Department of Health and Human Services

OFFICE OF 

INSPECTOR GENERAL 

 

REASSIGNMENT OF MEDICARE 

BENEFITS 

 

Daniel R. Levinson 

Inspector General 

October 2009 

OEI-07-08-00180 
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 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. These evaluations focus on preventing fraud, waste, or abuse and promoting 

economy, efficiency, and effectiveness of departmental programs. To promote impact, OEI 

reports also present practical recommendations for improving program operations. 

Office of Investigations 

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

of fraud and misconduct related to HHS programs, operations, and beneficiaries. With 

investigators working in all 50 States and the District of Columbia, OI utilizes its resources 

by actively coordinating with the Department of Justice and other Federal, State, and local 

law enforcement authorities. The investigative efforts of OI often lead to criminal 

convictions, administrative sanctions, and/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 for OIG’s internal operations. OCIG represents OIG in all civil and 

administrative fraud and abuse cases involving HHS programs, including False Claims Act, 

program exclusion, and civil monetary penalty cases. In connection with these cases, OCIG 

also negotiates and monitors corporate integrity agreements. OCIG renders advisory 

opinions, issues compliance program guidance, publishes fraud alerts, and provides other 

guidance to the health care industry concerning the anti-kickback statute and other OIG 

enforcement authorities. 
 

INTRODUCTION EXECUTIVE S UMMARY 

OBJECTIVES

To determine the extent to which: 

 1. practitioners have reassignments of benefits, 

 2. practitioners indicate that their reassignments of benefits should 

be active, 

 3. practitioners had Medicare expenditures through reassignments of 

benefits that should not have been active, and 

 4. the Centers for Medicare & Medicaid Services (CMS) has 

established safeguards with respect to reassignment of benefits. 

BACKGROUND 

Medicare regulations require that contractors distribute payments 

directly to practitioners who render services, unless those practitioners’ 

benefits are reassigned to third parties. A reassignment of benefits is a 

mechanism by which Medicare practitioners allow third parties to bill 

and receive payment for services that they rendered. 

Practitioners submit to Medicare contractors Form CMS-855I (855I) to 

enroll in Medicare and Form CMS-855R (855R) to reassign benefits. 

Contractors create records in the Provider Enrollment, Chain, and 

Ownership System (PECOS) reflecting information in the 855I. 

Contractors process 855Is and 855Rs using the safeguards established 

in Chapter 10 of the “Medicare Program Integrity Manual.” Contractors 

may employ additional safeguards, as needed. 

We obtained the PECOS May 2008 Individual Global Extract File (the 

May 2008 Extract), which contained records for all reassignments that 

were established between January 1, 2003, and December 31, 2007. We 

analyzed the Extract to determine the number of practitioners with 

reassignments and the number of reassignments per practitioner. Our 

sample included 497 practitioners with 1,723 reassignments. We also 

used the 2007 Part B Medicare claims data from the National Claims 

History file to match claims to practitioners and reassignments and 

interviewed CMS Central Office staff and contractors regarding 

procedures pertaining to reassignments and safeguards. 

FINDINGS 

CMS data indicate that 77 percent of practitioners have at least one 

reassignment. The May 2008 Extract indicated that 77 percent of 

practitioners had at least one reassignment. 

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EXECUTIVE SUMMARY 

Practitioners indicated that 37 percent of reassignments should not 

have been active. For 92 percent of reassignments that should not 

have been active, the practitioners were once employed with the third 

parties to which their reassignments were made, but had since 

terminated their employment with them. For the remaining 8 percent 

of reassignments, practitioners had no knowledge of the third parties to 

which their benefits had been reassigned or had applied for positions 

with the third parties but were never employed there.

Medicare paid a total of $140,488 through reassignments that should 

not have been active. Medicare paid $140,488, in 2007, through 

16 reassignments in our sample that should not have been active. 

CMS contractors reported using safeguards to ensure correct 

processing of reassignments, but several factors may limit their 

effectiveness. CMS contractor staff reported that they use safeguards 

for processing reassignments. Contractors also reported comparing 

signatures on reassignment applications to signatures on file and 

verifying the reassignments by telephone, mail, or site visits. However, 

only 48 percent of PECOS addresses resulted in responses from the 

practitioners, and 29 percent of practitioners indicated that they never 

update, did not know how to update, or relied on others to update their 

contact information with Medicare. Further, 48 percent of practitioners 

were not aware that they were entitled to access the claims billed on 

their behalf. System vulnerabilities also could lead to abuse of active 

reassignments. Finally, because the Multiple Carrier System does not 

populate PECOS with provider transaction access number deactivation 

information, reassignments in PECOS remain active. 

RECOMMENDATIONS 

Most practitioners enrolled in Medicare have at least one reassignment. 

However, practitioners indicated that 37 percent of their reassignments 

should not have been active. Despite the high number of reassignments 

that should not have been active, Medicare payments made through 

these reassignments were low. Safeguards are in place to ensure 

correct processing of reassignments, but several factors may limit their 

effectiveness. 

Subsequent to our analyses, CMS staff informed us of new policies that 

might address the limitations we identified regarding providers’ failure 

to update their contact information or terminate inactive reassignments 

and regarding the deactivation of provider transaction access numbers. 

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EXECUTIVE SUMMARY 

To reduce the number of reassignments that should not be active, we 

recommend that CMS: 

Implement Plans To Revalidate Practitioner Enrollment Information. 

We encourage CMS to implement its plans to revalidate practitioners’ 

enrollment information every 5 years. 

Educate Practitioners on the Need To Provide Current Information.

CMS could educate practitioners on the need to provide current 

correspondence information and terminate inactive reassignments. 

Implement Plans To Update PECOS From Other Data Sources. We 

encourage CMS to follow through with plans to allow the Multiple 

Carrier System to populate PECOS with information on practitioners 

whose billing privileges have been deactivated. 

Follow Up With the Practitioners for Whom Payments Were Made 

Through Reassignments That Should Not Have Been Active. We will 

forward information on these claims to CMS in a separate 

memorandum.

AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 

RESPONSE 

In its written comments, CMS agreed with the first and second 

recommendations, but it did not indicate specific agreement or 

disagreement with the third and fourth recommendations. However, 

CMS described actions it has taken or plans to take to address all four 

recommendations. 

In response to the first recommendation, CMS indicated that it 

instructed Medicare carriers and Part A/B Medicare Administrative 

Contractors to initiate and complete more than 10,000 revalidations. In 

response to the second recommendation, CMS indicated it has taken 

significant steps to help educate the public about its reporting 

responsibilities including discussing reporting responsibilities and the 

need to update enrollment information during CMS Open Door Forums, 

participating in conference calls with regional offices and contractors to 

discuss reporting responsibilities, mailing reporting responsibility 

information to high-risk providers, posting reporting responsibility 

information on the Medicare provider enrollment Web site, and sending 

listserv announcements to practitioners about their reporting 

responsibilities. 

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EXECUTIVE SUMMARY 

In response to the third recommendation, CMS plans in October 2009 to 

update PECOS with verified deactivation information contained in the 

Multiple Carrier System. In response to the fourth recommendation, 

CMS stated that once it receives the information from OIG, it will follow 

up with third parties that may have been inappropriately paid. We did 

not make changes to the report based on CMS’s comments.
 TABLE OF CONTENTS 

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

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

FINDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 

CMS data indicate that 77 percent of practitioners have at least 

one reassignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 

Practitioners indicated that 37 percent of reassignments should 

not have been active . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 

Medicare paid a total of $140,488 through reassignments that 

should not have been active . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 

CMS contractors reported using safeguards to ensure correct 

processing of reassignments, but several factors may limit their 

effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 

RECOMMENDATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 

Agency Comments and Office of Inspector General Response . . . 12 

APPENDIXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 

 A: Original Sampling Frames and Active Reassignments . . . . . . 14 

 B: Point Estimates and Confidence Intervals . . . . . . . . . . . . . . . . 15 

 C: Nonresponse Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 

 D: Practitioners With Reassignments by Specialty . . . . . . . . . . . 17 

 E: Reassignments That Should Not Have Been Active . . . . . . . . 19 

 F: Agency Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 

ACKNOWLEDGMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 
 

OBJECTIVES 

To determine the extent to which: 

 1. practitioners have reassignments of benefits, 

 2. practitioners indicate that their reassignments of benefits should 

be active, 

 3. practitioners had Medicare expenditures through reassignments of 

benefits that should not have been active, and 

 4. the Centers for Medicare & Medicaid Services (CMS) has 

established safeguards with respect to reassignment of benefits. 

BACKGROUND 

Medicare regulations require that contractors distribute payments 

directly to the practitioners who render services, unless those 

practitioners’ benefits are reassigned to third parties.1 A reassignment 

of benefits (hereinafter referred to as reassignment) is a mechanism by 

which Medicare practitioners allow third parties to bill and receive 

payment for services that they rendered. Approximately $28 billion was 

paid through reassignments in 2007. Many practitioners routinely 

reassign their Medicare benefits as part of their normal business 

practices. For example, anesthesiologists might reassign their benefits 

to several different hospitals where they render services in order for the 

hospitals to bill and receive payment from Medicare Part B for the 

services that the anesthesiologists performed. The hospitals would also 

bill and receive payment from Medicare Part A for the hospital portion 

of the service. In this example, anesthesiologists might have multiple 

reassignments, one for each hospital where they render services. 

According to 42 CFR § 424.80, third parties that may receive 

reassignments include the practitioners’ employers or billing agents, 

other Medicare-enrolled entities with which practitioners have 

contractual arrangements, Government agencies or entities, or other 

entities as established by court orders. 

Processing Enrollments and Reassignments 

Medicare contractors are responsible for enrolling practitioners and 

processing payments; each contractor is responsible for a specific 

geographic region. Under Medicare Contracting Reform, 

responsibilities of contractors are transitioning to Medicare 

 INTRODUCTION 

1 Section 1842(b)(6) of the Social Security Act; 42 CFR § 424.73. 

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INTRODUCTION 

Administrative Contractors. There were 10 contractors at the time of 

our review in March 2009. 

Enrollments. To enroll in Medicare, practitioners must submit 

Form CMS-855I (855I) to Medicare contractors serving their respective 

regions. Each 855I contains identifying information about the 

practitioner, including medical specialty, billing address, practice 

location, and any adverse legal actions. Using information from the 

855I, contractors create records in the Provider Enrollment, Chain, and 

Ownership System (PECOS) for each enrolled practitioner.2 

Reassignments. To reassign benefits, practitioners submit 

Form CMS-855R (855R) to Medicare contractors with which the 

practitioners are enrolled. The 855R contains information about both 

the practitioners and the third parties to which practitioners reassign 

benefits. The 855R requires the practitioners’ or delegated officials’ 

original signatures authorizing the reassignments.3 To reassign 

benefits, practitioners must first enroll in Medicare as individuals. The 

third parties to which the benefits are reassigned must enroll in 

Medicare as institutions or groups. Additionally, both the practitioners 

and the third parties must enroll with the same contractor serving their 

region. For example, practitioners enrolled through Contractor A may 

not reassign their benefits to clinics enrolled through Contractor B. The 

contractors process the 855Rs, adhering to required safeguards, and 

create PECOS records reflecting the information in the 855Rs. The 

855Rs are also used by both the practitioners and the third parties to 

terminate reassignments. The 855R requires the practitioners’ or 

delegated officials’ original signatures to terminate reassignments. 

Billing through reassignments. PECOS is linked to the Multiple Carrier 

System, which contractors use to pay Medicare claims, to create a 

record for each reassignment. In the Multiple Carrier System, a 

Provider Transaction Access Number (PTAN) is assigned to each 

practitioner for each reassignment so that the third party receiving the 

reassignment can bill on the practitioner’s behalf. In effect, there is one 

PTAN for each reassignment. If practitioners have multiple 

2 PECOS is the CMS system of records for enrollment and reassignments of Medicare 

practitioners. 

3 Delegated official means an individual who is given the authority by the practitioner to 

report changes and updates to the practitioner’s enrollment record. The delegated official 

must be an individual with an ownership or control interest (as defined in Section 

1124(a)(3) of the Social Security Act) or be a W-2 managing employee of the practitioner. 

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INTRODUCTION 

reassignments, they will have multiple PTANs. If no billing occurs for a 

period of 12 consecutive months, the PTAN is deactivated and no 

further billing can occur through that reassignment. 

Planned CMS Improvements 

After we completed data collection, CMS staff informed us of new 

policies that would improve existing reassignment safeguards. These 

improvements include periodically revalidating practitioner contact 

information and implementing communication from the Multiple 

Carrier System to PECOS. 

METHODOLOGY 

PECOS Individual Global Extract File 

From CMS, we obtained the PECOS May 2008 Individual Global 

Extract File (the May 2008 Extract), which CMS staff indicated to us 

contained records for all reassignments that were established between 

January 1, 2003, and December 31, 2007, and were still active on May 

1, 2008.4 We analyzed this information to determine the number of 

practitioners with reassignments and the number of reassignments per 

practitioner. Our sampling plan assigned practitioners to one of three 

strata, depending on the number of reassignments in the May 2008 

Extract—one or two reassignments, three or four reassignments, and 

five or more reassignments. We initially sampled 166 practitioners in 

each stratum for this study. The sampled practitioners had from 1 to 

21 reassignments. 

Prior to sample selection, CMS enrollment staff indicated to us that the 

May 2008 Extract contained only active reassignments—that is, 

reassignments for which no terminations have been submitted. 

However, we discovered discrepancies between the data contained in 

the May 2008 Extract and those in the PECOS database. When we 

asked CMS staff to explain these discrepancies, they determined that 

errors in the procedures that created the May 2008 Extract had caused 

it to contain records of terminated reassignments and inaccurate 

effective dates for reassignments.5 Therefore, we initially assigned 

4 We selected the May 2008 Extract to increase the likelihood that practitioners would 

still be in practice at the time we attempted to contact them from September 2008 to 

February 2009. 

5 Further information on the errors is available in our report entitled “Inaccurate Data in 

the Provider Enrollment, Chain, and Ownership System Individual Global Extract File,” 

OEI-07-08-00181. 

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INTRODUCTION 

some practitioners to the wrong stratum because of inaccuracies in the 

May 2008 Extract. After discovering the discrepancies and inaccurate 

effective dates, we examined PECOS data for every practitioner and 

reassignment in our sample to identify the correct number of active 

reassignments for each practitioner. This resulted in our sample having 

194 practitioners with 1 or 2 reassignments (249 total reassignments), 

152 practitioners with 3 or 4 reassignments (497 total reassignments), 

and 151 practitioners with 5 or more reassignments (977 total 

reassignments). 

We excluded from our analyses all reassignments that had been 

terminated as of May 1, 2008, and our reported study results reflect 

these adjustments. One practitioner with more than five reassignments 

was excluded because of an open Office of Inspector General (OIG) 

investigation. 

After we made these corrections, our sample included 497 practitioners 

with 1,723 reassignments. Projections were made for both practitioners 

and reassignments. See Appendix A for further details on the original 

sample and adjustments. See Appendix B for point estimates and 

confidence intervals. 

Practitioner Data Collection 

After selecting our sample, we mailed lists of the reassignments found 

in the May 2008 Extract to the sampled practitioners. We asked these 

practitioners whether each reassignment listed should have been active. 

Our overall response rate from practitioners was 88 percent.6 To 

achieve the highest response rate possible, we used multiple 

information sources to identify correct addresses for practitioners. We 

first used the correspondence address in the May 2008 Extract. If the 

U.S. Postal Service was unable to deliver a letter and it was returned to 

us with “return to sender” or “not at this address” noted on it or we 

received no response, we used the following sources to locate 

practitioners’ addresses: 

 the pay-to address listed in the May 2008 Extract, 

6 The response rates were: practitioners with one to two reassignments, 

158 practitioners, or 93 percent; practitioners with three to four reassignments, 

145 practitioners, or 86 percent; and practitioners with five or more reassignments, 

136 practitioners, or 82 percent. Responses from these 439 practitioners represent 

1,482 reassignments. 

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INTRODUCTION 

 the practitioner’s National Provider Identifier (NPI) mailing 

address, and 

 the practitioner’s NPI practice location address. 

We used additional resources to locate practitioners for whom we were 

still unable to identify correct mailing addresses, which included: 

 searching networking Web sites and public records, such as 

Google.com, LinkedIn.com, Facebook.com, State medical licensing 

Web sites, telephone and cell phone directories, and county tax 

information; 

 calling the practitioners; 

 examining the 2008 National Claims History file for recently paid 

claims to identify practitioners’ most recent places of employment; 

 searching LexisNexis to identify other potential addresses; and 

 searching the current PECOS database to determine whether the 

practitioners had updated their correspondence addresses. 

Once we identified the correct mailing address for each practitioner, we 

made at least four attempts to solicit a response by mail, with the 

fourth attempt being a certified letter. 

We then used the 2007 Part B Medicare claims data from the National 

Claims History file to determine how much Medicare paid through the 

sampled practitioners’ reassignments. We used practitioners’ 

identifying information (NPI and provider identification number) and 

third parties’ tax identification numbers to identify Medicare Part B 

claims paid through specific reassignments. 

Interviews With CMS and Contractors 

We interviewed CMS Central Office staff regarding procedures 

pertaining to reassignments and required safeguards. We conducted 

structured interviews with staff at all 10 contractors responsible for 

processing reassignments to assess the established reassignment 

safeguards. 

Nonresponse Analysis 

We received an 88-percent response rate from practitioners to the 

survey. Therefore, we conducted a nonresponse analysis. We found no 

statistical evidence of nonresponse in our key survey estimates. 

Appendix C provides details on the nonresponse analysis. 

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INTRODUCTION 

Limitations 

We limited our analyses to 2007 Medicare Part B claims from the 

National Claims History File and reassignment information in the 

May 2008 Extract. Information regarding whether reassignments 

should have been active was self-reported. 

Quality Standards 

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

Inspections” approved by the Council of the Inspectors General on 

Integrity and Efficiency.

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CMS data indicate that 77 percent of 

practitioners have at least one reassignment 

 FINDINGS

Data in the May 2008 Extract 

indicate that 517,936 practitioners 

had at least one reassignment (see 

Table 1). The May 2008 Extract data also indicate that these 

practitioners had a total of 833,016 reassignments. 

As Table 1 shows, nearly all certified registered nurse anesthetists had 

at least one reassignment, while physician assistants rarely had 

reassignments. The majority of practitioners with reassignments were 

physicians. Appendix D provides the percentages of practitioner 

specialties with reassignments. As Appendix D shows, emergency 

department physicians had the highest rate of reassignments for any 

physician specialty. 

Table 1: Types of Medicare-Enrolled Practitioners With Reassignments 

Practitioner Type Total Enrolled 

Practitioners

Total Practitioners with 

Reassignments

Percent of Enrolled 

Practitioners with 

Reassignments

Certified Registered Nurse 

Anesthetist 24,555 23,294 94.9

Nurse Midwife 3,113 2,820 90.6

Nurse Practitioner 45,140 40,333 89.4

Physical Therapist 34,354 30,329 88.3

Occupational Therapist 6,411 5,529 86.2

Doctor of Medicine/Doctor of 

Osteopathy 454,975 372,636 81.9

Audiologist 3,470 2,779 80.1

Dietician 6,936 5,440 78.4

Clinical Nurse Specialist 2,474 1,683 68.0

Licensed Clinical Social Worker 34,682 20,228 58.3

Clinical Psychologist 21,353 11,384 53.3

Other 1,391 741 53.3

Physician Assistant 35,712 740 2.1

 Total 674,566 517,936 76.8

Source: Office of Inspector General (OIG) analysis of Individual Global Extract File Enrollment and Reassignment Tables, 2009. 

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FINDINGS 

Overall, 37 percent of 

reassignments in the May 2008 

Extract should not have been 

active. Further, 39 percent of practitioners had at least one 

reassignment that should not have been active. For 92 percent of 

reassignments that should not have been active, the practitioners were 

once employed with the third parties to which their reassignments were 

made, but had since terminated their employment with them. For the 

remaining 8 percent of reassignments that should not have been active, 

practitioners had no knowledge of third parties to which their benefits 

had been reassigned or indicated that they had applied for positions 

with the third parties but were never employed there. As one of the 

practitioners in our sample stated, “Years ago, I was considering 

[working for the third party]. I don’t recall any contract [being] signed, 

much less [completing or signing] any Medicare forms. I never provided 

any services on their behalf, either.” 

Practitioners indicated that 37 percent of 

reassignments should not have been active 

Thirty-five percent of practitioners who indicated they had at least one 

reassignment that should not have been active believed that the 

reassignment(s) automatically terminated when their employment did. 

When we asked practitioners whether they knew they could terminate 

reassignments, 55 percent responded that they were not aware that 

they could do so.7 Point estimates with confidence intervals for selected 

statistics are contained in Appendix B. 

Appendix E compares reassignments that should not have been active 

among practitioners with one or two reassignments to those with three 

or four reassignments and five or more reassignments. 

Third parties collected payments 

from Medicare through 

reassignments that should not 

have been active for only 1 percent of practitioners.8 From our sample, 

we identified 12 practitioners who had a total of 16 reassignments 

through which Medicare made payments (1) after the dates the 

Medicare paid a total of $140,488 through 

reassignments that should not have been active 

7 After completing our survey, 12 practitioners requested us to provide them with copies 

of the CMS-855R or asked us how to find the CMS-855R so they could terminate their 

inactive reassignments. 

8 We counted payments in error only for services that were provided more than 1 month 

after the dates the practitioners indicated the reassignments should have been terminated. 

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FINDINGS 

practitioners indicated their employment with the third parties ended 

or (2) to third parties of which practitioners were not aware.9 While 

Medicare allowed a total of $35.3 million in payments through the 

sampled reassignments, only $140,488 in payments were made through 

reassignments that should not have been active. The amount paid 

through each of these 16 reassignments ranged from $7 to $66,901. 

In one example, a practitioner had a total of 21 reassignments. Of 

these, only three should have been active. For the remaining 

18 reassignments, four were for third parties with which the 

practitioner had terminated her employment in 2004. These third 

parties continued to collect Medicare payments on the practitioner’s 

behalf. Medicare payments to these third parties totaled more than 

$7,800 in 2007, which was 3 years after the practitioner indicated she 

terminated her employment with them. All four of these entities shared 

the same address.10

CMS contractors reported using safeguards to 

ensure correct processing of reassignments, 

but several factors may limit their effectiveness 

CMS contractor staff reported using 

safeguards to ensure that both 

practitioners and third parties are 

enrolled in Medicare, the signatures on 

the applications are those of the practitioners or delegated officials, the 

signatures are original (not photocopied or stamped), and the third parties 

listed are eligible to receive reassigned benefits.11 

Although they are not required to do so, 7 of 10 Medicare contractors 

reported using additional safeguards, such as comparing the signatures 

on reassignment applications to signatures on file or contacting the 

practitioners or the third parties to verify the reassignments by 

telephone, mail, or site visits. Contractors that used these additional 

safeguards indicated that they target these efforts to areas of high 

9 When practitioners indicated they had no knowledge of the third parties, all payments 

made through those reassignments were determined to be made in error regardless of date. 

10 We found that 25 separate legal entities shared this same address and suite number. 

11 The safeguards contractors reported using are those in CMS’s “Medicare Program 

Integrity Manual,” Pub. No. 100-08, ch. 10. 

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FINDINGS 

suspected fraud, practitioners with multiple reassignments, and/or 

855Rs they find suspicious or questionable.12

While contractors have implemented safeguards to prevent payments 

made through reassignments that should not have been active, the 

safeguards have limited effectiveness because (1) many practitioners 

fail to update their contact information with CMS, (2) many 

practitioners fail to review claims that were billed on their behalf, and 

(3) PTANs are not automatically deactivated when reassignments are 

deactivated. 

More than half of practitioners failed to update their information with CMS 

Many practitioners failed to provide CMS updated contact information, 

which could create challenges in contacting practitioners to verify 

reassignments. Only 48 percent of PECOS addresses resulted in 

responses from the practitioners. We identified correct mailing 

addresses for nearly all of the remaining practitioners using sources 

other than the May 2008 Extract. We obtained addresses from the NPI 

registry for 32 percent of practitioners. We obtained addresses for 

19 percent of practitioners through multiple Internet sources, such as 

Google.com, State licensing board Web sites, LexisNexis, and social 

networking sites. We were unable to locate addresses for 2 percent of 

practitioners.13

Additionally, 29 percent of practitioners indicated that they never 

update, did not know how to update, or relied on others to update their 

contact information with Medicare.14 One practitioner explained, “I 

personally do not contact Medicare. I have always presumed that the 

credentialing and billing departments take care of this. . . .” All of the 

practitioners in our sample who had payments made through 

reassignments that should not have been active failed to either 

12 In one example demonstrating the efforts contractors undertake to prevent 

inappropriate reassignments, a contractor rejected a reassignment application because it 

lacked required information. Subsequent to the rejection, the third party provided the 

missing information, resubmitting the original application. However, the contractor noted 

that the date on the application had been erased and rewritten. The contractor spoke with 

the practitioner, who explained that he decided not to join the group, leading the contractor 

to believe that the third party submitted the reassignment application without the 

practitioner’s knowledge. The contractor referred the group for further investigation. 

13 Percentages exceed 100 percent because of rounding. 

14 Practitioners indicated that they relied on administrative staff and credentialing or 

billing departments to update their information or prompt them to do so. 

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FINDINGS 

terminate their reassignments or update their contact information with 

CMS. 

Nearly half of practitioners were unaware that they could review 

claims billed on their behalf 

Practitioners, upon request to CMS, have unrestricted access to all 

claims billed on their behalf by the third parties to which their benefits 

have been reassigned.15 Theoretically, practitioners would see potential 

inappropriate claims that third parties billed to Medicare when 

reviewing the claims billed on their behalf. However, two factors 

impede the effectiveness of this safeguard. First, 48 percent of 

practitioners reported that they were not even aware that they were 

entitled to access the claims billed on their behalf. Second, if 

practitioners are not aware that third parties are billing Medicare on 

their behalf, they have no reason to request access to claims that the 

third parties are billing. 

PTAN deactivation does not currently update PECOS and terminate the 

reassignment 

Contractors use the Multiple Carrier System to pay Medicare claims. If 

after 12 months a PTAN is not used, it is deactivated in the system.16 

Deactivation of the PTAN prevents further billing through a given 

reassignment. However, as long as third parties continue to bill on 

practitioners’ behalf, the deactivation date is not triggered. 

Additionally, deactivation of a PTAN has no effect on the reassignment 

record in PECOS because the Multiple Carrier System did not populate 

PECOS with deactivation information at the time of this study.

15 42 CFR § 424.80(d)(2). Although the regulation requires practitioners to have 

unrestricted access, it does not specify how this access should be given. 

16 CMS, “Medicare Program Integrity Manual,” Pub. No. 100-08, ch. 10, § 13.1. 
 

 RECOMMENDATIONS 

Most practitioners enrolled in Medicare have at least one reassignment. 

However, practitioners indicated that 37 percent of their reassignments 

should not have been active. Despite the high number of reassignments 

that should not have been active, Medicare payments made through 

these reassignments were low. Safeguards are in place to ensure 

correct processing of reassignments, but several factors may limit their 

effectiveness. 

Subsequent to our analyses, CMS staff informed us of new policies that 

might address the limitations that we identified. These include 

periodically revalidating practitioner contact information and 

implementing communication from the Multiple Carrier System to 

PECOS. The implementation of these new policies would address the 

limitations we identified regarding providers’ failure to update their 

contact information or terminate inactive reassignments and regarding 

the deactivation of PTANs. 

To reduce the number of reassignments that should not be active, we 

recommend that CMS: 

Implement Plans To Revalidate Practitioner Enrollment Information. 

We encourage CMS to implement its plans to revalidate practitioners’ 

enrollment information every 5 years. 

Educate Practitioners on the Need To Provide Current Information.

CMS could educate practitioners on the need to provide current 

correspondence information and terminate inactive reassignments.

Implement Plans To Update PECOS From Other Data Sources. We 

encourage CMS to follow through with plans to allow the Multiple 

Carrier System to populate PECOS with information on practitioners 

whose billing privileges have been deactivated. 

Follow Up With the Practitioners for Whom Payments Were Made 

Through Reassignments That Should Not Have Been Active. We will 

forward information on these claims to CMS in a separate 

memorandum.

AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 

RESPONSE 

In its written comments, CMS agreed with the first and second 

recommendations, but it did not indicate specific agreement or 

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RECOMMENDATIONS 

disagreement with the third and fourth recommendations. However, 

CMS described actions it has taken or plans to take to address all four 

recommendations. 

CMS indicated that it has taken a number of steps to strengthen the 

reassignment process, such as implementing a systematic process to 

deactivate approximately 2 million infrequently used Medicare billing 

numbers. CMS indicated that it has also provided practitioners online 

access to enroll, change, or view existing enrollments. 

In response to the first recommendation, CMS indicated that it 

instructed Medicare carriers and Part A/B Medicare Administrative 

Contractors, through program instructions, to initiate and complete 

more than 10,000 revalidations. 

In response to the second recommendation, CMS indicated it has taken 

significant steps to help educate the public about its reporting 

responsibilities including discussing reporting responsibilities and the 

need to update enrollment information during CMS Open Door Forums, 

participating in conference calls with regional offices and contractors to 

discuss reporting responsibilities, mailing reporting responsibility 

information to high-risk providers, posting reporting responsibility 

information on the Medicare provider enrollment Web site, and sending 

listserv announcements to practitioners about their reporting 

responsibilities. 

In response to the third recommendation, CMS plans in October 2009 to 

update PECOS with verified deactivation information contained in the 

Multiple Carrier System. The synchronization process will ensure 

PECOS maintains current information on practitioners. 

In response to the fourth recommendation, CMS stated that once it 

receives the information from OIG, it will follow up with third parties 

that may have been inappropriately paid. 

We did not make changes to the report based on CMS’s comments. The 

full text of CMS’s comments can be found in Appendix F. 

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 APPENDIX ~ A 

Table A-1: Original Sampling Frames 

Stratum Stratum Definition Practitioners in 

Population*

Reassignments in 

Population*

Original Sample Design

Practitioners in 

Sample

Reassignments in 

Sample

Practitioners with one 

1 or two active 

reassignments

448,824 559,308 166 202

Practitioners with 

2 three or four active 

reassignments

54,345 178,208 166 543

Practitioners with five 

3 or more active 

reassignments

14,767 95,500 166 1,076

 Total 517,936 833,016 498 1,821

Stratum

Practitioners With 

One or Two Active 

Reassignments

Practitioners With 

Three or Four Active 

Reassignments

Practitioners With 

Five or More Active 

Reassignments

Design Sample 

Size

Reassignments in 

Sample

1 166 0 0 166 249

2 22 144 0 166 497

3 6 8 152 166 977

 Adjusted

 Sample Size 194 152 152 498 1,723

*The population figures are based on data in the Provider Enrollment, Chain, and Ownership System May 2008 Extract. As described in the "Methodology" section, the May 

2008 Extract is known to contain reassignments that should not be active. However, no other data source is available to provide more accuarate population figures.

Source: Office of Inspector General (OIG) analysis of May 2008 Individual Global Extract File Enrollment and Reassignment Tables, 2009. 

Table A-2: Active Reassignments Correctly Identified 

Source: OIG analysis of May 2008 Individual Global Extract File Enrollment and Reassignment Tables and Provider Enrollment, Chain, and Ownership System data, 2009.

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 APPENDIX ~ B 

Table B-1: Point Estimates and Confidence Intervals

Description Sample 

Size (n) Point Estimate

95-Percent 

Confidence 

Interval

Medicare expenditures through reassignments 497 $27,828,102,201 $21,056,195,180– 

$34,600,009,222

Percentage of reassignments practitioners indicated should not have been active

Percentage of practitioners with reassignments that should not have been active

1,482

439

36.5

38.8

31.4–41.6

32.5–45.5

Percentage of reassignments to third parties that should not have been active for which the 

practitioner worked previously 682 91.7 87.2–96.2

Percentage of reassignments to third parties that should not have been active for which the 

practitioner never worked 682 8.3 3.8–12.8

Percentage of practitioners believing that reassignments automatically terminated with end 

of employment 267 35.1 25.2–44.9

Percentage of practitioners unaware they could terminate a reassignment 439 55.2 48.2–62.0

Percentage of reassignments that should not have been active (practitioners 

with one or two reassignments) 233 33.1 26.2–40.1

Percentage of reassignments that should not have been active (practitioners 

with three or four reassignments) 428 42.1 36.2–48.0

Percentage of reassignments that should not have been active (practitioners 

with five or more reassignments) 821 50.0 43.6–56.5

Percentage of practitioners with reassignments that should not have been active 

(practitioners with one or two reassignments) 182 34.7 27.3–42.0

Percentage of practitioners with reassignments that should not have been active 

(practitioners with three or four reassignments) 132 70.4 62.5–78.3

Percentage of practitioners with reassignments that should not have been active 

(practitioners with five or more reassignments) 125 79.2 72.1–86.3

Percentage of practitioners with payments for reassignments that should not have been 

active 439 1.0 0.2–2.9

Percentage of Provider Enrollment, Chain, and Onwership System (PECOS) 

correspondence addresses that were correct 497 48.1 41.5–54.7

Percentage of practitioners with correct National Provider Identifier contact information and 

incorrect PECOS contact information 497 31.8 26.0–38.3

Percentage of practitioners with correct other contact information and incorrect PECOS and 

NPI contact information 497 18.5 14.0–24.0

Percentage of practitioners we could not locate 

Percentage of practitioners who never updated Medicare on contact information

Percentage of practitioners unaware they had access to claims billed on their behalf

497

439

439

1.7

29.0

48.1

0.4–4.5

23.1–35.7

41.3–55.1

Source: Office of Inspector General analysis of survey responses and 2007 National Claims History file data, 2009.

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 APPENDIX ~ C 

Nonresponse Analysis 

We analyzed how nonresponse to our survey may have affected our 

survey estimates. We examined potential nonresponse bias effects on 

key survey questions. Our nonresponse analysis provided no statistical 

evidence that our survey results were biased because of nonresponse. 

Our basic approach was to impute answers for nonrespondents and 

determine whether the survey estimate calculated with the imputed 

values differed significantly from the survey estimate based solely on 

the respondents’ answers. If no statistical difference was found between 

the two estimates, we considered our survey estimates to be unaffected 

by potential nonresponse bias. 

Variables available for both respondent and nonrespondent 

practitioners were the number of allowed claims for 2007, the amount of 

allowed claims for 2007, the number of active reassignments indicated 

in PECOS, and the number of years since graduating from their medical 

programs. We determined whether respondents and nonrespondents 

differed statistically at the 95-percent confidence level on these 

variables. We found only one difference for practitioners with five or 

more reassignments: nonresponding practitioners graduated more 

recently (on average 14 years ago) than responding practitioners (on 

average 17 years ago). 

Because practitioners with five or more reassignments who graduated 

more recently were now underrepresented in our sample because of 

nonresponse, we investigated whether this might bias our survey 

results. To do this, we first classified respondents into two categories 

corresponding to 14 or 17 years since graduation. Then we randomly 

assigned respondents’ values to missing nonrespondents’ values within 

the same graduation year categories. Finally, we conducted statistical 

tests of significance at the 95-percent confidence level to determine 

whether the estimates based on both respondents’ answers and 

nonrespondents’ imputed values differed from the estimates based only 

on respondents’ answers. 

Based on this analysis, we found no statistical evidence that our survey 

results were biased because of practitioner nonresponse. 
 

APPENDIX ~ D APPENDIX ~ D

Table D-1: Practitioners With Reassignments by Specialty 

Comparisons should not be made between Table 1 and Table D-1. 

Practitioners may have multiple specialties; thus, the information will 

not match between the tables. 

Physician Specialty Enrolled 

Providers

Providers With 

Reassignments

Percentage of Enrolled 

Providers With 

Reassignments

Emergency Medicine 35,993 34,341 95.4

Interventional Radiology 1,493 1,399 93.7

Radiation Oncology 3,259 3,046 93.5

Critical Care 4,435 4,085 92.1

Diagnostic Radiology 29,701 27,284 91.9

Cardiac Surgery 1,803 1,654 91.7

Nuclear Medicine 1,049 954 90.9

Anesthesiology 26,913 24,385 90.6

Interventional Pain Management 3,957 3,549 89.7

Hematology/Oncology 5,780 5,162 89.3

Pediatrics 25,470 22,706 89.1

Surgery Oncology 711 632 88.9

Pathology 7,667 6,805 88.8

Cardiology 18,422 16,326 88.6

Family Practice 58,364 51,687 88.6

Nephrology 5,056 4,453 88.1

Gynecological/Oncology 796 701 88.1

Hematology 968 852 88.0

Peripheral Vascular Medicine 262 228 87.0

Medical Oncology 1,920 1,661 86.5

Orthopedic Surgery 14,846 12,817 86.3

Pulmonary Disease 6,835 5,877 86.0

Neurosurgery 3,400 2,923 86.0

Vascular Surgery 2,721 2,339 86.0

Internal Medicine 84,207 72,145 85.7

Other 1,595 1,363 85.5

Obstetrics/Gynecology 21,967 18,727 85.3

Geriatric Medicine 2,925 2,487 85.0

Thoracic Surgery 2,650 2,245 84.7

Hand Surgery 1,228 1,040 84.7

Urology 5,934 5,011 84.4

continued on next page

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APPENDIX ~ D

Table D-1: Practitioners With Reassignments by Specialty (continued) 

Physician Specialty Enrolled 

Providers

Providers With 

Reassignments

Percentage of Enrolled 

Providers With 

Reassignments

Infectious Medicine 3,666 3,092 84.3

Neurology 9,023 7,610 84.3

Gastroenterology 7,405 6,231 84.1

Colorectal Surgery 827 690 83.4

Osteopathic Manipulative Treatment 1,366 1,139 83.4

Physical Medicine and Rehabilitation 5,767 4,806 83.3

General Surgery 17,241 14,349 83.2

Ophthalmology 10,497 8,706 82.9

Endocrinology 3,586 2,928 81.7

Otolaryngology 5,461 4,455 81.6

Preventative Medicine 789 641 81.2

Allergy/Immunology 2,221 1,803 81.2

Rheumatology 2,674 2,159 80.7

Dermatology 6,174 4,940 80.0

Psychiatry 22,880 18,053 78.9

Addiction Medicine 408 305 74.8

Maxillofacial Surgery 1,029 761 74.0

Optometry 19,055 14,036 73.7

Plastics 3,505 2,443 69.7

General Practice 8,739 5,981 68.4

Podiatry 9,109 6,223 68.3

Neuropsychiatry 196 133 67.9

Oral Surgery 3,014 1,965 65.2

Chiropractic 32,276 17,263 53.5

 Total 559,235 469,596

Source: Office of Inspector General analysis of Provider Enrollment, Chain, and Ownership System data, 2009.

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 APPENDIX ~ E 

Reassignments That Should Not Have Been Active 

Although practitioners with one or two reassignments were less likely to 

have reassignments that should not have been active than practitioners 

with more than two reassignments, they had the greatest number of 

reassignments that should not have been active overall. Among 

practitioners with three or four reassignments, the proportion of 

practitioners with at least one reassignment that should not have been 

active was 35 percentage points higher than that of practitioners with 

one or two reassignments. Among practitioners with five or more 

reassignments, the proportion of practitioners with at least 

one reassignment that should not have been active was 45 percentage 

points higher than that of those with one or two reassignments (see 

Table E-1). Statistical significance is shown in Table E-2. 

Table E-1: Comparisons of Percentages of Reassignments That Should Not 

Have Been Active 

Number of 

reassignments

One or two 

reassignments

Three or four 

reassignments

Five or more 

reassignments

 Total

Percentage of Reassignments 

That Should Not Have Been 

Active

33.1

42.1

50.0

36.5

Percentage of Practitioners With One 

or More Reassignments That Should 

Not Have Been Active

34.7

70.4

79.2

38.8

Source: Office of Inspector General (OIG) analysis of survey responses and claims data, 2009.

Table E-2: Statistical Significance Between Strata 

Percentage of Practitioners With 95-Percent 

Number of Reassignments One or More Reassignments That Confidence P-Value

Should Not Have Been Active Interval

One or two reassignments 34.7 - -

Three or four reassignments 70.4 - -

Difference 35.7 24.9—46.5 < 0.0001

One or two reassignments 34.7 - -

Five or more reassignments 79.2 - -

Difference 44.5 34.3—54.8 < 0.0001

Source: OIG analysis of survey responses, 2009.

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A P PEN D x F 

Agency Comments 

DEPARTMENT OF HEALTH & HUMAN SERVICES Centers for Medicare & Medicaid Services 

Administrator 

Washlngton,DC 20201 

DATE: SEP lilt 2JJIl9j 

TO: Daniel R. Levinson 

Inspector General 

FROM: Charlene Frizzera 

Acting Administrator 

SUBJECT: Office of Inspector Geneml (OlG) Draft Report: "Reassignment of Medicare 

Benefits" (OEI-07-08-00L80) 

Thank you for the opportunity to review and respond to the above referenced GIG Draft Report. 

The Centers for Medicare & Medicaid Services (CMS) appreciates the OIG's efforts in 

reviewing the Medicare reassignment process. 

The cMS has already taken a number ofsteps to strengthen the reassignment process. 

Specifically, after the publication of"Medicare Program: Requirements for Providers and 

Suppliers to Establish and Maintain Medicare Enrollment (CMS-0002-F)'' in the Pederql 

Register On April 21, 2006, CMS implemented a systematic. process to deactivate infrequently 

used Medicare billing numbers (i.e., a billing numhernot used in more than 12 consecutive 

months) for physicians, non-physician practitioners, and other suppIlers. Since implementIng 

this systematic process, we have deactivated approximately 2 million hilling numbers. 

In addition, CMSimplemented an internet-based provider enrollment system known as, the 

Provider Enrollment, Chain and Ownership System (PECOS), an electronic version of the 

Medicare enroJIment application process, earlier this year. The PECOS system allows 

physicians, non-physician practitioners,and other providers and suppliers (except for suppliers 

ofdurable medical equipment, prosthetics, orthotics and supplies) to enroll, change, or view an 

existing enrollment record at any time, By allowing physicians and non-physician practitioners 

ready access to their Medicare emolhnent record, we believe that physicians and non-physician 

practitioners will review and, as appropriate, update their current reassignments with the 

Medicare program more routinely. 

OIG Recommendation 

Implement plans to revalidate practitioner enrollment information. 

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APPENDIX ~ F 
 

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APPENDIX ~ F 
 

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 ACKNOWLEDGMENTS 

This report was prepared under the direction of Brian T. Pattison, 

Regional Inspector General for Evaluation and Inspections in the 

Kansas City regional office. 

Brian Whitley served as the team leader for this study. Other principal 

Office of Evaluation and Inspections staff from the Kansas City regional 

office who contributed to the report include Megan Buck and 

Michala Walker; central office staff who contributed include Kevin 

Farber and Kevin Manley.