PSC site visits to infusion providers generally have 

been limited to one or two a month, according to the PSC reports. By 

way of reference, our analysis indicated that about 1,300 South Florida 

providers billed at least one claim in the last half of 2006 that listed an 

HIV/AIDS diagnosis. 

CMS has taken limited action to strengthen the enrollment process for new 

infusion therapy providers 

Although CMS recognized in 2003 that “. . . in many cases site visits are 

the only method we have to ensure that providers and suppliers actually 

exist and meet the requirements to participate in [Medicare] . . . ,”36 it 

did not act on numerous contractor suggestions to implement 

preenrollment site visits for South Florida infusion therapy providers 

until mid-2006. In September 2004, TriCenturion submitted an 

“Infusion Project Progress Report” to CMS. The report stated that “the 

continued fraud and abuse in South Florida requires more drastic action 

to stop the abuse being perpetrated against the Medicare Trust Fund” 

and recommended that CMS contract for inspections of “all new clinics 

in South Florida prior to issuing a provider number.” The “Infusion 

Stopgap Plan” that EDS submitted to CMS in May 2005 also described 

an enhanced provider enrollment process that included onsite visits. In 

September 2005, EDS submitted a concept paper outlining the duties 

and responsibilities of a Special Investigative Team that would conduct 

in-depth investigations, including preenrollment site visits.37 In May 

2006, FCSO submitted a paper to CMS entitled “Medicare Fraud and 

CERT (Comprehensive Error Rate Testing Program) Scores: The Same 

Challenge in Fraud-Infected Areas?” In it, FCSO proposed establishing 

a pilot project to strengthen its prepayment activities, including 

enhanced provider enrollment. According to FCSO, it identified 

35 TriCenturion, LLC, “Infusion Project Progress Report,” September 9, 2004. 

36 “Medicare Program: Requirements for Establishing and Maintaining Medicare Billing 

Privileges.” 68 FR 22065–22066 (proposed April 25, 2003). 

37 EDS, “September 2005 Monthly Status Report.” 

 O E I - 0 9 - 0 7 - 0 0 0 3 0 ABERRANT BILLING IN S OUTH F LORIDA FOR BENEFICIARIES WITH HIV/AIDS 23 
FINDINGS FINDINGS 

unspent funds in its contract to finance the estimated $1 million, 

18-month initiative.38 

CMS approved the FCSO pilot project starting on July 12, 2006; it is 

scheduled to end on January 11, 2008.39 As part of the enhanced 

provider enrollment activity under the pilot, FCSO now conducts site 

visits of all new clinic applicants in South Florida. These site visits are 

performed by one individual working under contract to FCSO, who 

sends a letter to each provider ahead of time announcing the date of the 

visit and requesting the presence of medical personnel. According to 

FCSO, each site visit costs $75; the total budget for the site visits, 

including resources to review and process the findings, is $300,000. 

Although FCSO had projected that it would conduct 30 to 50 site visits 

of new applicants per month, only 59 had been conducted by 

December 2006 because fewer clinics applied for billing privileges than 

had been anticipated. FCSO plans to conduct unannounced visits later 

in 2007 because it suspects that some fraudulent providers put on false 

fronts during an announced visit. FCSO also anticipates expanding the 

pilot to include site visits of existing Medicare providers. 

38 For reference, according to FCSO, its total budget (including activities in both 

Connecticut and Florida) for fiscal year 2007 is approximately $76 million. 

39 FCSO, “Statement of Work, First Coast Service Options, South Florida Pilot Project.” 

O E I - 0 9 - 0 7 - 0 0 0 3 0 ABERRANT BILLING IN S OUTH F LORIDA FOR BENEFICIARIES WITH HIV/AIDS 24 
Δ RECOMMENDATIONS 

CMS has had limited success in controlling aberrant billing by infusion 

clinics in South Florida. The aberrant billing patterns discussed in this 

report raise concerns about the integrity of the Medicare program. 

Controls implemented to date have had limited effect. Therefore, we 

recommend that CMS: 

Mandate Site Visits for Certain Providers in High-Risk Jurisdictions 

Medicare currently requires site visits before carriers issue provider 

numbers to independent diagnostic testing facilities. The carrier in 

Southern California expanded these visits to other providers to great 

effect at little additional cost, but only for a limited time. (See page 7.) 

Because the normal provider enrollment process is a desk review of 

paperwork, both announced and unannounced site visits are essential in 

high-risk areas to confirm that providers have physical addresses and 

report accurate information in their applications. CMS could fund these 

site visits out of carriers’ program management budgets, which already 

support current provider enrollment activities. 

Afford Contractors More Time To Review New Applications From Certain 

Providers in High-Risk Jurisdictions 

Contractor standards require that 80 percent of new applications be 

processed within 60 days of receipt. In South Florida, this rule may 

hinder FCSO’s ability to ensure that only legitimate providers obtain 

billing privileges. CMS should set alternative standards in high-risk 

jurisdictions for certain provider types and/or geographic areas 

vulnerable to fraud. CMS also should allow contractors to exempt 

applications from providers that have had recent revocations or 

payment suspensions from the timeliness standard, even if the 

corporate structures of the providers have changed or providers apply 

under new tax identification numbers. 

Modify the Statement of Work for the Jurisdiction That Includes South 

Florida To Require Enhanced Activities To Fight Fraud and Abuse 

CMS intends to release the Statement of Work for the Medicare 

Administrative Contractor for Jurisdiction 9, which includes Florida, 

Puerto Rico, and the U.S. Virgin Islands, later this year. The agency 

should require and fund the new contractor to conduct enhanced 

provider enrollment, data analysis, and claims-editing activities in the 

portion of this area identified as high-risk. 

 O E I - 0 9 - 0 7 - 0 0 0 3 0 ABERRANT BILLING IN S OUTH F LORIDA FOR BENEFICIARIES WITH HIV/AIDS 25 
RECOMMENDATIONS 

Require Extensive Review of All Reassignments in High-Risk Areas To 

Confirm That They Are Legitimate 

OIG investigators and CMS contractor personnel told us that fraudulent 

infusion clinics in South Florida sometimes appropriate the identities of 

legitimate providers to obtain billing privileges. For this reason, CMS 

and the contractors said that they are reluctant to use sanctions such as 

revocations and suspensions on all of the provider numbers associated 

with a particular clinic when it revokes or suspends one, which 

potentially leaves Medicare open to further abuse. To minimize the 

chances of a legitimate provider being associated with a fraudulent one, 

CMS should take steps to ensure that all reassignments in high-risk 

areas are legitimate. The FCSO pilot project partially addresses this by 

funding the carrier to conduct a more extensive review when it receives 

a sixth reassignment application for a particular provider. For example, 

contractors are directed to send the physician a letter to verify the 

reassignment and to deactivate the provider identification number and 

deny the application if the physician does not respond. CMS should 

extend this policy by funding carriers to conduct this level of review for 

all new and existing reassignments that meet the criteria specified in 

the pilot, both in South Florida and in other high-risk geographic areas. 

Strengthen Revocations To Prevent Further Fraud and Abuse 

Currently, because providers may use revoked numbers to continue to 

submit potentially fraudulent claims for service dates prior to the 

effective date of the action, revocations do not adequately protect 

Medicare funds. Similarly, in cases when fraudulent activity is evident, 

the requirement to provide 30 days’ notice prior to the effective date of 

the revocation may expose Medicare to additional potentially fraudulent 

claims. CMS should consider shortening the notice period for 

revocations. In addition, CMS should require prepayment review on all 

claims from providers that have effective or pending revocations. CMS 

also should develop a strategy for minimizing the risk to Medicare from 

providers with multiple billing numbers, perhaps automatically placing 

all numbers associated with a revoked number on prepayment review 

pending further investigation. 

AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 

RESPONSE 

CMS generally concurred with our recommendations. CMS stated that 

our analysis will be useful to its continued efforts to prevent fraudulent 

payments for infusion therapy and that the agency will be contacting 

 O E I - 0 9 - 0 7 - 0 0 0 3 0 ABERRANT BILLING IN S OUTH F LORIDA FOR BENEFICIARIES WITH HIV/AIDS 26 
RECOMMENDATIONS 

OIG for details about additional metropolitan areas exhibiting aberrant 

billing patterns. CMS also stated that our recommendations to 

mandate site visits and afford contractors more time to review new 

applications in high-risk jurisdictions have been incorporated into a new 

demonstration project. 

CMS stated that our recommendations demonstrate that CMS’s current 

actions are working. CMS also stated that the decline in Medicare 

payments in Florida from 2004 to 2006, despite increased amounts 

billed, demonstrates the effectiveness of corrective actions. However, 

we found that in the last half of 2006, approximately 10 percent of 

beneficiaries with HIV/AIDS lived in the three South Florida counties, 

but claims originating in those counties constituted 50 percent of 

submitted charges and 37 percent of the Medicare paid amount. The 

continued aberrant billing and payment patterns documented in our 

report demonstrate the need for improved provider enrollment controls 

to prevent the entry of unqualified providers into the Medicare program. 

CMS acknowledged the need for improvement in the provider 

enrollment process and described recent actions it has taken to 

strengthen this process. 

In response to our recommendation to modify the Statement of Work for 

the jurisdiction including South Florida to require enhanced activities to 

fight fraud and abuse, CMS concurred and stated that it has added 

language to the Statement of Work to indicate that Florida is a 

high-risk area and special actions are needed to deal with fraud. We 

recommend that CMS require and fund enhanced provider enrollment, 

data analysis, and claims-editing activities in this area. 

In response to our recommendation that CMS review all reassignments 

in high-risk areas, CMS concurred and stated that Medicare contractors 

are currently required to review such reassignments. We have revised 

our recommendation to clarify that CMS should conduct a more 

extensive review sufficient to confirm the legitimacy of such 

reassignments. For example, CMS could require contractors to send the 

physician a letter to verify the reassignment and to deactivate the 

provider identification number and deny the application if the physician 

does not respond. This level of review is required and funded by the 

FCSO pilot project only when the contractor receives a sixth 

reassignment application for a particular provider. We recommend that 

CMS extend this policy by funding carriers to conduct this level of 

review for all new and existing reassignments that meet the criteria 

 O E I - 0 9 - 0 7 - 0 0 0 3 0 ABERRANT BILLING IN S OUTH F LORIDA FOR BENEFICIARIES WITH HIV/AIDS 27 
RECOMMENDATIONS 

specified in the pilot, both in South Florida and in other high-risk 

geographic areas. 

CMS also concurred with our recommendation to strengthen 

revocations. CMS states that it will consider enhancements to this 

section of the regulations.40 

While we recognize that traditional CMS program integrity actions form 

an integral part of any antifraud strategy, they have proven insufficient 

to control aberrant billing in South Florida. Our report shows that 

while claims edits depress infusion claims activity for a time, providers 

respond by changing billing patterns; this pattern of action and 

response produces payment denials but few long-term savings to 

Medicare as providers circumvent the controls. Payment suspensions, 

revocations, and investigations eliminate particular problem providers 

or provider numbers from the program, but have limited scope. 

Additional efforts are needed to prevent unscrupulous individuals from 

becoming Medicare providers. 

CMS’s positive response to our recommendations, including its 

initiation of the new demonstration project, indicates that the agency is 

now moving toward strategies that should more effectively protect the 

integrity of Medicare payments in South Florida. 

The full text of CMS’s comments is available in Appendix B. 

40 We note a technical correction—CMS’s comments cited 42 CFR 434.535; the 

regulations listing the reasons a Medicare contractor may use to revoke billing privileges 

are found at 42 CFR 424.535. 

 O E I - 0 9 - 0 7 - 0 0 0 3 0 ABERRANT BILLING IN S OUTH F LORIDA FOR BENEFICIARIES WITH HIV/AIDS 28 
Δ APPENDIX~A 

DETAILED METHODOLOGY FOR TABLE 3 

To produce Table 3, we first determined the Metropolitan Statistical 

Area (MSA) in which each service was claimed to have been provided. 

To do so, we matched the Medicare Part B National Claims History data 

to the Office of Management and Budget’s MSA data by the provider’s 

ZIP Code. If a ZIP Code did not match any MSA, we considered the 

claim to originate from a nonmetropolitan area of the State in which the 

ZIP Code was located. Next, we summarized the claims data by 

beneficiary, adding up the number of claims from each MSA in which 

the beneficiary had a service. If any MSA was the source of more than 

50 percent of a beneficiary’s claims, we considered the beneficiary as 

belonging to that MSA. If not, we considered the beneficiary as 

belonging to no MSA. We used the same process to determine to which 

MSA, if any, each provider belonged. We then matched the beneficiary 

and provider MSA data back to the claims data so that each claim 

record contained three geographic indicators: the MSA from which the 

claim originated, the MSA to which the beneficiary belonged, and the 

MSA to which the provider belonged. 

Next we calculated the four characteristics we had identified as 

representative of aberrant billing in South Florida for each MSA. We 

calculated the percentage of the submitted amount that was for drugs 

by dividing the amount submitted for drugs in each MSA by the total 

amount submitted in that MSA. We calculated the mean submitted per 

provider for beneficiaries with HIV/AIDS for each MSA by dividing the 

total submitted for beneficiaries with HIV/AIDS by providers with at 

least one claim referencing an HIV/AIDS diagnosis belonging to that 

MSA by the number of such providers. We found the percentage of 

beneficiaries with at least one drug claim in each MSA by dividing the 

number of beneficiaries belonging to the MSA that had at least one drug 

claim by the total number of beneficiaries belonging to that MSA. 

Lastly, we calculated the mean amount submitted for drugs among 

beneficiaries with at least one drug claim in each MSA by dividing the 

total amount submitted for drugs for beneficiaries belonging to each 

MSA by the number of beneficiaries belonging to the MSA that had at 

least one drug claim. We calculated the same values for the entire 

nation excluding South Florida using the same methodology. We 

included all MSAs (or nonmetropolitan areas) that had at least two 

characteristics that were at least twice the national level in Table 3. 

 O E I - 0 9 - 0 7 - 0 0 0 3 0 ABERRANT BILLING IN S OUTH F LORIDA FOR BENEFICIARIES WITH HIV/AIDS 29 
Δ APPENDIX~B 

 O E I - 0 9 - 0 7 - 0 0 0 3 0 ABERRANT BILLING IN S OUTH F LORIDA FOR BENEFICIARIES WITH HIV/AIDS 30 
APPENDIX~B 

 O E I - 0 9 - 0 7 - 0 0 0 3 0 ABERRANT BILLING IN S OUTH F LORIDA FOR BENEFICIARIES WITH HIV/AIDS 31 
APPENDIX~B 

 O E I - 0 9 - 0 7 - 0 0 0 3 0 ABERRANT BILLING IN S OUTH F LORIDA FOR BENEFICIARIES WITH HIV/AIDS 32 
APPENDIX~B 

 O E I - 0 9 - 0 7 - 0 0 0 3 0 ABERRANT BILLING IN S OUTH F LORIDA FOR BENEFICIARIES WITH HIV/AIDS 33 
Δ ACKNOWLEDGMENTS 

This report was prepared under the direction of Timothy S. Brady, 

Regional Inspector General for Evaluation and Inspections in the San 

Francisco regional office, and Deborah W. Harvey, Deputy Regional 

Inspector General. 

Scott Hutchison and Cindy Lemesh conducted this study. Central office 

staff who contributed include Scott Manley, Linda Abbott, and Robert 

Gibbons. 

 O E I - 0 9 - 0 7 - 0 0 0 3 0 ABERRANT BILLING IN S OUTH F LORIDA FOR BENEFICIARIES WITH HIV/AIDS 34