Department of Health and Human Services 

OFFICE OF

INSPECTOR GENERAL

 

LOS ANGELES INDEPENDENT 

DIAGNOSTIC TESTING 

FACILITIES’ COMPLIANCE WITH 

MEDICARE STANDARDS 

 

 

Daniel R. Levinson 

Inspector General 

August 2011 

OEI-05-09-00561 
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EXECUTIVE SUMMARY EXECUTIVE SUMMARY

OBJECTIVE

To determine whether Independent Diagnostic Testing Facilities (IDTF) 

in the Los Angeles area complied with selected Medicare standards 

requiring IDTFs to be at the locations on file with the Centers for 

Medicare & Medicaid Services (CMS) and to be open during business 

hours.

BACKGROUND

IDTFs, a type of Medicare provider, offer diagnostic services and are 

independent of a physician’s office or hospital. Medicare allowed almost 

$1 billion for IDTF claims for 2.4 million beneficiaries in 2010. Of this, 

$38.7 million was for claims by IDTFs in the Los Angeles area.

IDTF services have historically been vulnerable to abuse. In site visits 

in 1997, the Office of Inspector General (OIG) found that 20 percent of 

IDTFs were not at the locations on file with CMS. A 2001 OIG review of 

IDTF claims projected $71.5 million in improper Medicare payments. In 

2007, CMS reported that it had denied $163 million in IDTF charges 

and terminated the Medicare billing privileges of 83 IDTFs in Los 

Angeles. 

To comply with Medicare standards, IDTFs must maintain a physical 

facility at the location on file with CMS and be open during business 

hours. IDTFs that do not comply with Medicare standards are subject

to a variety of administrative actions, including revocation of their 

billing privileges.

To determine whether IDTFs in the Los Angeles area were at the 

locations on file with CMS and were open during business hours, we 

conducted unannounced site visits to all IDTFs with fixed practice 

locations. We also determined the amount that Medicare allowed for 

noncompliant IDTFs. 

FINDING

Forty-six of the one hundred thirty-two Los Angeles-area IDTFs 

failed to comply with selected Medicare standards. Twenty-four 

IDTFs were not at the locations on file with CMS. Twenty-two IDTFs 

were not open during business hours. Of the 46 noncompliant IDTFs, 
 

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EXECUTIVE SUMMARY 

25 submitted claims representing services performed on the same dates 

that site reviewers visited their locations.

RECOMMENDATIONS

Periodically conduct unannounced site visits to IDTFs. Periodically 

conducting nationwide unannounced site visits to IDTFs may enable

CMS to identify and remove nonoperational IDTFs from the program 

and potentially reduce erroneous Medicare payments. CMS could focus 

unannounced site visits on high-risk areas or base them on fraud-risk 

assessments. 

Impose a moratorium on new IDTF enrollments in the Los Angeles 

area. Given both the current and historical rates of potential fraud 

among IDTFs in the Los Angeles area, CMS should impose a 

moratorium on the enrollment of new Los Angeles-area IDTFs in 

Medicare. A moratorium would prevent new enrollments while CMS 

develops additional program safeguards for IDTFs in the Los Angeles 

area. 

Take appropriate action against the noncompliant IDTFs identified 

by our report. Under separate cover, we have referred to CMS the 

IDTFs that our site visits identified as noncompliant. CMS should 

investigate these IDTFs and revoke their billing privileges if warranted.

AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 

RESPONSE 

CMS concurred with our recommendations that it periodically conduct 

unannounced site visits to IDTFs and that it take appropriate action 

against the noncompliant IDTFs identified by our report. CMS stated 

that it anticipates increasing the frequency of unannounced site visits to 

IDTFs and that it will take appropriate administrative actions against 

the IDTFs identified in this report. 

CMS did not concur with our recommendation to impose a moratorium 

on new IDTF enrollments in the Los Angeles area. However, CMS 

stated that it would take our recommendation under strong 

consideration. We did not make any changes to the report based on 

CMS’s comments. 
 

 TABLE OF CONTENTS

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

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

FINDING ................................................... 8 

Forty-six of the one hundred thirty-two Los Angeles-area IDTFs 

failed to comply with selected Medicare standards ............. 8 

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

Agency Comments and Office of Inspector General Response.... 13

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

A: Independent Diagnostic Testing Facility Standards ........ 14

B: Detailed Methodology................................ . 18

C: Agency Comments ................................... 21

ACKNOWLEDGMENTS ..................................... 24
 

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 INTRODUCTION

OBJECTIVE

To determine whether Independent Diagnostic Testing Facilities (IDTF) 

in the Los Angeles area complied with selected Medicare standards 

requiring IDTFs to be at the locations on file with the Centers for 

Medicare & Medicaid Services (CMS) and to be open during business 

hours.

BACKGROUND

Medicare covers inpatient and outpatient clinical and diagnostic 

services. These services can be provided in a number of settings, 

including physicians’ offices, hospitals, and IDTFs. IDTFs, a type of 

Medicare provider, offer diagnostic services and are independent of a 

physician’s office or hospital.1

Services that may be provided by an IDTF include, but are not limited 

to, magnetic resonance imaging, ultrasound, x-rays, and sleep studies. 

Although some IDTF services can be performed remotely, such as 

pacemaker monitoring, most IDTF services require a patient to be 

present at a facility. 

 Medicare allowed almost $1 billion for 

IDTF claims for 2.4 million beneficiaries in 2010. Medicare allowed 

$38.7 million for claims by Los Angeles-area IDTFs in 2010. 

Historical Vulnerabilities

IDTF services have historically been vulnerable to fraud, waste, and 

abuse. IDTFs were originally known as Independent Physiological 

Laboratories (IPL). In 1997, after becoming concerned that IPL services 

were vulnerable to abuse—in particular, citing a lack of certification 

requirements and confusion about the type of services that IPLs should 

provide—CMS issued new standards to address these vulnerabilities.2, 3 

The new standards modified staffing, certification, and documentation 

requirements for IPLs. IPLs were also renamed IDTFs to help clarify 

their function.4

Also in 1997, the Office of Inspector General (OIG) conducted site visits 

to IPLs. In an August 1998 report based on these visits, OIG reported 

1 42 CFR § 410.33(a)(1).

2 62 Fed. Reg. 59048, 59071–72 (Oct. 31, 1997).

3 62 Fed. Reg. 59048, 59100–01 (Oct. 31, 1997) (adding 42 CFR § 410.33).

4 62 Fed. Reg. 59048, 59071–72 (Oct. 31, 1997).
 

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INTRODUCTION

that 20 percent of IPLs were not at the locations on file with CMS.5 In 

the report, OIG also projected $11.6 million in improper payments for 

IPL services and expressed concerns that the new standards that CMS 

had issued would not be sufficient to reduce the vulnerabilities that OIG 

had identified.6

Despite the new standards, problems with IDTF services persisted. In a 

2001 review of IDTF services, OIG identified claims that were not 

reasonable, necessary, ordered by a physician, or sufficiently 

documented and projected $71.5 million in improper payments.7 In 

2007, CMS reported that it had denied $163 million in IDTF charges 

and terminated Medicare billing privileges for 83 IDTFs in 

Los Angeles.8 

In May 2009, the Health Care Fraud Prevention and Enforcement 

Action Team (HEAT) initiative was launched to increase efforts to 

reduce Medicare fraud. A collaboration between officials from the 

Department of Health & Human Services and the Department of 

Justice, the HEAT initiative builds upon existing programs that combat 

fraud and identifies new methods to prevent fraud.

Medicare Standards 

CMS designed the IDTF standards—most recently updated in 2008—to 

ensure that IDTFs and their staffs operate in accordance with 

appropriate business practices. Among other things, these standards 

require IDTFs to:

● maintain a physical facility, 

● be accessible during regular business hours, and

● report any change in location to CMS within 30 days of the 

change.9 

5 OIG, Independent Physiological Laboratories: Vulnerabilities Confronting Medicare, 

OEI-05-97-00240, August 1998. 

6 Ibid.

7 OIG, Review of Claims Billed by Independent Diagnostic Testing Facilities for Services 

Provided to Medicare Beneficiaries During Calendar Year 2001, A-03-03-00002, June 2006.

8 CMS testimony before the House Budget Committee, July 17, 2007. Accessed at 

http://www.cms.hhs.gov on October 5, 2009.

9 42 CFR §§ 410.33(g)(2), (g)(3), and (g)(14)(i).
 

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INTRODUCTION

See Appendix A for the 17 Medicare standards for IDTFs.

IDTF Enrollments

An IDTF that wishes to enroll in Medicare must submit an application. 

The application collects various types of information, including the 

address at which the IDTF will provide services and the services that it

will provide. 10

An applicant must indicate whether it will provide services at a fixed 

location or whether it will be mobile or portable. A mobile or portable 

IDTF does not provide services at one fixed location. An applicant must 

submit a separate application for each IDTF practice location and for 

each mobile or portable unit.

 

11

Before approving an IDTF’s enrollment, CMS reviews the application 

and conducts an initial site visit. These processes may help to ensure 

that information on the application is correct and that the applicant 

complies with all 17 Medicare standards. 

 

Postenrollment Site Visits

According to the Medicare Program Integrity Manual, if an existing 

IDTF requests an expansion of services and if the new services are 

sufficiently different from those already provided, CMS must conduct a 

postenrollment site visit.12

In addition, CMS may conduct postenrollment site visits at its 

discretion.

 For example, if an IDTF that provides sleep 

studies submits a request to start providing ultrasound tests, CMS is 

required to conduct a postenrollment site visit. 

13 CMS cites unannounced postenrollment site visits as a 

successful way to determine whether IDTFs are operational and are at 

the locations on file with CMS.14 According to the Medicare Program 

Integrity Manual, when CMS conducts a site visit to verify the 

operational status of an IDTF, CMS should attempt to make its 

determination using only an external review of the IDTF. CMS requires 

10 Form CMS-855B. Accessed at http://www.cms.hhs.gov on October 13, 2009.

11 CMS, Medicare Program Integrity Manual, Pub. No. 100-08, ch. 10, § 4.19.1(C). 

Accessed at http://www.cms.hhs.gov on February 3, 2011.

12 CMS, Medicare Program Integrity Manual, Pub. No. 100-08, ch. 10, § 4.19.6(C). 

Accessed at http://www.cms.hhs.gov on February 3, 2011.

13 42 CFR § 410.33(g)(14).

14 Preamble to final rule implementing sections of the Patient Protection and Affordable 

Care Act of 2010. 76 Fed. Reg. 5862, 5869 (Feb. 2, 2011).
 

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INTRODUCTION

that reviewers document their visits using written observations of the 

facilities and photographs as appropriate.15 

CMS Administrative Actions

CMS may take the following administrative actions against 

noncompliant or inactive providers, including IDTFs: 

● Investigation. CMS investigations may include site visits and 

interviews with IDTF staff and Medicare beneficiaries, as well 

as analysis of claims data. 

● Prepayment review. CMS reviews documentation from 

providers before deciding whether to pay claims.

● Payment suspensions. CMS may immediately suspend some or 

all payments to an IDTF if there is a credible allegation of fraud 

against that IDTF.16 

● Revocation. CMS may revoke Medicare billing privileges for an 

IDTF that does not comply with Medicare standards.17

Medicare should not pay for services provided after the date 

that a provider’s billing privileges are revoked. If CMS 

determines that a provider is no longer operational, the date of 

revocation is the date of this determination.18 

● Deactivation. CMS may deactivate a provider’s billing 

privileges when an IDTF has not submitted claims for 

12 consecutive months.19 This reduces the risk that the billing 

privileges associated with that provider’s identification number 

will be used for fraudulent purposes. 

Temporary Moratoria

CMS may also reduce the potential for fraud, waste, or abuse among 

IDTFs by imposing a moratorium on IDTF enrollment. CMS’s authority 

to impose moratoria on specific provider types, specific geographic 

15 CMS, Medicare Program Integrity Manual, Pub. No. 100-08, ch. 15, § 20.1. Accessed 

at http://www.cms.hhs.gov on February 22, 2011.

16 CMS, Medicare Program Integrity Manual, Pub. No. 100-08, ch. 8, § 8.3.1.1. Accessed 

at http://www.cms.hhs.gov on August 16, 2011.

17 CMS, Medicare Program Integrity Manual, Pub. No. 100-08, ch. 15, § 15.27.2(A). 

Accessed at http://www.cms.hhs.gov on January 31, 2011. See also 42 CFR § 424.535(a)(1).

18 CMS, Medicare Program Integrity Manual, Pub. No. 100-08, ch. 15, § 15.27.2(B). 

Accessed at http://www.cms.hhs.gov on January 31, 2011. See also 42 CFR § 424.535(g).

19 CMS, Medicare Program Integrity Manual, Pub. No. 100-08, ch. 15, § 15.27.1. 

Accessed at http://www.cms.hhs.gov on January 31, 2011. See also 42 CFR § 424.540(a). 
 

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INTRODUCTION

areas, or both was established by the Patient Protection and Affordable 

Care Act and implemented in 2011.20

Related Work

OIG is conducting a concurrent analysis of national IDTF claims data. 

This analysis identifies areas with high utilization of services provided 

by IDTFs, compares the patterns of IDTFs in these areas with the 

patterns of IDTFs nationally, and identifies IDTF claims with unusual 

characteristics.

OIG also completed a companion report assessing IDTFs in the Miami 

area, Miami Independent Diagnostic Testing Facilities’ Compliance 

With Medicare Standards (OEI-05-09-00560).

METHODOLOGY

We performed unannounced site visits in May and June 2010 to all 

IDTFs with fixed practice locations in the Los Angeles–Long Beach–

Glendale, CA Core Based Statistical Area (Los Angeles area). We 

determined whether these IDTFs complied with selected Medicare 

standards requiring IDTFs to be at the locations on file with CMS and

to be open during business hours. See Appendix B for a detailed 

description of our methodology.

Scope

We focused our review on IDTFs with fixed practice locations because it 

was not feasible to locate mobile or portable IDTFs for unannounced site 

visits. Mobile or portable IDTFs do not provide services at one fixed 

location.

We focused on IDTFs in the Los Angeles area because this area has a 

high concentration of IDTFs compared to other areas of the country.

We focused on IDTF standards 3 and 14, which require an IDTF to 

maintain a physical facility and to be accessible during regular posted 

business hours to CMS and beneficiaries.21 We focused on these 

20 The Patient Protection and Affordable Care Act, P.L. 111-148, § 6401(a)(3) (adding 

section 1866(j)(6) of the Social Security Act, which was redesignated as section 1866(j)(7) by 

the Health Care and Education Reconciliation Act of 2010, P.L. 111-152, § 1304). 

Implementing regulations for moratoria on newly enrolling Medicare providers and 

suppliers are located at 42 CFR § 424.570. 

21 42 CFR §§ 410.33(g)(3) and (g)(14).
 

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INTRODUCTION

standards to limit our interaction with IDTF staff and reduce the risk of 

alerting staff at potentially fraudulent IDTFs to our presence. 

Finally, we focused this report on the results of our site visits. In a 

companion report—Miami Independent Diagnostic Testing Facilities’ 

Compliance With Medicare Standards (OEI-05-09-00560)—we include 

the results of a Miami-based special project and describe CMS actions 

against noncompliant IDTFs in that area. Because there was no special 

project in the Los Angeles area, a similar review was outside the scope 

of this report.

Data Sources and Data Collection

Identifying IDTF locations. To identify IDTF locations for our 

Los Angeles-area site visits, we first used the 2009 Part B National 

Claims History (NCH) file to identify IDTFs that submitted claims in 

2009 for practice locations in the Los Angeles area. We then located 

addresses for all 149 IDTFs with fixed practice locations through the 

Provider Enrollment, Chain, and Ownership System and a data request 

to CMS. 

Site visits to IDTFs. We conducted unannounced site visits in May and 

June 2010 to determine whether these IDTFs maintained a physical 

facility at the location on file with CMS and were open during business 

hours. We recorded all observations using a standard form. 

Updates after site visits. To account for any changes in our information 

between the time when we identified our study population and the dates 

of our site visits, we requested address updates and changes in 

enrollment status from CMS for all IDTFs that we found to be

noncompliant. 

Payments to noncompliant IDTFs

Analysis

. We used the 2010 Part B NCH file to 

determine how much Medicare allowed for services reportedly provided 

by noncompliant IDTFs. 

Before analyzing our site visit results, we removed 17 IDTFs from our 

analysis. Fourteen of these were no longer enrolled in Medicare at the 

time of our site visits. We categorized three IDTFs as “unable to 

determine.” Our analysis was performed on the remaining 132 IDTFs.

Determining compliance. We determined compliance with IDTF 

standards 3 and 14 in the following manner:
 

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INTRODUCTION

● We determined that an IDTF was at the location on file with 

CMS if it maintained a physical facility with its name clearly 

marked somewhere other than a building directory (e.g., a sign 

on or near the primary entrance to the IDTF). 

● We determined that an IDTF was open if it was accessible to 

CMS and beneficiaries during regular business hours (i.e., the 

door was unlocked) during either of two visits on separate days.

IDTFs that did not meet at least one standard were considered 

noncompliant for the purposes of this report.

We aggregated the results of the site visits to determine the numbers of 

IDTFs that (1) maintained physical facilities at the locations on file with 

CMS and (2) were open during business hours. We also categorized site 

reviewers’ observations about what was found (e.g., a sign with a 

different business name) at the locations on file with CMS. 

Payments to noncompliant IDTFs. We calculated the total amount that 

Medicare allowed in 2010 for IDTFs that were not at the locations on 

file with CMS and for IDTFs that were not open. For each IDTF, we 

also calculated the amount that Medicare allowed in 2010 following our 

site visit (i.e., from the date of our last site visit through 

December 2010). In addition, we determined the number of 

noncompliant IDTFs that submitted claims representing services 

provided on the same dates that site reviewers visited their locations 

and the amount that Medicare allowed for such services.

Limitations

Because we reviewed compliance with only 2 of the 17 Medicare IDTF 

standards, we may be understating the number of noncompliant IDTFs 

in the Los Angeles area. IDTFs must meet all 17 standards to be 

eligible to bill Medicare for services. 

Standards

This study was conducted in accordance with the Quality Standards for 

Inspection and Evaluation issued by the Council of the Inspectors 

General on Integrity and Efficiency.
 

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Forty-six of the one hundred thirty-two 

Los Angeles-area IDTFs failed to comply with 

selected Medicare standards

 FINDING

Forty-six of the IDTFs in the 

Los Angeles area were not at the 

locations on file with CMS or were 

not open during business hours. 

Medicare allowed $6.2 million for services provided by these IDTFs in 

2010, $2.6 million of which was allowed after our site visits. An 

additional five IDTFs were open only during the second visits made to 

their locations. We considered these IDTFs open for the purposes of this 

review. 

Twenty-four IDTFs were not at the locations on file with CMS

After taking into account the IDTFs that submitted address updates to 

CMS, we found that 24 of the IDTFs that we visited did not maintain a 

facility at the location on file with CMS. CMS requires all IDTFs to 

“[m]aintain a physical facility.”22

As Table 1 shows, when site reviewers visited the locations on file with 

CMS, they found different businesses, unmarked office suites, and 

private residences with no indication that IDTFs were located there. In 

three cases, the street addresses on file with CMS did not exist or the 

suite numbers on file with CMS did not exist at the given street 

addresses. See Photo 1 for an example of an empty suite that site 

reviewers found at the location CMS had on file for one IDTF. 

 Medicare allowed $4 million for these 

24 IDTFs in 2010.

Table 1

Description of 

the locations on 

file with CMS for 

24 noncompliant 

IDTFs

What OIG Found at Location on File

Description Number

Sign with a different business name 10

Private residence with no sign indicating an IDTF 7 

No sign indicating a business name 4 

Nonexistent address/suite 3 

 Total 24

Source: OIG unannounced site visits to IDTFs, May and June 2010.

22 42 CFR § 410.33(g)(3).
 

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Photo 1

There was no 

indication that an 

IDTF was 

operational at this 

location.

 Source: OIG unannounced site visits to IDTFs, May and June 2010.

FINDING

Twenty-two IDTFs were not open during business hours

Twenty-two IDTFs maintained a visible sign at the location on file with 

CMS but were locked during business hours on 2 separate days. CMS 

requires that each IDTF “[b]e accessible during regular business hours 

to CMS and beneficiaries” and “[m]aintain a visible sign posting its 

normal business hours.”23 Site reviewers visited 15 of the 22 IDTFs 

during their posted business hours. The remaining seven IDTFs did not 

have posted business hours and were visited during reasonable business 

hours (9 a.m. to 5 p.m.). Medicare allowed $2.2 million for these 

22 IDTFs in 2010. See Photo 2 for an example of an IDTF that was not 

open during business hours.

23 42 CFR § 410.33(g)(14).
 

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FINDING

Photo 2

The IDTF’s name 

was posted (name 

redacted in photo), 

but the door was 

locked at each of 

two visits during 

regular business 

hours.

 Source: OIG unannounced site visits to IDTFs, May and June 2010.

Five additional IDTFs were locked during business hours on the first

day we visited and open on the second day. These IDTFs were 

considered open for the purposes of this report because they were open

on the second visits. However, these IDTFs may have been open on our

second visits because they had become aware of our review. 

Twenty-five noncompliant IDTFs submitted claims representing services 

provided on the dates of their site visits

Twenty-five of the noncompliant IDTFs submitted claims representing

259 services performed on the same dates that site reviewers visited

their locations. Medicare allowed $45,000 for 222 of these services. 

Fourteen of the twenty-five IDTFs that submitted claims were not at 

the locations on file with CMS, and 11 were not open during business 

hours.

The services reportedly performed on the same dates as OIG’s site visits

generally would have required a beneficiary to be physically present. 

The most common services billed on the dates of OIG’s site visit were

x-ray services and vascular studies. 

Submitting claims representing services provided at a noncompliant

location raises suspicion that these services may not have been 

legitimate. These IDTFs may have changed locations without notifying
 

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FINDING

CMS. However, IDTFs that change locations without notifying CMS 

within 30 days are no longer compliant with all Medicare standards.
 

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RECOMMENDATIONS RECOMMEN DATIONS

Forty-six of the one hundred thirty-two IDTFs in the Los Angeles area 

did not comply with selected Medicare standards. Twenty-four of these 

noncompliant IDTFs were not found at the locations on file with CMS 

and 22 were not open during business hours. Twenty-five of these 

noncompliant IDTFs submitted claims representing services provided 

on the same dates that OIG site reviewers visited their locations. 

This finding indicates that further actions are needed to protect the 

integrity of the Medicare program and protect beneficiaries from 

potentially fraudulent IDTFs. Therefore we recommend that CMS:

Periodically conduct unannounced site visits to IDTFs 

CMS advocates the use of unannounced postenrollment site visits to 

determine whether providers are operational. Periodically conducting 

nationwide unannounced site visits to IDTFs may enable CMS to 

identify and remove nonoperational IDTFs from the program and 

potentially reduce erroneous Medicare payments. CMS could focus 

unannounced site visits on high-risk areas or base them on fraud-risk 

assessments. 

Impose a moratorium on new IDTF enrollments in the Los Angeles area

Given both the current and historical rates of potential fraud among 

IDTFs in the Los Angeles area, CMS should impose a moratorium on 

the enrollment of new Los Angeles-area IDTFs in Medicare. A 

moratorium would prevent new enrollments while CMS develops 

additional program safeguards for IDTFs in the Los Angeles area, such 

as more frequent indepth reviews of IDTFs. Because services provided 

by IDTFs are also available at physicians’ offices and hospitals, an 

enrollment moratorium on IDTFs is unlikely to have a negative impact 

on beneficiaries’ access to these services. 

Take appropriate action against the noncompliant IDTFs identified by this 

report

Under separate cover, we have referred to CMS the IDTFs that our site 

visits identified as noncompliant. CMS should investigate these IDTFs 

and revoke their billing privileges if warranted.
 

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RECOMMENDATIONS

AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 

RESPONSE 

CMS concurred with our recommendations that it periodically conduct 

unannounced site visits to IDTFs and that it take appropriate action 

against the noncompliant IDTFs identified by our report. CMS stated 

that it anticipates increasing the frequency of unannounced site visits to 

IDTFs. CMS plans to compare IDTF enrollment information with 

public records to identify potential changes to enrollment information 

that would warrant further investigation. CMS stated that it will take 

appropriate administrative actions against the IDTFs identified in this 

report. 

CMS did not concur with our recommendation to impose a moratorium 

on new IDTF enrollments in the Los Angeles area. However, CMS 

stated that it would take our recommendation under strong 

consideration and that it will assess Medicare beneficiary access to 

IDTF services prior to imposing a moratorium. 

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

For the full text of CMS’s comments, see Appendix C. 
 

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 APPENDIX~A

Independent Diagnostic Testing Facility Standards24

The [independent diagnostic testing facility (IDTF)] must certify in its 

enrollment [application] that it meets the following standards and 

related requirements:

(1) Operates its business in compliance with all applicable Federal and 

State licensure and regulatory requirements for the health and safety of 

patients.

(2) Provides complete and accurate information on its enrollment 

application. Changes in ownership, changes of location, changes in 

general supervision, and adverse legal actions must be reported to the 

Medicare fee-for-service contractor on the Medicare enrollment 

application within 30 calendar days of the change. All other changes to 

the enrollment application must be reported within 90 days.

(3) Maintain a physical facility on an appropriate site. For the purposes 

of this standard, a post office box, commercial mailbox, hotel, or motel is 

not considered an appropriate site.

(i) The physical facility, including mobile units, must contain space 

for equipment appropriate to the services designated on the 

enrollment application, facilities for hand washing, adequate 

patient privacy accommodations, and the storage of both business 

records and current medical records within the office setting of the 

IDTF, or IDTF home office, not within the actual mobile unit.

(ii) IDTF suppliers that provide services remotely and do not see 

beneficiaries at their practice location are exempt from providing 

hand washing and adequate patient privacy accommodations.

(4) Has all applicable diagnostic testing equipment available at the 

physical site excluding portable diagnostic testing equipment. The 

IDTF must— 

(i) Maintain a catalog of portable diagnostic equipment, including 

diagnostic testing equipment serial numbers at the physical site;

(ii) Make portable diagnostic testing equipment available for 

inspection within 2 business days of a [Centers for Medicare & 

Medicaid Services (CMS)] inspection request.

24 These standards are taken verbatim from 42 CFR § 410.33(g). 
 

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APPENDIX~A

(iii) Maintain a current inventory of the diagnostic testing 

equipment, including serial and registration numbers and provide 

this information to the designated fee-for-service contractor upon 

request, and notify the contractor of any changes in equipment 

within 90 days.

(5) Maintain a primary business phone under the name of the 

designated business. The IDTF must have its— 

(i) Primary business phone located at the designated site of the 

business or within the home office of the mobile IDTF units.

(ii) Telephone or toll free telephone numbers available in a local 

directory and through directory assistance.

(6) Have a comprehensive liability insurance policy of at least $300,000 

per location that covers both the place of business and all customers and 

employees of the IDTF. The policy must be carried by a 

nonrelative-owned company. Failure to maintain required insurance at 

all times will result in revocation of the IDTF’s billing privileges 

retroactive to the date the insurance lapsed. IDTF suppliers are 

responsible for providing the contact information for the issuing 

insurance agent and the underwriter. In addition, the IDTF must— 

(i) Ensure that the insurance policy [...] remain in force at all 

times and provide coverage of at least $300,000 per incident; and

(ii) Notify the CMS designated contractor in writing of any policy 

changes or cancellations.

(7) Agree not to directly solicit patients, which include[s], but is not 

limited to, a prohibition on telephone, computer, or in-person contacts. 

The IDTF must accept only those patients referred for diagnostic testing 

by an attending physician, who is furnishing a consultation or treating a 

beneficiary for a specific medical problem and who uses the results in 

the management of the beneficiary’s specific medical problem. 

Nonphysician practitioners may order tests as set forth in [42 CFR] 

§ 410.32(a)(3).

(8) Answer, document, and maintain documentation of a beneficiary’s 

written clinical complaint at the physical site of the IDTF[.] (For mobile 

IDTFs, this documentation would be stored at their home office.) This 

includes, but is not limited to, the following:

(i) The name, address, telephone number, and health insurance 

claim number of the beneficiary.
 

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APPENDIX~A

(ii) The date the complaint was received; the name of the person 

receiving the complaint; and a summary of actions taken to resolve 

the complaint.

(iii) If an investigation was not conducted, the name of the person 

making the decision and the reason for the decision.

(9) Openly post these standards for review by patients and the public.

(10) Disclose to the government any person having ownership, financial, 

or control interest or any other legal interest in the supplier at the time 

of enrollment or within 30 days of a change.

(11) Have its testing equipment calibrated and maintained per 

equipment instructions and in compliance with applicable 

manufacturers[’] suggested maintenance and calibration standards.

(12) Have technical staff on duty with the appropriate credentials to 

perform tests. The IDTF must be able to produce the applicable Federal 

or State licenses or certifications of the individuals performing these 

services.

(13) Have proper medical record storage and be able to retrieve medical 

records upon request from CMS or its fee-for-service contractor within 

2 business days.

(14) Permit CMS, including its agents, or its designated fee-for-service 

contractors, to conduct unannounced, on-site inspections to confirm the 

IDTF’s compliance with these standards. The IDTF must— 

(i) Be accessible during regular business hours to CMS and 

beneficiaries; and

(ii) Maintain a visible sign posting its normal business hours.

(15) With the exception of hospital-based and mobile IDTFs, a 

fixed-base IDTF is prohibited from the following:

(i) Sharing a practice location with another Medicare-enrolled 

individual or organization;

(ii) Leasing or subleasing its operations or its practice location to 

another Medicare-enrolled individual or organization; or

(iii) Sharing diagnostic testing equipment used in the initial 

diagnostic test with another Medicare-enrolled individual or 

organization.
 

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APPENDIX~A

(16) Enrolls for any diagnostic testing services that it furnishes to a 

Medicare beneficiary, regardless of whether the service is furnished in a 

mobile or fixed base location.

(17) Bills for all mobile diagnostic services that are furnished to a 

Medicare beneficiary, unless the mobile diagnostic service is part of a 

service provided under arrangement as described in section 1861(w)(1) 

of the [Social Security] Act.
 

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 APPENDIX~B

Detailed Methodology

We conducted unannounced site visits to all Independent Diagnostic 

Testing Facilities (IDTF) with fixed practice locations in the 

Los Angeles–Long Beach–Glendale, CA Core Based Statistical Area 

(Los Angeles CBSA) to determine whether they complied with selected 

Medicare standards. Specifically, we determined whether each IDTF 

was at the location on file with the Centers for Medicare & Medicaid 

Services (CMS) and was open during business hours. We then 

determined how much money Medicare allowed for services reportedly 

provided by these IDTFs in 2010.

Scope

We focused our review on IDTFs that submitted claims for Medicare 

payment in 2009 to concentrate our visits on IDTFs with recent activity 

in the Medicare program. At the time we developed our study 

population, data on claims from 2009 were the most recent available.

Data Sources and Data Collection

Identifying IDTF locations. We identified IDTFs that submitted claims in 

2009 using the specialty code and provider identification numbers 

(provider ID) fields in the 2009 Part B National Claims History (NCH) 

file. We counted each provider ID that had only claims with the 

specialty code 47 as an IDTF. We determined the CBSA to which each 

IDTF belonged by matching the ZIP Code field from the NCH with the 

ZIP Codes corresponding to each CBSA. We then selected the IDTFs in 

the Los Angeles CBSA.

We located an address for each IDTF in the Los Angeles CBSA with a 

fixed practice location using a combination of two sources. Our primary 

source was the practice location field from the Provider Enrollment, 

Chain, and Ownership System (PECOS).25 Most, but not all, IDTFs 

have enrollment information, such as their practice location, stored in 

PECOS.26 When an IDTF did not have an address in PECOS, we 

25 PECOS is the system of record for Medicare provider enrollment information. PECOS 

is populated based on the initial provider enrollment application and updated any time a 

provider submits an updated application to CMS. 

26 An IDTF that enrolled before 2004 and has not submitted an updated application may 

not have an enrollment record in PECOS.
 

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APPENDIX~B

requested this information from CMS. This process resulted in 

addresses for 149 IDTFs in the Los Angeles CBSA.27

Site visits to IDTFs. We conducted unannounced site visits to these 

149 IDTFs to determine whether they were at the locations on file with 

CMS and were open during business hours. We recorded all 

observations using a standard form. We conducted all site visits from 

May 3 through May 11 and on June 4, 2010.

We designed our site visit protocol to ensure that we gave providers the 

benefit of the doubt when determining whether they complied with 

Medicare standards. For example:

● All visits to IDTFs were made during posted business hours if 

hours were posted or during reasonable business hours (9 a.m. 

to 5 p.m.) if none were posted.

● If an IDTF was locked, we made a second visit to that location 

on a different day. We considered IDTFs to be open if they were 

open on either the first visit or (if applicable) the second visit.

● When the building at an IDTF’s location on file with CMS was a 

multisuite office building, site reviewers searched for the IDTF 

by name as well as by suite number. We considered the IDTF to 

be at the location on file with CMS if site reviewers could find it 

in any suite or office space in the building.

● If an IDTF had a sign posted indicating that visitors should ring 

a buzzer or doorbell to enter the facility, site reviewers did so. If 

the door was opened (e.g., someone came to the door or the lock 

was released), we considered the IDTF to be open.

● If an IDTF had a sign posted indicating that services were

available by appointment only, a site reviewer attempted to 

make an appointment for services with that IDTF (e.g., called 

the phone number listed on the sign). If the site reviewer was 

able to make an appointment, we considered the IDTF to be 

open.

● If we found a different business name at the IDTF location on 

file with CMS, we attempted to determine whether the IDTF we 

27 Two IDTFs submitted claims in 2009 using more than one provider ID. We have 

collapsed claims for these provider IDs, reporting on each of these as unique locations 

rather than as unique provider IDs.
 

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APPENDIX~B

were looking for was operating under the name we found. First, 

we requested from CMS all names for IDTFs that we did not 

find and reviewed this information to ensure that we captured 

all possible aliases. Second, as a final check, we reviewed public 

Web sites, including the National Provider Identifier registry, to 

determine whether the IDTF we were looking for could be 

operating under the name we found. If we were able to connect 

the two names, we categorized the IDTF as being at the location 

on file with CMS. 

Analysis

Updates after site visits. CMS indicated that seven IDTFs had their 

billing privileges deactivated and seven IDTFs had their billing 

privileges revoked before the dates of our site visits. We removed these 

14 IDTFs from our analysis. 

IDTFs categorized as “unable to determine.” We removed three IDTFs 

from our analysis because we were unable to complete the full site visit 

protocol or were unable to access the door of the reported practice 

location. 
A P PEN D x c 

Agency Comments 

(-~ DEPAKfMENT OF HEALTH' HUMAN SERVICES Centers for Medicare & Medicaid Service. 

,~ Administrator 

WashingIon. DC 20201 

DATE: JUL 2 6 2011 

TO: 	 Daniel R. Levinson 


Inspector General 


FROM: 	 Donald M. Berwick, M.D. 


Administrator 


SUBJECT: 	 Office of Inspector General (OIG) Draft Report: "Los Angeles Independent 

Diagnostic Testing Facilities' Compliance with Medicare Standards" (OEI-05-09­

00561) 

The Centers for Medicare & Medicaid Services (CMS) appreciates the opportunity to review and 

comment on the Office ofInspector General (OIG) draft report entitled, "Los Angeles 

Independent Diagnostic Testing Facilities' Compliance with Medicare Standards." The purpose 

ofthis report is to determine whether Independent Diagnostic Testing Facilities (IDTFs) in the 

Los Angeles area complied with selected Medicare standards requiring IDTFs to be at the 

location on file with CMS and open during business hours. 

IDTFs offer diagnostic services and are independent ofa physician's office or hospital. 

According to OIG's report, Medicare paid almost $1 billion for II~TF claims for 2.4 million 

beneficiaries in 2010. Of this, $38.7 million was for claims by lDTFs in the Los Angeles area. 

Medicare standards indicate that IDTFs must maintain a physical facility at the location on file 

with CMS and be open during business hours. lDTFs that do not comply with Medicare 

standards are subject to a variety of administrative actions, including revocation oftheir billing 

privileges. 

The Affordable Care Act strengthens the focus on the integrity ofthe Medicare, Medicaid, and 

Children's Health Insurance Program (CHIP) programs and provides important new tools to 

combat fraud and abuse, including enhanced provider and supplier screening requirements; 

authority to suspend payments pending investigations of credible allegations offraud; and, when 

necessary, authority to impose moratoria on new providers and suppliers. 

IDTF services have historically been vulnerable to abuse. As such, CMS is taking additional 

steps to address potential vulnerabilities in the enrollment and claims payment process for this 

supplier group using the authorities granted under the Affordable Care Act. Under the new 

OEI-05-09-00561 Los ANGELES INDEPENDENT DIAGNOSTIC TESTING FACILITIES' COMPLIANCE WITH MEDICARE STANDARDS 21 
 

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APPENDIX ~ C
 

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APPENDIX ~ C
 

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 ACKNOWLEDGMENTS

This report was prepared under the direction of Ann Maxwell, Regional 

Inspector General for Evaluation and Inspections in the Chicago 

regional office, and Thomas Komaniecki, Deputy Regional Inspector 

General. 

Laura Kordish served as the team leader for this study, and Lisa Minich 

and Mara Werner served as lead analysts. 

We would also like to acknowledge the contributions of Office of 

Evaluation and Inspections central and regional offices. Contributing 

staff from these offices include Loul Alvarez, Melissa Baker, 

Jenell Clarke, Berivan Demir Neubert, Ben Dieterich, Kevin Farber, 

Anne Gavin, Robert Gibbons, Veronica Gonzalez, Michael Henry, 

Nicole Hrycyk, Pat Jackson, Christina Lester, Abby Lopez, 

Kevin Manley, Kevin McAloon, Beth McDowell, Linda Min, 

Brian Pattison, Megan Ruhnke, Talisha Searcy, Alicia Simon, 

Mark Stiglitz, Roman Strakovsky, China Tantameng, Jesse Valente, 

and Marcia Wong.
 

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.