Department of Health and Human Services 

OFFICE OF 

NSPECTOR GENERAL 

LIMITS ON BENEFICIARY FINANCIAL 

LIABILITY 

(BAIANCE BILLING) 

APRIL 1993 
OFFICE OF INSPECrOR GENHWL 

The mission of the Office of Inspector General (OIG), as mandated by Public bw 95452. .as 

amended, is to protect the integrity of the Dcpxtmcnt of Health and Human Scmticcs’ (HHS) 

programs as WCIIas the health and welfare of bcncficianes served by those programs. This 

statuto~ mission is carrjcd OUt through a nationuidc nc:work of’ audits, investigations, and 

inspections conducted by three OIG operating componcntx the OKKC of Audit Sc~iccs. the 

OffiCCof Investigations, and the Office of Evaluation and Inspections. _rhc O]G also informs 

the Sccrctary of HHS of program, and management problems, and recommends courses to 

correct thcm. 

OFFICE OF AUDIT SERVICES 

The OIG’S Office of Audit Semites (OAS) provides an auditing sem”ces for HHS, either by 

conducting audits ~tith its oum audit resourczs or by overseeing audit work done by others. 

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

carrjing out their respective rcsponsl%ilities and are intended to provide independent 

assessments of HHS programs and operations in order to reduce waste, abuse, and 

mismanagement and to promote economy and efflcierq throughout the Department. 

OFFICE OF INVESTIGATIONS 

The OIG’S Offke of Investigations (01) conducts crimina~ ci@ and administrative 

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

unjust enrichment by providers. The investigative efforts of 01 lead to criminal convictions, 

administrative sanctions, or civil money penalties. The 01 also oversees State Medicaid fraud 

control units which investigate and prosecute fraud and patient abuse in the Medicaid program. 

OFFICE OF EVALUATION AND INSPECHONS 

The OIG’S Office of Evaluation and Inspections (OEI) conducts short-term management and 

program evaluations (called inspections) that focus on issues of concern to the Department, 

the Congress, and the public. The findings and recommendations contained in these inspection 

reports generate rapid, accurate, and up-to-date information on the efficienq, vulnerability, 

and effectiveness of departmental programs. This report was prepared in the New York 

regional office under the direction of Thomas F. Tully, Regional Inspector General and Alan 

S. Meyer, Deputy Regional Inspector GeneraL Project stafE 

REGION II HEADQUARTERS 

Joseph M. Benlioski, Project Leader Wayne Powell 

Joseph J.Corso,Jr., Project Leader Brian P. Ritchie 

Lucille M. Cop Barbara R Tedesco 

William J. Counihan 

For additional copies of this report, contact the New York regional office at 21U264-1998. 
Department of Health and Human Services 

OFFICE OF 

INSPECTOR GENERAL 

LIMITS ON BENEFICIARY FINANCIAL 

LIABILITY 

(BALANCE BILLING) 

APRIL 1993 OEI-02-92-00130 
EXECUTIVE SUMMARY 

PURPOSE 

To repoti on Medicare 

beneficiaries. 

BACKGROUND 

earners’ implementation of limits on physicians’ charges to 

Con~essional interest in limiting beneficiary financial liability for physician semices 

beg~n with the establishmen~ in 1984, of the Participating Physician Program. In 

return for payment incentives, participating physicians must accept assignment of 

Medicare’s approved amount as payment in full in all cases; non-participants may 

accept assignment on a case-by-case basis. About 19 percent of all claims are 

unassigned, representing 13 percent of allowed physician charges, or $5.7 billion, in 

1990. 

Provisions of OBIU 1989, effective Januaxy 1991, Iimited beneficiary responsibility for 

amounts physicians charged in excess of the amount allowed by Medicare. These 

provisions precluded physicians who did not accept assignment in 1991 from charging 

beneficiaries more than 12S percent of Medicare’s allowed amounts for medical 

procedures, and more than 140 percent of allowed amounts for evaluation and 

management services. This new system, called ‘limiting chafg~n is also frequently 

referred to as “Balance BiIling.” In administering these restrictions, ~ers monitor a 

sample of procedures and senkes for all physicians’ unassigned claims for the first 

and second half of each year. When the cumulative amount of potential excessive 

charges on individual claims in the 6-month sample period exceeds $300, a notice is 

sent to the physician ident@ing all such charges Should potential violations be 

confirme~ physicians are intensively monitored. If physicians continue to violate 

charge limits, they may be referred for civil monetary penalty or exclusion proceedings. 

We collected data on monitoring activities from all carriers for the two monitoring 

periods in 1991. 

sample of twelve 

FINDINGS 

We also interviewe~ either by telephone or in person, staff from a 

Medicare earners. Case files were reviewed at six earners we visited. 

Data Supplied By Carriers Ixxiicated That The Extent Of Excessive Charges By 

Physicians Appeared I&nited 

Potential physician violations represented only four percent of all physicians submitting 

unassigned claims. Overcharges and beneficiaries each represented one percent or 
lCSSof the total 

population. 

submitwd charges on unassigned claims 

Initiatives Of some Carriers Helped To 

Bencficiark 

Some camiers asked physicians to make 

Rdua 

refunds 

and of the total Medicare 

The Fmcia.1 Impact On Some 

to beneficiaries, although this was not 

required by HCFA in 1991. Sixteen carriers, who accounted for 60 percent of all 

physicians receiving initial notices for 1991, repofi always requesting refunds. 

All Mti”earc Carriers Implemented Required Monitoring Of limits On Physicians’ 

Charges In 1991; Hcnwxer, Some Did So More Intensively Than Others 

Carriers’ monitoring procedures for physicians who received initial notices of limiting 

charge violations differed in the manner of intensive monitoring. — This resulted in

physicians not being not~ed 

within the charge limits, and 

HCFA’S Educational EfYo~ 

To Beneficiaries 

on a timely basis to correct their charging practices to fall 

prevented beneficiaries 

Focused On Physicians 

ffom receiving prompt refunds. 

And Gave Ve~ Little Attention 

Carner education on limiting charges focused almost exclusively on physicians, in an 

attempt to reduce charge violations at their source. A review of E@anation of 

Medicare Benefits (EOMB) forms for 1991 from 12 sample earners showed that they 

misstated the amount that the beneficiary was responsl%le for payin~ 

RECOMMENDA~ONS 

. 

Our recommendations take into account that during the course of this study HCFA 

(1) had instructed earners to request physicians to make refunds to beneficiaries in 

those cases where charges exceeded Medicare l.imi~, (2) had implemented plans to 

revise EOMBS to provide beneficiaries with the neeessa~ information to detect 

excessive charges, and (3) developed instructions on development and disposition of 

intensively monitored cases Also, legislation had been introduced in the Congress 

requiring physicians to refund beneficiaries any amounts found to be in excess of 

billing limits. The legislation was not enacteq but has been reintroduced in the 

current session of Congress. 

We support these efforts, and in addition, recommend that HCF& 

1. Contact those carriers who never notified physicians to voluntarily refund or 

credit beneficiaries based on 1991 violations found through monitorin~ and 

request that they send one notice to those physicians to make refunds to, or 

credit the accounts o~ those benefickks previously identified. 

ii 
Support legislation requiring physicians to make refunds to beneficiaries for 

amounts collected in accss of charge limits 

COMMENTS 

~~’ereceived comments from the Health Care Financing Administration (HCFA) and 

from the Assistant Secretary for Planning and Evaluation (ASPE). Both disagree wi[h 

our recommendation to now contact physicians who had not been requested to make 

refunds to beneficiaries for 1991 charge Violations. Their reason is that there is no 

statuto~ authority requiring physicians to make such refunds. 

Also, HCFA believes that it would be inappropriate to take the recommended action 

on a retroactive basis since at the time the violations were identified, it did not think 

that it had authority to instinct carriers to request physicians to make refunds. The 

ASPE states that “Congress enacted a different system of Iixnits on balance billing by 

physicians since approtiately 1984, called Maximum Allowable Charges or MAACS. 

The OIG’S recommendation singles out only those beneficiaries who were overcharged 

by the new limiting charge system enacted for 1991.” 

Additionally, HCFA indicates that it has taken action regarding those beneficiaries 

who may have been charged more than the 1991 charge limits. The HCFA notes that 

leaflets describing the Medicare limiting charge were distributed to beneficiaries 

through Social Security Administration district offices HCFA regional offices, and 

national beneficiary organizations. These leaflets advise beneficiaries to contact their 

Medicar& carriers if they believe they had been overcharged for physician sefices in 

1991. The HCFA states that it has instructed carriers to assist beneficiaries in 

dete rmining whether violations occurred and in contacting physicians to request 

refunds. 

OIG RESPONSE 

We understand that current law does 

only recommending that HCFA issue 

not require physicians to make refunds and are 

notices to physicians requesting that they 

voluntarily make refunds. We believe that many physicians will do so once notified of 

the overcharges. We have clarified our recommendation to reflect our inten~ which is 

to seek fair and equitable treatment for those beneficiaries semiced by those carriers 

which did not make such requests of physicians. 

We recognize and appreciate HCFA’S concern about retrospective actions. However, 

we believe that these actions can be taken with a minimum of effort and cost. Our 

study confirmed that just over half of the earners always or sometimes requested 

refunds or adjustments. However, there were 26 earners who never requested refunds 

or adjustments of beneficiary accounts from a total of 3,170 physicians found in 

\tiolation of charge limits. That represents less than 20 percent of the total physician 

vio]ators. Only these physicians need be sent a letter requesting a refund or an 

...

111 
------- ------ --

-------- -----

------

------- --

--

-- ---

--

----

------

--

� 

adjustment of beneficiaries’ accounts This action would assure equal treatment to all 

overcharged beneficiaries. 

We commend HCFA’S initiative to remedy the unequal treatment bcncficiarics 

received in obtaining tier assistance in ‘obtaining refunds for overcharges in 1991. 

Neverthel~ wc bdicvc that it falls short of remedying the unequal treatment 

beneficiaries rcceive~ the burden for identifjhg and correcting overcharges should 

not be placed on beneficiaries Also, this remedy is Iimited to only those beneficiaries 

who re&ivcd and acted upon the information in the leafle~ 

As the MAAC provision on physician charges was not within the scope of this study, 

we arc not able to comment on ASPE’S obsemation regarding overcharges during the 

MC program 

The HCFA also provided general and technical comments on the draft report which 

we have incorpo~ated in h-is report as appropriate. Comments horn ASPE and 

HCFA arc included in Appendix A. 

-. ....-

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.

iv 
TABLE OF CONTENTS 

ExEcuTrvE SUMMARY 

INTRODUCTION . . . ...*. � *O*...* . . . . . . . . . . . . . . . . . . . ...00 00 -0---- � 1 

FINDINGS . . . . . . . 

Extent Of 

Refunds To 

. . . . ...0 . . . . . . . . . . . . . . . . . . . . . . . . .* . ...-* � --.0=. 

Charge Violations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Beneficiaries -* --.*-. .0 ..00.0 . . . . . . . . . . . . . . . . 9..0000- * 

Camier Monitoring Of Physicians . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Physician And Education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

4 

4 

5 

8 

Comments . . . . . . . . � .**.9. m 9 *..*... . . . . . . . . . . . . ...* . . . . ...* . . . . 8 

APPENDIX 

& CommentsO nD raftReport. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .A-l 
INTRODUCTION


PURPOSE 

To report on Medicare carriers’ implementation of limits on physicians’ charges to 

beneficiaries. 

BACKGROUND 

Since the inception of Medicare, physicians have been given the option to receive 

payment directly from Medicare on an assigned basis or to be paid by the beneficiary 

on an unassigned basis. Assignment is an agreement by a physician to accept


Medicare’s allowed amount as payment in full. The physician accepting assignment of


a Medicare claim receives 80 percent of the allowed amoun~ and biIls the beneficia~


for only the remaining 20 percent (coinsurance). When assignment is not accepted,


the beneficiary is respons]%le for paying the physician. Medicare pays the beneficiary


80 percent of the Medicare-approved amount for the semice.


Until recent years, when assignment was not accepte~ a physician could charge the


beneficiary more than Medicare’s approved amount without any restrictions.


Medicare would pay 80 percent of its allowed amoun~ and the beneficiary would be


responsl%le for the full balance of the amount billed by the physician. Cunently,


however, when assignment is not accepted a physician may charge no more than a


specified percentage above an allowable amount established by Medicare. This limit


on the Mount of the physician’s charge is referred to as the limiting charge.”


This inspection focused on unassigned claims in 1991 subject to Medicare’s charge


Iimits. About 19 percent of all claims are unassigned. In 1990, they represented


approximately 13 percent of physicians’ allowed charges, or about $5.7 billion.


L+@ztive Hutay


Congressional interest in limiting beneficiary liabiIity for physician services began with


the passage of the Deficit Reduction Act of 1984. It established a Medicare Physician


Participation Program designed to provide physicians with incentives to accept


assignment on claims for all senkes rendered. Participating physicians agree to


accept assignment on all claims for sewices furnished during &e year. Physicians who


do not participate may decide on a case-by-case basis whether to accept or not accept


assignment.


Since 1984, several laws have been enacted which placed limits on the amounts


nonparticipating physicians were allowed to charge beneficiaries. The OBW of 1986


provided for limits on the actual charges that could be made by nonparticipating


physicians, Imown as Maximum Allowable Actual Charge (MAAC) limits.

These provisions were replaced, effective January 1991, by a new system of limits, 

known as limiting charges, resulting from OBW 1989. This new s}~tem is also 

frequently referred to as ‘*Balance Billing.” For 1991, physicians not accepting 

assignment could charge no more than 125 percent of Medicare’s allowed amounts for 

medical procedures and, as required by OBW 1990, 140 percent of established 

amounts for evaluation and management semices. 

Cuti Monitohg of Nonpa@pahg Physicians 

The Mcdicarc Carriers Manual, section 7555.1, required earners to monitor a sample 

of each non~articinating physician’s charges for the first and second half of each year. 

(Due to delays experienced by earners in calculating limiting charges and notifjing 

physicians of them the first monitoring period in 1991 was March through June; the 

first complete 6-month period began in July). The sample consisted of the 10 most 

common procedures performed in the physician’s specialty. When the cumulative 

amount of potential excessive charges billed in the sample period exceeds $300, a 

notice is sent to the physician identi&ing all procedures and related charges. The $300 

threshold may consist of a single procedure or multiple procedures with at least $1 in 

potentiaI excessive charges. Physicians are asked to review the information and noti$ 

the earner of charges they believe are not excessive or which were submitted in emor. 

If the cam”er finds that “excess charges” are adequately explaine~ the physician is not 

considered in violation. The initial notification also states that a special follow-up 

review of charges will be conducted to examine whether the physician’s charging 

practices have been corrected to be within the charge limits. If charges continue to 

violate the limi~ the matter may be referred for possl%le civil monetary penalty or 

exclusion’ proceedings. 

The carrier follow-up review of physicians who have not satisfactorily explained 

excessive charges, known as “intensified monitoring,” is conducted over a three- to sixmonth penocL Should violations continue to occur, the earner sends a second notice 

requesting an explanation. It indicates that charges not adequately explained will be 

considered as violations of OBW limits, and that continued violations may result in 

referral for civil monetary penalty or exclusion proceedings. 

B enejkhy Ihqu.i&s On Chuqp 

If a earner receives a beneficiary complaint on a potential charge limit violation and 

finds the complaint has meri$ it sends a notification letter to the physician, even if the 

$300 threshold level has not been reached. Many of these complaints are made after 

beneficiaries are notified of physicians’ charges by carriers on Explanation Of 

Medicare Benefits (EOMB) forms. During 1991, these EOMBS also contained 

information on Medicare approved charges on the amount of Medicare payment and 

on the beneficiary’s responsl%ility for the balance of the physician’s charge. 

2 
MErHoDomGY 

At our requcsh all 56 tiers provided documentation on their monitoring activities 

and on their handling of beneficiary complaints for the first monitoring period. They 

also provided early information of a similar nature on the second monitoring period 

(just beginning at the time of our data collection). Data included: (1) the total 

number of physicians sent initial notices of potential charge limit violations; (2) the 

total number of beneficiaries involved; and (3) the total related excessive charges. 

While aIl carriers provided information, the number of responses to each of our 

questions vanex ranging from 39 to 56. Some carriers reported that ccflain 

information was not available; thus, the data rcpofled in our findings do not represent 

the full ex~ent of violations, excessive charges or number of beneficiaries involved. 

For the purpose of vcri&ing earners’ monitoring activities and seeing if there were any 

variations in implementation, we divided carriers into three groups. These groups 

were based upon the size of the beneficiary populations they seine: (1) more than 11 

milliorq (2) between three and 11 million; and (3) less than 3 million. We randomly 

selected 12 carriers (four from each group). From them we obtained and analyzed 

documents regarding monitoring procedures, beneficiary and physician 

comespondence, HCFA instmctions to carriers, and EOMB forms Their educational 

activities with physician and beneficiary organizations were also reviewed. 

We intefiewed staff at six of the 12 sample earners by telephone (at least one from 

each group) regarding their monitoring procedures and experiences. At the remaining 

six carriers (at least one in each group) we made site visits. The six carriers were 

purposively selected to provide a geographic distribution of different size carriers. At 

these site% we reviewed a total of 221 physicians who had violated charge limk We 

abstracted and recorded data to veri~ aspects of the monitoring process including 

intensified monitoring. We also reviewed carriers’ handling of complaints. We 

specifically identified excessive charges for approximately 20,000 procedures billed in 

the 221 violation case% and placed them into six groups by amounts ranging from $1 

to more than $100. 

We also called physicians to determine whether they made refunds to or credited 

accounts of 36 beneficiaries identified through the case reviews as having been 

overcharged $100 or more. When physicians indicated that they had made refunds or 

credited accounts, we requested documentation to that affect. In these cases there 

was no indication that carriers had requested that physicians make refunds. 

Lastly, we asked several beneficiary and physician advocq organizations about their 

dealings with carriers and beneficiaries on Iirniting charges. 

. 
FINDINGS 

DATA SUPPLIED BY CARNERS INDICATED THAT THE EXI’ENT OF 

EXCESSIVE CHARGES BY PHYSICIANS APPEARED LIMITED 

I&nfiJi pdatid viohioru mpmwnkd 0+ a SM.U fmcdora of d chaqps submitld on 

unussignd clainq canit7s’ - g pbti accod for some of these idenfi!i 

Vidafwns 

For the two 1991 monitoring peno~ 49 carriers in the first monitoring period and 46 

earners in the second period repotied identifying potential overcharges by 

nonparticipating physicians of about $11 million. This total represented far less than 1 

percent of total unassigned submitted charges. It involved approximately 343,000 

beneficiaries, or about 1 percent of the total Medicare population. The average 

excessive charge per overcharged beneficiary was approximately $32. 

It should be noted that the above data is not a complete picture of the extent of 

excessive charges to beneficiaries. Any violations which may have occurred during the 

first two months of 1991 and any physicians’ excessive charges which did not total $300 

are not included 

For the same perio~ 55 earners in the first monitoring period and 52 in the second 

period reported identifying 16,284 non-participating physicians whose cumulative 

potential overcharges on aIl unassigned claims were $300 or”more These physicians 

represented four percent of the 389,399 non-participating physicians who submitted 

unassigned claims to 52 carriers. 

Other data reported by 54 carriers horn the first monitoring period further suggest the 

relatively small percentage of potential physician violations. Carriers resolved 65 

percent (5,919) of 9,122 potential violations they identified without needing to send 

second notices to physicians. Of these resolution% nearly 40 percent (~166) of the 

potential violations were caused by technical problems and not physician errors. In 

these cases, earners inappropriately cited physicians with vio~tions for a variety of 

reasons, although, in many instances, potential overcharges did occur. The most 

frequently cited reasons were: (1) earner recoding of semices which lowered limiting 

charges; (2) monitoring staff using different charge levels than those given to 

physicians; (3) not sending correct charge limits to physicians before the period being 

monitored; (4) miscoding multiple semices as one semice; and (5) using incorrect 

physician specialty or locality information. 

A review of 221 physician violation case files at the six visited earners revealed that 

the amounts of excessive charges per procedure were small. Eighty-nine percent of 

excessive charges were $x or less, for the near]y ~(),()()() procedures rendered between 

4 
\farch and June 1991. The balance included five percent in the S26 to S50 range, and 

six percent over $50. 

INITIATIVES OF SOME QWRIERS HELPED REDUCE THE FrNANCIAL 

IMPA~ ON SOME BENEFICIARY 

Some cati on their own rqzuzstd that phpkiaru malz rejhds to bcncjlcian”m 

For the first and second monitoring periods, some carriers report requesting physicians 

to make refunds or adjustments, although they were not required by HCFA to do so. 

A review of files at six earners confirmed this activity. 

Regarding excessive charges identified by monitoring, 29 percent of carriers (16) say 

they always made such requests, 46 percent (26) repoti they never made such 

requests, and 25 percent (14) sometimes made them. 

The sixteen carriers who report always requesting refunds or credits made such 

requests of 9,614 physicians in their semice area. These physicians accounted for 

nearly 60 percent of all those receiving initial notices for the ~o 1991 monitoring 

periods. They rendered sefices to 46 percent of the beneficiaries who were 

potentially overcharged. Their excessive charges were approximately $4 million in 

1991. 

halysis of the biIls from 221 physician-cases reviewed at the six earners we visited 

(tWO always requested physicians to make refunds and four sometimes did so) showed 

that for 73 percent of the 13,579 beneficiaries overcharge their physicians were 

requested by carriers to refund or credit beneficiary accounts, or had voluntarily done 

so. However, we did ident@ 36 beneficiaries who were overcharged horn $122 to 

$1,359. Her records did not indicate that requests for refunds or adjustments had 

been made. Documents we later obtained horn physicians conf~ed that refunds or 

adjustments were made for seven of the 36 beneficim”es, amounting to $2,801. 

However, no refunds or adjustments had been made in the remaining 29 cases, 

representing total potential overcharges of $14,898. 

There is no legal requirement that physicians make refunds to beneficiaries, even 

when excessive charges are identtied. The limiting charge legislation, section lW8(g) 

of the Social Security Ac~ provides only that physicians may be sanctioned for 

knowingly, willfully and repeatedly billing in violation of the charge limitation. 

However, the law is silent as to the extent of beneficiaries’ responsibility for excessive 

charges. Thus, beneficiaries lacked off]cial recourse to obtain refimds from physicians. 

[Note: In March 199A HCFA instructed cam”ers to revise their intensive monitoring 

follow-up notices to advise physicians to adjust their charges which exceeded the limits 

and to request that refunds be made to beneficiaries. It also instmcted carriers to 

revise initial monitoring notices to reflect its position on requesting physicians to adjust 

charges and to make refunds where excessive charges are identified.] 

5 
ALL MEDICARE cARRrERs HAVE IMPLEMENT D REQUIRED


MONITORING OF LIMITS ON PHYSICIANS CHARGES XN 1991; HOWEVER


SOME DID SO MORE 1NTENSEL% THAN OTHERS


All 56 Medicare earners repoti having implemented HCFA’S instructions to monitor


phvsician charges in both of the 1991 semi-annual monitoring periods. During the first


m&itonng period (March - June 1991) 55 earners report that 9,122 physicians


received ini~ial noti-ms of charge violations. Carriers reso}ved and closed 85 percent of


these cases as of March 1992 The open =es were still under intensive monitoring.


No cases were referred for punitive action as of that time.


Our review of cases during site visits revealed that carriers’ procedures differ in the


manner of intensive monitoring. This resulted in physicians not being notified on a


timely basis to correct their charging practices and prevented beneficiaries from


receiving prompt refunds. These differences in monitoring procedures were not found


to be related to Carner size. Lacking specific instructions from HCF~ carriers


monitored physicians intensively anywhere horn three to six months after sending a


notice of the initial violation. As a resul$ subsequent notices to physicians of new


violations vary in the degree of carrier efforts in that some notices 1) were sent every


mont~ regardless of the size of the excessive charges; 2) were sent only after three


months showing all accumulated excessive charges; or 3) were not sent if the amount


is considered smalL


For the first monitoring period 52 carriers reported receiving 877 beneficiary


complainantsof limiting charge violations. Of that number, 703, or 80 percenq were


reported to have merk Carriers had resolved 84 percent of the cases as of March


1992


HCFA’S EDUCATIONAL EFFORTS FOCUSED ON PHYSICIANS AND GAVE 

VERY LITTLE A~ ONTO BENEFICIARIES 

Carner education activities on limiting charges were focused almost exclusively on 

physicians in an attempt to reduce limiting charge violations at their source. Sample 

carriers provided examples of agendas for provider seminars they conducted, bulletins 

they issued descniing Iimiting charges and literature they sent to all physicians. Their 

efforts were considered welcome and effective, according to several physician 

organizations we contacted. 

However, earners did not receive instructions from HCFA to educate beneficiaries on 

1991 limiting charges, according to contacts within HCFA and at 12 sample Carne= 

Nevertheless, these earners reported that they were responsive to most requests from 

beneficiary groups to provide speakers at meetings where limiting charges were among 

the topics discussed. 

6

E@uwion QfMdkan Bcn@k (EOMB) Jobcnejii qxy@ullihlaccssiv echmgCs 

Our review of EOMBS for 1991 from 12 sample 

in 1991 incormdy Cncoumgd 

cam”em showed that beneficiaries 

received misleading information on Explanation of Medicare Benefits (EOMB) forms, 

regarding the amount they were responsible for paying physicians. These EO?VIBS 

overstated the amount physicians could legally charge them, leading beneficiaries to 

believe that they were responsible for the full difference between Medicare’s payments 

and physicians’ charge% including amounts in excess of limiting charges. 

In response to public concerns about this issue, HCFA instructed carriers in early 1992 

to delete all reference to patients’ respons]%ilities for physicians’ charges on EOMBS. 

However, beneficiaries still were not alerted to excessive charges. 

[Note: The HCFA added a message on the back of the EOMB, effective June 1992, 

which notes that doctors, generally, may not charge more than 120 percent of the 

Medicare approved amount Beneficiaries are advised to contact carriers if they think 

their doctors have charged more than the limiting charge. This message also refers 

beneficiaries to the 1992 Medicare Handbook for information on limiting charges. 

HCFA indicated that by the end of 1992 the EOMB wilI display the physician’s charge 

limit and the amount of actual charges. This will enable beneficiaries to know if the 

charge exceeded the Medicare limiL 

Odzet oqprziaztiow have pkzyed a de h &&g benej%iah 

Most be~eficianes­ have their own health insurance plans which supplement Medicare 

payments. These plans play a role in noti@ing beneficiaries about limiting charge% 

according to our review of documents in carrier files and discussions with both carrier 

staff and members of beneficiary advocacy groups The information provided by these 

plans (though not always accurate) alerts beneficiaries to limiting charge violations and 

refers them to their physicians or carriers to resolve questions about excessive charges. 

Our contacts 

taking active 

groups often 

with community-based advocacy groups indicate that they have been 

roles in assisting beneficiaries with limiting charge problems. These 

query carriers about limiting charge violations on behalf of beneficiaries. 

7 
. 

RECOMMENDATIONS 

Our recommendations take into account that during the course of this study HCFA. 

(1) has instructed carriers to request phpicians to make refunds to beneficiaries in 

those cases where charges exceeded Medime limits, (2) has implemented plans to 

revise EOMBS to provide beneficim”es with the necessaxy information to detect 

excessive charges, and (3) has developed instmctions on development and disposition 

of intensively monitored cases. Also, legislation had been introduced in the Congress 

requiring physicians to refund beneficiaries any amounts found to be in excess of 

billing limits. The legislation was not enacted, but has been reintroduced in the 

cument session of Congress. 

We support these efforts, and in addition, recommend that HCFk 

1. ~ntact those carriers who never notified physicians to vohmtaxily refund or 

credit beneficiaries based on 1991 violations found through monitorin~ and 

request that they send one noti= to those physicians to make refunds to, or 

credit the accounts o~ those beneficiaries previously identifkxi 

z Support legislation requiring physicians to make refimds to beneficiaries for 

amounts collected in excess of charge limits 

cob4MENTs 

We received comments horn the Health Care Financing Administration (HCFA) and 

from the Assistant Secretary for Planning and Evaluation (ASPE). Both disagree with 

our recommendation to now contact physicians who had not been requested to make 

refunds to beneficiaries for 1991 charge violations. Their reason is that there is no 

statutory authority requiring physicians to make such refunds 

Also, HCFA believes that it would be inappropriate to take the recommended action 

on a retroactive basis since at the time the violations were identifie~ it did not think 

that it had authority to instinct carriers to request physicians to make refunds. The 

ASPE states that “Congress enacted a different system of limits on balance billing by 

physicians since approximately 1984, called Maximum Alowable Charges or WCS. 

The OIG’S recommendation singles out only those beneficiaries who were overcharged 

by the new ~imiting charge system enacted for 1991.” 

Additionally, HCFA indicates that it has taken action regarding those beneficiaries 

who may have been charged more than the 1991 charge limits. The HCFA notes that 

leaflets describing the Medicare limiting charge were distributed to beneficiaries 

through Social Security Administration district offices, HCFA regional offices, and 

8 
national beneficiary organizations. These leaflets advise beneficiaries to contact their 

Medicare carriers if they believe they had been overcharged for physician sewices in 

1991. The HCFA states that it has instructed carriers to assist beneficiaries in 

determining whether Violations occurred and in contacting physicians to request 

refunds. 

OIG RESPONSE 

We understand that current law does not require physicians to make refunds and are 

only recommending that HCFA issue notices to physicians requesting that they 

voluntarily make refunds. We believe that many physicians wiJl do so once notified of 

the overcharges. We have clarified our recommendation to reflect our inten~ which is 

to seek fair and equitable treatment for those beneficiaries seticed by those earners 

which did not make such requests of physicians. 

We recognize and appreciate HCFA’S concern about retrospective actions. However, 

we believe that these actions can be taken with a minimum of effort and COSL Our 

study confirmed that just over half of the earners always or sometimes requested 

refunds or adjustments. However, there were 26 carriers who never requested refunds 

or adjustments of beneficiary accounts ffom a total of 3,170 physicians found in 

violation of charge limits That represents less than 20 percent of the total physician 

violators. Only these physicians need be sent a letter requesting a refund or an 

adjustment of beneficim”es’ accounts. This action would assure equal treatment to all 

overcharged beneficiaries. 

We co&end HCFA’S initiative to remedy the unequal treatment beneficiaries 

received in obtaining carrier assistance in obtaining refunds for overcharges in 1991. 

Nevertheles~ we believe that it falls short of remedying the uneqti treatment 

beneficiaries receive~ the burden for identifying and correcting overcharges should 

not be placed on beneficiaries. Also, this remedy is Iimited to only those beneficiaries 

who received and acted upon the information in the leaflet 

As the MAAC provision on physician charges was not within the scope of this study, 

we are not able to comment on ASPE’S obse~ation regarding overcharges during the 

M_/WC program 

The HCFA also provided general and technical comments on the draft report which 

we have incorporated in this report as appropriate. Comments from ASPE and 

HCFA are included in Appendix A 

9 
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APPENDIX A


COHKENTS OH THZS D- REPORT 

. . .. 

. . . 

.- -. *-P. - —-. @ ..l 

-0. -. -,.- . . . 

,----- —--+. .- ... ..- -

“ . - . .--—. - . 

.— - .. -.. -.. - Q .—-— _._:. ”- .-- ..__.-- —-.—--—— .-. — . . --—- ——-& --%--- -—-.- .4 -

---+ -+. . . 

. . . ..---- ..-. .- . . .

... . . . “-2JA+- - ----+> ‘- -’-: -::’~:z-~ .= “. . . .: --+- .. -x. -. .. -“ 

. . . 

. . ,. 

.. -. - -., -—. - . ..-. .. .. . 8. -. — .. .-

. . ..- -. . .. . . ,--- ..-. -. 4-

...- ,-. .. . . ,. .. .. ... -. . . .,, -“ . .. .-. .. ., .- -... . .:-- -. 

.-

. . 

-.-— - . . -. 

-. 

A-1

. 

Data 

From 

Subject 

To 

Heatth cdrO 

Stnanc:ng Adnmistratlon 

Ac~ing 

office 

Administrator 

~A~ _ -+!!. 

of Inspector General (OIG) Draft Repon: “tits on Beneficiary Fhancial 

Liability (B&mcc Billing)” OEI-02-92-00130 

B~ B. MitchcIl 

Principal Deputy Inspector General 

. 

WC reviewed the subject OIG draftrepoti concerning Medi=e carriers’ 

implementation of tits on physician charges to beneficiaries as set forth in the 

Omrxi%us Budget Reconciliation Act of 1989. 

OIG found that data supplied by carriers indicated that the extent of excessive 

charges by physicians appeared limited in the fit two monitoring periods in 1991, 

potentiaI overcharges represented less than 1 percent of total unassigned submitted 

chargeq or about $11 miI1iom 

OIG &o found that although all Medicare m-em implemented required 

monitoring of limits on physicians’ charges in 1991, some czmiers are monitoring 

more intensively than others. Initiatives among some carnem helped reduce the 

financi&l imnact on beneficiaries. However, not all beneficiaries are as 

knowledgeable of this issu~ nor are they able to pursue refimds &om physicians who 

have biIIed above the statutory lii”k OIG also noted that the Health Care 

Financing Administration’s (HCFA) educational efforts focused on physicians while 

@ving little attetition to beneficiaries 

OIG recommends that HCFA contact those carriers that did not not~ 

physicians to refund or credit beneficiaries based on 1991 violations found through 

monitoring The carriers should send a notice to those physicians to make refunds 

to, or credit the accounts o~ those beneficiaries who were prm”ously identified. 

HCFA disagrees with this recommendation. 

Our specific comments on the repofi’s recommendation are attached 

conside~tio~ along with general and technical comments. We appreciate 

acknowledgement of our effo~ to improve implementation of the limiting 

provision. -

Thank you for the oppo~unity to review and comment 

Please advise us whether you agree with our position on the 

?~ .: recommendation at your earliest convenience. -“- ,...

‘ ~!

for your 

OIG’S 

charge 

on this draft report. 

repofl’s 

Attachment 
. 

Comments of the Health Care Fmancin~ Administmtion (H~.A~ 

on Office of Inspector Genexal fOIG\ Ddt RcPo~: 

“Limits on Bencficiam Financial liability 

@a?ance F3i?1inEl? 0EI~2-9Z-00130 

Recommendation 

That HCFA contact those cam”crs who never noticd physici= to refund or credit 

bcne~ciaries based on 1991 violations found through rnonitotig and request that they 

send one notice to those physicians to make refunds tq or credit the accounts O& those 

beneficiaries who were previously identified 

HCFA Response 

We disayee. & OIG noted, HCF’A does not have statuto~ authority to require that 

physicians refund excess charges to beneficiaries. To take the recommended action on a 

ret~oactive basis would be inappropriate since at the time these violations were idenfie~ 

we did not believe we had the authority to instruct eamiers to reques~ much less requires 

refunds of excessive charges 

HCFA has taken adrninis~rative action that addresses OIG’S mncem about biting 

charge violations that may have occurred in 1991. HCFA developed a leaflet that 

specifically explains the Medicare limiting charge requi,rernen~ and invites beneficiaries 

to contact their fiers if they believe they have been overcharged for semices furnished 

in 1991. Th*e leaflets were distributed to beneficiaries through Social %euri~ 

Administration di~ri~t offices, HCFA regional offices and 63 national beneficiary 

organizations Medicare carriers have been instructed to assist beneficiaries b 

determining whether violations occurred in the past and in con~ct.ing physici- to 

request refunds. 

In view of thecurrentabsenceofstatuto~ language requiring refun~ we believe that 

addressing possible 1991 violations in this-way ~ more appropriate effectiv~ and 

administratively feasl%le than the approach outiincd in OIG’S draft recommendation 

Since the legislation referenced on page eight of the draft report was not enacte~ OIG 

may want to substitute a recommendation re!ating to the introduction or support of 

legislation requiring physicians to make refunds to beneficiari~ for amounts collected in 

excess of the limiting charge amount.
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DEPARTMENT OF HUL~ & HUMAN SERVICES 

on 

DIG’ZCI 

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