Department of Health and Human Services
 

OFFICE OF 

INSPECTOR GENERAL 

QUESTIONABLE BILLING BY 

COMMUNITY MENTAL HEALTH 

CENTERS 

Daniel R. Levinson
 

Inspector General
 

August 2012 

OEI-04-11-00100 
 

 

EXECUTIVE SUMMARY: QUESTIONABLE BILLING BY COMMUNITY 

MENTAL HEALTH CENTERS 

OEI-04-11-00100 

WHY WE DID THIS STUDY 

During 2010, 206 community mental health centers (CMHC) received an estimated 

$218.6 million for providing partial hospitalization program (PHP) services to 

approximately 25,000 Medicare beneficiaries with mental disorders. Past Office of 

Inspector General (OIG) studies have found vulnerabilities in Medicare payments to 

CMHCs for PHPs. Additionally, in 2011, four CMHC owners and managers in MiamiDade County, Florida, were convicted of fraudulently billing Medicare approximately 

$200 million for medically unnecessary PHP services from 2002 to 2010. 

HOW WE DID THIS STUDY 

We developed nine questionable billing characteristics based on past OIG work and input 

from Centers for Medicare & Medicaid Services (CMS) staff. We used 2009 and 2010 

Medicare claims from CMS’s National Claims History File to identify CMHCs that had 

unusually high billing for at least one of nine OIG questionable billing characteristics in 

2010 and the metropolitan areas where these CMHCs were located. We also determined 

whether the percentage of CMHCs with questionable billing varied according to whether 

States had licensure or certification requirements. 

WHAT WE FOUND 

In 2010, approximately half of CMHCs met or exceeded thresholds that indicated 

unusually high billing for at least one of nine questionable billing characteristics. 

Approximately one-third of these CMHCs had at least two of the characteristics. 

Additionally, approximately two-thirds of CMHCs with questionable billing were 

located in eight metropolitan areas. Finally, 90 percent of CMHCs with questionable 

billing were located in States that do not require CMHCs to be licensed or certified. 

WHAT WE RECOMMEND 

We recommend that CMS (1) increase its monitoring of CMHCs’ Medicare billing and 

fraud prevention controls, (2) enforce the requirement that certifying physicians be listed 

on the PHP claims submitted by CMHCs, (3) finalize and implement the proposed 

conditions of participation for CMHCs, and (4) review and take appropriate action 

against CMHCs with questionable billing that we identified. CMS concurred with all 

four recommendations. 
 

TABLE OF CONTENTS 

Objectives ....................................................................................................1 

Background..................................................................................................1 

Methodology................................................................................................6 

Findings......................................................................................................13 

In 2010, approximately half of CMHCs had questionable 

billing .............................................................................................13 

Approximately two-thirds of CMHCs with questionable billing 

were located in eight metropolitan areas .......................................16 

Ninety percent of CMHCs with questionable billing were in 

States that do not require CMHCs to be licensed or certified ........17 

Conclusion and Recommendations ............................................................19 

Agency Comments and Office of Inspector General Response .....21 

Appendixes ................................................................................................22 

A: Number of Community Mental Health Centers and Medicare 

Payments in Each State, 2010 ........................................................22 

B: Healthcare Common Procedure Coding System Codes Used 

on Partial Hospitalization Program Claims....................................23 

C: Number of Beneficiaries With Cognitive Disorders Who 

Participated in Partial Hospitalization Programs, 2010 .................24 

D: Percentage of Community Mental Health Centers With 

Questionable Billing by Metropolitan Area and Characteristic, 

2010................................................................................................25 

E: Agency Comments ....................................................................26 

 Acknowledgments..........................................................................30 
 

 

 

 

 

 

OBJECTIVES 

1.	 To identify questionable billing by community mental health 

centers (CMHC) in 2010. 

2.	 To determine the extent to which questionable billing by CMHCs 

varied by geographic location and the existence of State licensure 

or certification requirements. 

BACKGROUND 

The Omnibus Budget Reconciliation Act of 1990 authorized Medicare 

Part B to reimburse CMHCs for providing partial hospitalization programs 

(PHP).1 PHPs are intense, structured, outpatient mental health treatment 

programs.

2 A CMHC provides PHPs for individuals with mental illness 

who reside in or near the community where the CMHC is located.3 

During 2010, 206 CMHCs received an estimated $218.6 million for 

providing PHP services to approximately 25,000 Medicare beneficiaries. 

Past Office of Inspector General (OIG) studies found vulnerabilities in 

Medicare payments to CMHCs, such as billing for medically unnecessary 

or undocumented PHP services.4 Additionally, four CMHC owners and 

managers in Miami-Dade County, Florida, were convicted of Medicare 

fraud in 2011. These individuals manipulated patients’ charts, diagnoses, 

and lengths of stay to fraudulently bill Medicare approximately 

$200 million for medically unnecessary PHP services from 2002 to 2010.5 

This fraud scheme involved doctors, other providers, and marketers who 

referred Medicare beneficiaries to these CMHCs and received financial 

kickbacks. 

1 The Omnibus Budget Reconciliation Act of 1990, P.L. 101-508, § 4162. 

2 Social Security Act, § 1861(ff)(3)(A), 42 U.S.C. § 1395x(ff)(3)(A). 

3 Social Security Act, § 1861(ff)(3)(B)(i)(I); Public Health Service Act, § 1913(c)(1); Centers 

for Medicare & Medicaid Services (CMS), Medicare State Operations Manual, Pub. No. 100-

07, ch. 2, § 2252I; CMS, Medicare Program Integrity Manual, Pub. No. 100-08, ch. 15, 

§ 15.4.1.1.A. 

4 OIG, Five-State Review of Partial Hospitalization Programs at Community Mental Health 

Centers, OAS-04-98-02145, October 1998; OIG, Review of Partial Hospitalization Services 

Provided Through Community Mental Health Centers, OAS-04-98-02146, October 1998. 

5 Department of Justice (DOJ), Owner of Miami-area mental health care corporation 

convicted on all counts for orchestrating $205 million Medicare fraud scheme. Accessed at 

http://www.justice.gov/opa/pr/2011/August/ on August 23, 2011. 

Questionable Billing by Community Mental Health Centers (OEI-04-11-00100) 1 
 

 

 

 

 

 

 

PHP Services and Requirements 

Beneficiaries who participate in PHPs must have mental disorders that 

severely interfere with multiple areas of their daily lives, including social, 

vocational, and/or educational functioning.6 PHPs provide outpatient 

services to beneficiaries who have been discharged from inpatient 

psychiatric care. Beneficiaries can thus participate in PHPs in a 

community setting in lieu of continued inpatient care. PHPs also provide 

outpatient services to beneficiaries with mental disorders whose 

physicians certify that they would relapse or require hospitalization in the 

absence of PHPs.7, 8 Additionally, Medicare beneficiaries may participate 

in PHPs only if services 

	 are reasonable and necessary for the diagnosis or active treatment 

of the individuals’ conditions and 

	 are reasonably expected to improve or maintain the individuals’ 

conditions.9 

PHPs must offer a combination of individual, group, family, occupational, 

and activity therapies. Educational and diagnostic services may also be 

provided.10 There are no specific limits on the length of time that 

Medicare covers PHPs.11 However, participating beneficiaries must 

receive a minimum of 20 hours of services weekly.12 Additionally, PHP 

beneficiaries must be able to cognitively participate in these services.13 

PHPs are not medically reasonable or necessary for beneficiaries who 

cannot actively participate because of a cognitive disorder, such as 

Alzheimer’s disease or severe dementia.14 

Physicians must develop an individualized treatment plan for each PHP 

beneficiary, which includes treatment goals and describes the coordinated 

6 CMS, Medicare Benefit Policy Manual, Pub. No. 100-02, ch. 6, § 70.3. 

7

 42 CFR § 410.43(a)(3), 42 CFR § 424.24(e), CMS, Medicare Benefit Policy Manual, Pub. 

No. 100-02, ch. 6, §§ 70.3.B.1 and 70.3B.5. 

8 The national provider identifier for the certifiying physician is required on PHP claims. 

CMS, Medicare Claims Processing Manual, Pub. No. 100-04, ch. 25, § 75.5. 

9 Social Security Act, § 1861(ff)(2), 42 U.S.C. § 1395x(ff)(2). 

10 Social Security Act, § 1861(ff)(2), 42 U.S.C. § 1395x(ff)(2); 42 CFR § 410.43(a)(4); CMS, 

Medicare Benefit Policy Manual, Pub. No. 100-02, ch. 6, § 70.3.B.2. 

11 CMS, Medicare Benefit Policy Manual, Pub. No. 100-02, ch. 6, § 70.1.C.3. 

12 CMS, Medicare Benefit Policy Manual, Pub. No. 100-02, ch. 6, § 70.3.
 

13 Ibid. 

14 42 CFR § 410.43(c)(7); CMS, Medicare Benefit Policy Manual, Pub. No. 100-02, 

ch. 6, § 70.3.B.1. 

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services that will be provided.15 The plan must include the type, amount, 

duration, and frequency of services.16 The plan should also document 

continued efforts to restore the beneficiary to a higher level of functioning 

to permit discharge from the PHP. The plan must also demonstrate the 

continued need for PHP services to maintain the individual’s condition and 

prevent relapse or hospitalization.17 

Additionally, physicians must supervise PHP services and periodically 

evaluate beneficiaries to ensure that their treatment goals are being met. 

Physicians are required to recertify beneficiaries’ need for PHP services 

18 days after their admissions and at least every 30 days thereafter.18 

Oversight of Medicare Participation and Billing by CMHCs 

The Medicare program has limited ability to oversee the quality, health, 

and safety of care provided in CMHCs because these providers do not 

have conditions of participation (CoP). CoPs are standards that help 

ensure the quality and safety of Medicare and Medicaid providers’ care.19 

However, in 2011, CMS proposed a rule to establish CoPs for CMHCs and 

noted that “there are currently only limited circumstances in which CMS 

can terminate a facility based on the result of a complaint investigation. 

Without CoPs in place, CMS’ oversight of CMHCs is severely limited.”20 

Additionally, CMHCs are not required to be accredited by an accreditation 

agency or licensed or certified by their States.21 This is unlike CMS’s 

oversight of other providers, such as hospitals and long-term-care 

facilities. 

CMS Oversight of CMHCs. CMS regional offices are responsible for 

approving or denying CMHCs for Medicare participation. A regional 

office conducts one site visit to a CMHC when notified by a Medicare 

Administrative Contractor (MAC) that a CMHC has applied for Medicare 

enrollment and has been in operation for an entire business quarter.22 

15 42 CFR § 424.24(e)(2); CMS, Medicare Benefit Policy Manual, Pub. No. 100-02, 

ch. 6, § 70.3.B.5.c. 

16 42 CFR § 424.24(e)(2).
 

17 CMS, Medicare Benefit Policy Manual, Pub. No. 100-02, ch. 6, § 70.3.B.5.c. 

18 CMS, Medicare Benefit Policy Manual, Pub. No. 100-02, ch. 6, § 70.3.B.5.b. 

19 CMS has developed CoPs for 19 provider types, including home health agencies, 

psychiatric hospitals, and long-term-care facilities. CMS, Conditions for Coverage and 

Conditions of Participation. Accessed at http://www.cms.gov/CFCsAndCoPs/ on June 17, 

2011. 

20 76 Fed. Reg. 35684 (June 17, 2011). 

21 Government Accountability Office (GAO), Medicare: Lessons Learned From HCFA’s 

Implementation of Changes to Benefits, GAO-HEHS-0031, January 2000. 

22 CMS, Medicare State Operations Manual, Pub. No. 100-07, ch. 2, §§ 2250G and 2252. 

Questionable Billing by Community Mental Health Centers (OEI-04-11-00100) 3 
 

 

 

 

 

 

However, in the proposed rule to establish CoPs, CMS noted that many 

“CMHCs have never had an onsite survey visit by CMS” after initial 

certification.23, 24 

CMS contracts with MACs and Zone Program Integrity Contractors 

(ZPIC) to help ensure the financial integrity of Medicare payments, 

including those to CMHCs. MACs are responsible for ensuring correct, 

reliable, and timely payment of claims.25 They implement claims 

processing edits to prevent improper payments, educate providers that 

make improper claims, and collect overpayments. 

ZPICs ensure that Medicare funds are appropriately paid and that any 

improper payments are identified. They proactively identify potential 

fraud; investigate allegations of fraud; initiate administrative actions to 

deny or suspend payments where there is evidence of fraud; refer cases to 

OIG for criminal and civil investigation; and refer cases to CMS for 

administrative actions, including provider revocations.26 

Additionally, CMS ensures the financial integrity of Medicare payments 

through its predictive analytics system. In June 2011, CMS implemented 

a predictive analytics system that analyzes all Medicare Parts A and B 

claims to identify potential fraud.27 This system builds profiles of 

Medicare providers (e.g., CMHCs) that enable CMS to create risk 

scores.28 These risk scores estimate the likelihood of fraud and identify 

potentially fraudulent claims and billing patterns. 

State Oversight of CMHCs. CMHCs must meet applicable State licensing 

or certification requirements to participate in Medicare; however, not all 

States have such requirements.29 The goal of State licensure or 

certification is to ensure that health care providers meet minimum State 

standards of quality and safety. States that require CMHCs to be licensed 

23 76 Fed. Reg. 35685 (June 17, 2011). 

24 We did not verify whether CMS conducted onsite survey visits prior to CMHCs’ Medicare 

enrollment. Currently, OIG is conducting a study on CMS’s and contractors’ CMHC
 

oversight activities. OEI-04-11-00101, in progress.
 

25 CMS, Part A and Part B MAC Statement of Work Jurisdiction F, October 2010. 

26 CMS, Medicare Program Integrity Manual, Pub. No. 100-08, ch. 4, § 4.2.2.
 

27 CMS, Predictive Modeling Analysis of Medicare Claims, MLN Network, November 2011. 

Accessed at https://www.cms.gov/MLNMattersArticles/Downloads/SE1133.pdf on February 

27, 2012. 

28 The predictive analytics system also builds profiles on networks, billing patterns, and 

beneficiary utilization. 

29 42 CFR § 410.2. 

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or certified conduct regular site visits to ensure CMHCs’ compliance with 

State requirements.30 

Medicare Conditions of Participation and Accreditation. CMS can 

implement quality standards, such as CoPs, that providers must meet to 

participate in Medicare.31 CMHCs do not currently have CoPs, but CMS 

proposed six CoPs for CMHCs in June 2011, which are expected to be 

implemented in 2014.32 Implementation of these CoPs will authorize CMS 

to conduct regular CMHC site visits to verify compliance.33 

Upon implementation of CoPs, CMS may also verify compliance with 

CoPs by using State survey and certification agencies or by granting 

deeming authority to accreditation organizations.34 A provider seeking 

accreditation must submit an application to an accrediting organization 

and is subject to unannounced site visits. Using the application and site 

visit results, the accrediting organization determines whether to accredit 

the provider.35 Accreditation is required for certain Medicare providers, 

such as durable medical equipment suppliers.36 However, CMS currently 

does not have the statutory authority to grant deeming authority to 

accreditation organizations for CMHCs. Therefore, these providers are 

not subject to accreditation requirements.37 

Related OIG Work 

In 1998, OIG found that in a 12-month period, Medicare paid $229 million 

for unallowable and highly questionable PHP services provided by 

30 The frequency of site visits varies by State. Site visits may be required yearly, biennially, 

every 3 years, etc. 

31 42 CFR part 485. 

32 The six proposed CoPs are personnel qualifications; client rights; admission, initial 

evaluation, comprehensive assessment, and discharge or transfer of the client; treatment team, 

client-centered active treatment plan, and coordination of services; quality assessment and 

performance improvement; and organization, governance, administration of services, and 

partial hospitalization services. 76 Fed. Reg. 35684–35711 (June 17, 2011). 

33 Ibid. 

34 Having deeming authority means being able to officially determine whether a facility is in 

compliance with Medicare and Medicaid requirements. Social Security Act §1865(a)(1), 42 

CFR 488.6, 76 Fed. Reg. 35685 (June 17, 2011). 

35 CMS, DMEPOS Accreditation Presentation. Accessed at 

http://www.cms.gov/MedicareProviderSupEnroll/downloads/DMEPOSAccreditationPresentat 

ion.pdf on March 20, 2012. 

36 The Medicare Improvements for Patients and Providers Act of 2008, P.L. 110-275 

§ 154(b)(1), required all durable medical equipment, prosthetics, orthotics, and suppliers to 

meet quality standards for Medicare accreditation by October 1, 2009. 

37 A statutory change is required to use accreditation organizations to verify CMHCs’ 

compliance with CoPs. 

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14 CMHCs in 5 States. Through medical record review, OIG found that 

91 percent (4,959 of 5,431) of the PHP services reviewed did not meet 

Medicare requirements for reimbursement because: (1) the beneficiaries 

were ineligible for services, (2) services were not medically reasonable or 

necessary for the beneficiaries’ condition, (3) services were not properly 

authorized by or furnished under the supervision of physicians, or 

(4) services were not adequately documented.38 Additionally, OIG found 

that 60 percent of all States do not require CMHCs to be licensed or 

certified.39 This creates a vulnerability whereby dishonest individuals 

have an opportunity to establish CMHCs and improperly bill Medicare for 

PHP services. 

In 1999, OIG assessed the appropriateness of Medicare payments for 

mental health services provided in practitioners’ offices, CMHCs, 

beneficiaries’ homes, and custodial care facilities.40 Of the 303 medical 

records reviewed, 22 percent revealed that beneficiaries received mental 

health services beyond what was medically reasonable and necessary. 

Further, these excessive mental health services were often provided in 

beneficiaries’ homes or by CMHCs.41 

OIG is conducting a study on the extent to which CMS and its contractors 

performed oversight activities to detect and deter fraudulent CMHC 

billing.42 

METHODOLOGY 

We analyzed Medicare PHP claims submitted by all 206 CMHCs in 

2010.43 We also analyzed claims from CMS’s National Claims History 

Carrier (i.e., physician) and Inpatient Standard Analytical Files (i.e., 

inpatient) from 2009 and 2010.44 We used the beneficiaries’ Health 

Insurance Claim Numbers to associate their 2009 and 2010 physician and 

38 OIG, Five-State Review of Partial Hospitalization Programs at Community Mental Health 

Centers, OAS-04-98-02145, October 1998; OIG, Review of Partial Hospitalization Services 

Provided Through Community Mental Health Centers, OAS-04-98-02146, October 1998. 

39 Ibid. 

40 Mental health services include PHP services such as group, individual, and family therapy.
 

Medicare pays CMHCs only for PHP services.
 

41 OIG, Medicare Part B Payments for Mental Health Services, OEI-03-99-00130, May 2001. 

42 OEI-04-11-00101, in progress. 

43 We identified Medicare PHP claims submitted by CMHCs in CMS’s National Claims
 

History Outpatient file with bill type 76, indicating that the claim was for PHP services. We 

excluded three CMHCs with a Medicare reimbursement amount of $0 in 2010. 

44 We identified these claims in the Medicare physician National Claims History file with 

place of service code 53, indicating the service was provided at a CMHC. 

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Questionable Billing by Community Mental Health Centers (OEI-04-11-00100) 7 

 

inpatient claims with their 2010 PHP claims. These claims were used to 

identify diagnoses and gather information about the types of services 

beneficiaries received that were not on the PHP claims. 

We matched National Provider Identifiers in the National Plan and 

Provider Enumeration System and on the PHP claims to obtain addresses 

for each CMHC. Only 25 States have CMHCs that receive Medicare 

payments.45 See Appendix A for the amount of Medicare payments made 

to CMHCs in each of those States. Additionally, we used CMS’s 2010 

Enrollment Database to obtain addresses for each beneficiary who 

received PHP services at a CMHC in 2010. 

Finally, we reviewed State health facility licensing and mental health 

department Web sites and contacted State officials in these departments to 

determine which States require CMHCs to be licensed or certified. 

Identification of CMHCs With Questionable Billing 

We first identified all Medicare PHP claims submitted by CMHCs with 

dates of service ending in 2010. We identified 273,561 claims billed by 

206 CMHCs. We also identified all Medicare physician and inpatient 

claims with dates of service ending in 2009 and 2010. We identified 

5.3 million physician claims and 71,602 inpatient claims submitted for the 

24,703 beneficiaries who participated in PHPs at CMHCs. 

Based on past OIG work and input from CMS staff familiar with 

fraudulent PHP billing by CMHCs, we developed nine CMHC 

questionable billing characteristics. 

To ensure reliability of the analysis of each characteristic, we focused our 

analysis of questionable billing on CMHCs that had at least five 

beneficiaries and were paid at least $10,000 for PHP services in 2010. 

Eleven of the 206 CMHCs did not meet these criteria. In total, 195 

CMHCs were included in this analysis. We calculated the percentage of 

beneficiaries at each CMHC with each questionable billing characteristic. 

We considered a CMHC’s billing to be unusually high, or questionable, on 

a characteristic if the percentage of beneficiaries was greater than the 75th 

percentile plus 1.5 times the interquartile range.46 The nine characteristics 

are described below: 

1.	 Beneficiaries who received only group psychotherapy during their 

PHP participation. PHPs must offer a combination of services to treat 

45 CMHCs were located in 24 States and 1 U.S. territory (Puerto Rico). Hereinafter we refer 

to the 24 States and Puerto Rico collectively as States. 

46 This is a standard exploratory method for identifying members of a population with 

unusually high values on a given statistic compared to the rest of the population when no 

benchmarks exist. See J.W. Tukey, Exploratory Data Analysis, Addison-Wesley, 1977. 
 

beneficiaries’ mental health conditions. Past OIG studies found that 

beneficiaries in CMHCs were likely to receive more group 

psychotherapy sessions than necessary.47 Further, CMHCs that 

provide exclusively group psychotherapy to beneficiaries may be 

billing for services that are not medically necessary or therapeutic. We 

identified CMHCs with questionable billing based on the percentage 

of beneficiaries in each CMHC that had claims indicating only group 

psychotherapy, Healthcare Common Procedure Coding System 

(HCPCS) codes G0410 and G0411. See Appendix B for a list of 

services and the accompanying HCPCS codes used on PHP claims. 

2.	 Beneficiaries who were not referred to PHPs by health care facilities. 

Beneficiaries admitted to PHPs must be under the care of physicians 

who certify the need for PHP services.48 Beneficiaries who present 

themselves (i.e., are not referred by health care facilities) to the 

CMHCs with orders from the physicians raise questions about whether 

they were evaluated by physicians and eligible for PHP services. 

Additionally, past OIG studies have found that some beneficiaries 

were not certified by physicians to participate in PHPs.49 We 

identified CMHCs with questionable billing based on the percentage 

of beneficiaries in each CMHC with referral code 1 on their PHP 

claims, indicating that the beneficiaries presented themselves to 

CMHCs, rather than being transferred from health care facilities. 

3.	 Beneficiaries who were not evaluated by physicians during their PHP 

participation. Physicians must develop an individualized treatment 

plan for each beneficiary receiving PHP services, which includes 

treatment goals and describes the coordinated services that will be 

provided through the PHP. Physicians must also supervise the delivery 

of PHP services and periodically evaluate beneficiaries to ensure that 

their treatment goals are being met. Past OIG studies have found that 

the medical records of PHP beneficiaries lacked physician evaluations, 

signed plans of care, orders for services, and/or physician progress 

notes.50 We identified CMHCs with questionable billing based on the 

percentage of beneficiaries in each CMHC that did not have PHP or 

47 OIG, Medicare Part B Payments for Mental Health Services, OEI-03-99-00130, May 2001. 

48 42 CFR § 410.43(a)(3), 42 CFR § 424.24(e), CMS, Medicare Benefit Policy Manual, Pub. 

No. 100-02, ch. 6, §§ 70.3.B.1 and 70.3B.5. 

49 OIG, Five-State Review of Partial Hospitalization Programs at Community Mental Health 

Centers, OAS-04-98-02145, October 1998; OIG, Review of Partial Hospitalization Services 

Provided Through Community Mental Health Centers, OAS-04-98-02146, October 1998. 

50 Ibid. 

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physician claims indicating professional services by a physician during 

their PHP participation in 2010.51 

4.	 Beneficiaries with no mental health diagnoses a year prior to 

participating in PHPs. Beneficiaries must have mental health 

disorders that severely interfere with multiple areas of their daily lives, 

including social, vocational, and/or educational functioning. Past OIG 

studies have found, and recent convictions of CMHC owners and 

managers have illustrated, that beneficiaries with no prior histories of 

mental disorders often received PHP services that were not medically 

reasonable or necessary.52, 53 The absence of records of prior inpatient 

treatment or physician visits for mental disorders raises concerns about 

whether PHP services were medically reasonable or necessary. We 

used 2009 and 2010 physician and inpatient claims data to determine 

whether each beneficiary receiving PHP services at a CMHC had a 

mental health diagnosis on other Medicare claims prior to receiving 

PHP services in 2010. We identified CMHCs with questionable billing 

based on the percentage of beneficiaries in each that did not have a 

mental health diagnosis between January 1, 2009, and their first date 

of PHP service in 2010. 

5.	 Beneficiaries who participated in PHPs at CMHCs outside their 

communities. Past OIG work identified concerns regarding PHP 

services provided to Medicare beneficiaries outside their communities. 

Beneficiaries who participate in PHPs outside their communities raise 

concerns about CMHCs’ obtaining beneficiary Medicare numbers and 

billing for services that were not provided or providing PHP services 

that were not medically reasonable or necessary. We determined the 

threshold for excessive distances from the CMHC to be 102 miles.54 

We then identified CMHCs with questionable billing based on the 

percentage of beneficiaries who resided more than 102 miles away. 

51 We used physician claims because the professional services of physicians, such as 

psychological assessments and medication management, are not paid as PHP services. Claims 

for professional services are submitted and paid separately. 

52 OIG, Five-State Review of Partial Hospitalization Programs at Community Mental Health 

Centers, OAS-04-98-02145, October 1998; OIG, Review of Partial Hospitalization Services 

Provided Through Community Mental Health Centers, OAS-04-98-02146, October 1998. 

53 DOJ, op. cit. 

54 We determined this distance by using a standard exploratory method for identifying 

members of a population with unusually high values on a given statistic compared to the rest 

of the population when no benchmarks exist. See J.W. Tukey, Exploratory Data Analysis, 

Addison-Wesley, 1977. 

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6.	 Beneficiaries who participated in PHPs at more than one CMHC. 

OIG data analysis indicates that the majority (86 percent) of PHP 

beneficiaries receive services at one CMHC.55 Therefore, a high 

percentage of beneficiaries who participated in PHPs at more than one 

CMHC may indicate that providers have worked together to share 

beneficiaries. Sharing beneficiaries is a common fraud scheme and 

may involve cooperation between managers, physicians, and marketers 

to solicit beneficiaries or beneficiary Medicare numbers.56 

Beneficiaries who participate in PHPs at more than one CMHC also 

raise concerns about whether the PHP services were provided and 

were medically reasonable and necessary. We identified CMHCs with 

questionable billing based on the percentage of beneficiaries in each 

CMHC that participated in PHPs at more than one CMHC. 

7.	 Beneficiaries with cognitive disorders who participated in PHPs. 

PHPs are not medically reasonable or necessary for beneficiaries who 

cannot actively participate because of cognitive disorders, such as 

Alzheimer’s disease or severe dementia. Past OIG studies and recent 

convictions of CMHC owners and managers have shown that 

beneficiaries with Alzheimer’s disease or severe dementia were 

receiving PHP services at some CMHCs.57, 58 Using 2010 physician 

and inpatient claims, we identified beneficiaries with cognitive 

disorders who participated in PHPs. See Appendix C for the the 

diagnosis codes and associated descriptions. We identified CMHCs 

with questionable billing based on the percentage of beneficiaries in 

each CMHC with these diagnosis codes. 

8.	 Beneficiaries with long durations of PHP participation. There are no 

specific limits on the length of time that Medicare covers PHPs. 

CMHC owners and managers have been convicted of Medicare fraud 

for abusing the ability to bill for PHPs for long periods of time. These 

individuals manipulated the length of beneficiaries’ stays to maximize 

the number of days Medicare would pay for PHP. We determined the 

55 OIG 2010 Medicare PHP claims data. 

56 CMHC owners and managers, physicians, marketers, and other providers have been 

convicted of Medicare fraud for working together to solicit beneficiaries to attend CMHCs. 

DOJ, op. cit. 

57OIG, Five-State Review of Partial Hospitalization Programs at Community Mental Health 

Centers, OAS-04-98-02145, October 1998; OIG, Review of Partial Hospitalization Services 

Provided Through Community Mental Health Centers, OAS-04-98-02146, October 1998. 

58 DOJ, op. cit. 

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threshold for a long duration of PHP participation to be 147 days.59 

We then identified CMHCs with questionable billing based on the 

percentage of beneficiaries who received over 147 days of PHP 

services from the CMHCs. 

9.	 Beneficiaries who were readmitted to inpatient treatment. Medicare 

beneficiaries are eligible for participation in PHPs only if services will 

prevent relapse or hospitalization. The relapse of a severely mentally 

ill beneficiary might be unavoidable, but a high percentage of 

beneficiaries readmitted to inpatient treatment after receiving PHP 

services at a CMHC raises concerns because PHPs are intended to 

prevent relapse and hospitalization. Additionally, as shown by past 

OIG work, CMHCs may discharge beneficiaries to inpatient treatment 

and then readmit them to avoid questions about lengths of stay. Using 

2010 PHP and inpatient claims, we identified beneficiaries who were 

readmitted to inpatient treatment after PHP services and then returned 

to the CMHCs.60 We identified CMHCs with questionable billing 

based on the percentage of beneficiaries who were readmitted to 

inpatient treatment and then returned to the CMHCs. 

Geographic Analysis of CMHCs With Questionable Billing 

We determined whether CMHCs with questionable billing were 

concentrated in certain metropolitan areas.61 To do this, using each 

CMHC’s address, we first identified each CMHC’s Core Based Statistical 

Area (CBSA). A CBSA is a region around an urban center that has at least 

10,000 people.62 CBSAs may be categorized as metropolitan or 

micropolitan. We determined the total number of CMHCs in each 

metropolitan area and the number of CMHCs that had questionable 

59 We established this duration of stay by using a standard exploratory method for identifying 

members of a population with unusually high values on a given statistic compared to the rest 

of the population when no benchmarks exist. See J.W. Tukey, Exploratory Data Analysis, 

Addison-Wesley, 1977.

60 We identified beneficiaries who were in inpatient stays with mental health diagnoses, were 

discharged to CMHCs within 2 days, and were then readmitted to inpatient treatment with 

mental health diagnoses within 2 days of discharge from the CMHCs. We also identified 

beneficiaries who were receiving PHP services and were admitted to inpatient treatment with 

mental health diagnoses within 2 days of discharge from CMHCs, then readmitted to the 

CMHCs within 2 days of discharge from inpatient treatment. 

61 We used census data and each CMHC’s address to identify the metropolitan area of each. 

A “metropolitan area” is defined as a core urban area with a population of 50,000 people or 

more. A “micropolitan area” is defined as a core urban area with a population of at least 

10,000, but fewer than 50,000 people. U.S. Census Bureau, Metropolitan and Micropolitan 

Definition Files. Accessed at http://www.census.gov/population/metro/data/def.html on 

January 10, 2012. 

62 Ibid. 

Questionable Billing by Community Mental Health Centers (OEI-04-11-00100) 11 
 

 

Questionable Billing by Community Mental Health Centers (OEI-04-11-00100) 12 

billing.63 We then calculated the percentage of CMHCs that had 

questionable billing in each metropolitan area. 

State Licensure or Certification Analysis of CMHCs With 

Questionable Billing 

We reviewed State health facility licensing and mental health department 

Web sites and contacted State officials in these departments to determine 

whether their States require CMHCs to be licensed or certified. We 

determined whether questionable billing by CMHCs varied according to 

whether States had licensure or certification requirements for CMHCs. 

We analyzed the total number of CMHCs and the number of CMHCs that 

had questionable billing based on license or certification requirements. 

Limitations 

The findings in this report are based on our analysis of PHP claims 

submitted during 2010 and cannot be generalized to any other period. 

The nine questionable billing characteristics included in our analysis are 

not intended to be a comprehensive set of characteristics for identifying 

Medicare CMHC questionable billing. Additionally, while the presence of 

these characteristics raises questions about the appropriateness of the PHP 

claims submitted by CMHCs, we did not conduct a medical record review 

to determine whether the services billed by CMHCs were inappropriate or 

fraudulent. 

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. 

63 CMHCs were located in 54 metropolitan areas. To ensure reliability of the geographic 

analysis, we excluded all micropolitan areas and metropolitan areas that did not have at least 

three CMHCs. 
 

Questionable Billing by Community Mental Health Centers (OEI-04-11-00100) 13 

 

 

 

FINDINGS 

In 2010, approximately half of CMHCs had 

questionable billing 

In 2010, 102 of 195 (52 percent) CMHCs met or exceeded the threshold 

that indicated unusually high billing for at least 1 of 9 questionable billing 

characteristics. 

Approximately one-third of the CMHCs with questionable billing met or 

exceeded the thresholds for multiple characteristics we developed. 

Specifically, 33 CMHCs met or exceeded the thresholds for 2 or more 

characteristics, and 2 CMHCs met or exceeded the thresholds for 

4 characteristics. None of the CMHCs met or exceeded the thresholds on 

more than four characteristics. See Table 1 for the number and percentage 

of CMHCs by the number of questionable billing characteristics. 

Table 1: Number and Percentage of Questionable Billing Characteristics 

for Which CMHCs Met or Exceeded Unusually High Billing Thresholds, 

2010 

Number of Questionable 

Billing Characteristics 

Number of 

CMHCs Percentage of CMHCs 

0 93 48% 

1 69 35% 

2 25 13% 

3 6 3% 

4 2 1%

 Total 195 100% 

Source: OIG analysis of 2010 Medicare PHP, physician, and inpatient claims. 

For each questionable billing characteristic, Table 2 shows the median 

among all CMHCs, the range of unusually high billing, and the number of 

CMHCs with unusually high billing. Additionally, Table 2 includes the 

threshold for each characteristic that indicated questionable billing.64 

64 We determined these thresholds by using a standard exploratory method for identifying 

members of a population with unusually high values on a given statistic compared to the rest 

of the population when no benchmarks exist. See J.W. Tukey, Exploratory Data Analysis, 

Addison-Wesley, 1977. 
 

 

   

Table 2: CMHCs With Unusually High Billing by Questionable Billing Characteristic, 2010 

Questionable Billing Characteristic 

Median 

Among All 

CMHCs* 

CMHCs With Unusually High Billing** 

Threshold Range of Billing 

Number 

of 

CMHCs 

Beneficiaries who received only group 

psychotherapy during their PHP participation 0 percent 6 percent 6 to 100 percent 43 

Beneficiaries who were not referred to PHPs by 

health care facilities 0 percent 9 percent 10 to 100 percent 35 

Beneficiaries who were not evaluated by physicians 

during their PHP participation 2 percent 13 percent 15 to 72 percent 21 

Beneficiaries with no mental health diagnoses prior 

to participating in PHPs 1 percent 10 percent 10 to 24 percent 16 

Beneficiaries who participated in PHPs at CMHCs 

outside their communities 2 percent 15 percent 15 to 72 percent 15 

Beneficiaries who participated in PHPs at more than 

one CMHC 16 percent 66 percent 66 to 97 percent 5 

Beneficiaries with cognitive disorders who 

participated in PHPs 12 percent 40 percent 40 to 50 percent 4 

Beneficiaries with long durations of PHP participation 1 percent 44 percent 46 to 50 percent 3 

Beneficiaries who were readmitted to inpatient 

treatment 10 percent 29 percent 30 to 55 percent 3 

Total*** 102 

* The median (i.e., the 50th percentile) indicates that half of all CMHCs were equal to or fell below this value.
 

** We considered a CMHC’s billing to be unusually high if it was greater than the 75th percentile plus 1.5 times the interquartile 

range.
 

*** The columns do not sum to the totals because some CMHCs met or exceeded the threshold for more than one characteristic. 

Source: OIG analysis of 2009 and 2010 Medicare PHP, physician, and inpatient claims. 

In 2010, 43 CMHCs had unusually high percentages of 

beneficiaries who received only group psychotherapy during 

their PHP participation 

CMHCs that provide only group psychotherapy raise concern because 

PHPs must offer a combination of services. Further, the CMHCs may be 

billing for group psychotherapy that is not medically necessary or 

therapeutic. The percentages of beneficiaries who received only group 

psychotherapy during their PHP participation at these 43 CMHCs ranged 

from 6 to 100 percent. At over one-third of these CMHCs (15 of 43), 

more than 50 percent of beneficiaries received only group psychotherapy. 

In 2010, 35 CMHCs had unusually high percentages of 

beneficiaries who were not referred to PHP by health care 

facilities 

Beneficiaries must have been under the care of physicians who certified 

the need for PHPs before they can receive such services. However, 

beneficiaries who present themselves (i.e., were not referred by health care 

facilities) to the CMHCs may have no record of PHP certification. A high 

percentage of beneficiaries who present themselves to the CMHCs with 

orders from physicians raises questions about whether they were evaluated 

by physicians and eligible for PHP services. The percentages of such 

Questionable Billing by Community Mental Health Centers (OEI-04-11-00100) 14 
 

 

 

beneficiaries at these CMHCs ranged from 10 to 100 percent. At over half 

of these CMHCs (19 of 35), 100 percent of beneficiaries were not referred 

to PHPs by health care facilities. 

In 2010, 21 CMHCs had unusually high percentages of 

beneficiaries who were not evaluated by physicians during 

their PHP participation 

Beneficiaries at these 21 CMHCs did not have claims with HCPCS codes 

indicating that physician services occurred during their PHP participation 

for the entire year we reviewed. A high percentage of beneficiaries who 

were not evaluated by physicians raises concerns about whether services 

were medically reasonable and necessary. The percentages of such 

beneficiaries at these 21 CMHCs ranged from 15 to 72 percent. Out of the 

282 beneficiaries receiving PHP services at 1 CMHC in Miami-Dade 

County, Florida, 203 were not evaluated by physicians during their PHP 

participation. 

In 2010, 16 CMHCs had unusually high percentages of 

beneficiaries with no mental health diagnoses prior to 

participating in PHPs 

Beneficiaries must have mental disorders that severely interfere with 

multiple areas of their daily lives, including social, vocational, and/or 

educational functioning. The absence of prior inpatient treatment or 

physician visits for a mental disorder raises concerns about whether PHP 

services were medically reasonable and necessary. The percentages of 

such beneficiaries at these 16 CMHCs ranged from 10 to 24 percent. 

In 2010, 15 CMHCs had unusually high percentages of 

beneficiaries who participated in PHPs at CMHCs outside their 

communities 

A high percentage of beneficiaries that participated in PHPs at CMHCs 

outside their communities are a concern because the CMHCs may be 

offering financial kickbacks, obtaining beneficiary Medicare numbers and 

billing for services that were not provided, or providing PHP services that 

are not reasonable or necessary. The percentages of such beneficiaries at 

these 15 CMHCs ranged from 15 to 72 percent. One of these CMHCs, in 

Broward County, Florida, billed for a beneficiary who resided in Maui 

County, Hawaii–over 4,000 miles away. The other 77 beneficiaries at this 

CMHC resided an average of nearly 550 miles away. 

In 2010, 15 CMHCs met or exceeded thresholds that indicated 

questionable billing for other characteristics 

Fifteen CMHCs met or exceeded thresholds that indicated questionable 

billing for at least one of the other four characteristics we developed. 

Questionable Billing by Community Mental Health Centers (OEI-04-11-00100) 15 
 

 

These characteristics were the percentages of beneficiaries who (1) 

participated in PHPs at other CMHCs, (2) had inappropriate diagnoses for 

participation in PHPs, (3) had long durations of PHP participation, and (4) 

were readmitted to inpatient treatment. 

Participation in PHPs at Other CMHCs. Five CMHCs had unusually 

high percentages of beneficiaries who participated in PHPs at more than 

one CMHC. This may indicate that CMHCs have shared beneficiaries. 

Additionally, this raises concerns about whether the PHP services were 

medically reasonable and necessary and whether the services were 

provided. Three of these five CMHCs had beneficiaries who participated 

in PHPs at five different CMHCs during 2010. 

Cognitive Disorders During PHP Participation. Four CMHCs had 

unusually high percentages of beneficiaries with cognitive disorders (e.g., 

Alzheimer’s disease or severe dementia) who participated in PHPs. This 

may indicate that these CMHCs inappropriately billed for services that are 

not medically reasonable or necessary. Of the 140 beneficiaries served by 

these 4 CMHCs, 61 percent (85 beneficiaries) had dementia and 

31 percent (43 beneficiaries) had Alzheimer’s disease diagnoses. 

Long Durations of PHP Participation. Three CMHCs had unusually high 

percentages of beneficiaries who had long durations (i.e., over 147 days) 

of PHP participation. This may indicate that the CMHCs are providing 

PHP services that are not medically reasonable or necessary. One of these 

CMHCs had three beneficiaries who received PHP services for almost the 

entire year (362 days). 

Readmission to Inpatient Treatment. Three CMHCs had unusually high 

percentages of beneficiaries who were readmitted to inpatient treatment 

after PHP participation. This may indicate that the CMHCs are providing 

PHP services that are not preventing relapse and hospitalization, as 

intended. The percentages of beneficiaries who were readmitted to 

inpatient treatment and then returned to these three CMHCs ranged from 

30 to 55 percent. 

Approximately two-thirds of CMHCs with 

questionable billing were located in eight

metropolitan areas 

In 2010, 8 of 11 metropolitan areas with at least 3 CMHCs had higher 

percentages of CMHCs with questionable billing than the national 

Questionable Billing by Community Mental Health Centers (OEI-04-11-00100) 16 
 

 

Questionable Billing by Community Mental Health Centers (OEI-04-11-00100) 17 

 

percentage.65 The percentages in these metropolitan areas ranged from 

61 to 100 percent, compared to the national percentage of 52 percent. 

These metropolitan areas made up 69 percent (70 of 102) of all CMHCs 

with questionable billing. All were located in Florida, Louisiana, and 

Texas. Table 3 shows the number and percentage of CMHCs in these 

eight areas. The remaining 26 CMHCs with questionable billing were 

dispersed among 22 other metropolitan areas. 

Table 3: Metropolitan Areas With a Higher Percentage of CMHCs With 

Questionable Billing Than the National Percentage, 2010 

Metropolitan Area 

Number of CMHCs 

With Questionable 

Billing 

Total Number of 

CMHCs 

Percentage of CMHCs 

With Questionable 

Billing 

Jacksonville, FL 3 3 100% 

Houston, TX 13 16 81% 

Tampa, FL 5 7 71% 

Lafayette, LA 2 3 67% 

San Antonio, TX 2 3 67% 

Houma, LA* 2 3 67% 

Miami, FL 32 52 62% 

Baton Rouge, LA 11 18 61%

 Total 70 102 69%

 National 102 195 52% 

*Indicates Houma-Bayou Cane-Thibodaux metropolitan area.
 

Source: OIG analysis of 2009 and 2010 Medicare PHP, physician, and inpatient claims. 

The Miami metropolitan area had a higher percentage of CMHCs with 

questionable billing than the national percentage for six of the nine 

characteristics. The Baton Rouge metropolitan area had a higher 

percentage of CMHCs with questionable billing than the national 

percentage for five of the nine characteristics. See Appendix D for 

additional information about these eight metropolitan areas by 

characteristic.66 

Ninety percent of CMHCs with questionable billing 

were in States that do not require CMHCs to be 

licensed or certified 

In 2010, approximately half (13 of 24) of States with CMHCs did not 

require CMHCs to be licensed or certified. Most (167 of 195) of the 

CMHCs and the majority (92 of 102) of CMHCs with questionable billing 

were located in these States. 

65 Of the 102 CMHCs with questionable billing, 96 were located in 31 metropolitan areas, 4 

were located in micropolitan areas (a core urban area with between 10,000 and 50,000 

people), and 2 were located in rural areas. However, this analysis focused on the 11 

metropolitan areas that had at least 3 CMHCs. 

66 The other three metropolitan areas included in this analysis were New Orleans, Boston, and 

Shreveport. 
 

Approximately half (92 of 167) of CMHCs in States that did not require 

CMHCs to be licensed or certified had questionable billing, and 

approximately one-third (10 of 28) of CMHCs in other States had 

questionable billing. Further, States that require CMHCs to be licensed or 

certified had no CMHCs with questionable billing for five of the nine 

questionable billing characteristics. Table 4 compares CMHCs with 

questionable billing in States with and without licensure and certification 

requirements by characteristic. 

Table 4: CMHCs With Questionable Billing Characteristics by State Licensure or 

Certification Requirements, 2010 

Questionable Billing Characteristic 

States With Licensure/Certification States Without Licensure/Certification 

Total CMHCs 

With 

Questionable 

Billing 

Percentage of 

CMHCs With 

Questionable 

Billing (N=28) 

Total CMHCs 

With 

Questionable 

Billing 

Percentage of 

CMHCs With 

Questionable 

Billing (N=167) 

Beneficiaries who received only group 

psychotherapy during their PHP 

participation 7 25% 36 22% 

Beneficiaries who were not referred to 

PHPs by health care facilities 5 18% 30 `18% 

Beneficiaries who were not evaluated 

by physicians during their PHP 

participation 1 4% 20 12% 

Beneficiaries with no mental health 

diagnoses prior to participating in PHP 0 0% 16 10% 

Beneficiaries who participated in PHPs 

at CMHCs outside their communities 0 0% 15 9% 

Beneficiaries who participated in PHPs 

at more than one CMHC 0 0% 5 3% 

Beneficiaries with cognitive disorders 

who participated in PHPs 1 4% 3 2% 

Beneficiaries with long durations of 

PHP participation 0 0% 3 2% 

Beneficiaries who were readmitted to 

inpatient treatment 0 0% 3 2%

 Total* 10 36% 92 55% 

*The columns do not sum to the totals because some CMHCs met or exceeded the threshold for more than one 

characteristic. 

Sources: OIG analysis of 2009 and 2010 Medicare PHP, physician, and inpatient claims and State Web sites.
 

Questionable Billing by Community Mental Health Centers (OEI-04-11-00100) 18 
 

CONCLUSION AND RECOMMENDATIONS 

In 2010, Medicare paid approximately $218.6 million to 206 CMHCs for 

PHP services. Past OIG studies have found vulnerabilities in Medicare 

payments to CMHCs for PHPs. Additionally, in 2011, four CMHC 

owners and managers in Miami-Dade County, Florida, were convicted of 

fraudulently billing Medicare approximately $200 million for medically 

unnecessary PHP services from 2002 to 2010. 

Approximately half of CMHCs had questionable billing for at least one of 

the nine OIG characteristics we reviewed. Approximately one-third of the 

CMHCs with questionable billing met or exceeded the threshold for at 

least two of the nine characteristics. The presence of these characteristics 

raises questions about the appropriateness of the PHP claims submitted by 

these CMHCs. However, we did not conduct a medical record review to 

determine whether the services billed by CMHCs were fraudulent. 

Additionally, 8 of 11 metropolitan areas with at least 3 CMHCs had higher 

percentages of CMHCs with questionable billing than the national 

percentage. Finally, 90 percent of the CMHCs with questionable billing 

were located in States that do not require CMHCs to be licensed or 

certified. All eight metropolitan areas with a higher percentage of CMHCs 

with questionable billing than the national percentage were located in 

these States. 

Collectively, these findings identify specific vulnerabilities in Medicare 

payments to CMHCs for PHPs that should be addressed to safeguard the 

Medicare program. 

We recommend that CMS: 

Increase its monitoring of CMHCs’ Medicare Billing and Fraud 

Prevention Controls 

When using its predictive analytics system to identify CMHCs with high 

fraud risk scores, CMS should consider, at a minimum, including the OIG 

questionable billing characteristics used in this evaluation. Further, to 

increase fraud prevention controls, CMS should instruct MACs to develop 

and implement national claims processing edits based on these 

characteristics, as appropriate. For example, edits can be developed or 

expanded to check for beneficiaries with cognitive disorders. 

Additionally, CMS should instruct ZPICs in the identified eight 

metropolitan areas to monitor CMHCs’ billing for PHPs using, at a 

minimum, these characteristics. 

Questionable Billing by Community Mental Health Centers (OEI-04-11-00100) 19 
 

Enforce the Requirement That Certifying Physicians Be Listed 

on the PHP Claims Submitted by CMHCs 

Beneficiaries admitted to PHPs must be under the care of physicians who 

certify the need for PHP services. CMS should enforce the Medicare 

Claims Processing Manual requirement that the certifying physician be 

listed on the PHP claim submitted by CMHCs. This provides additional 

information for CMS to use to verify whether the PHP services billed by 

CMHCs were medically reasonable and necessary. 

Finalize and Implement the Proposed CoPs for CMHCs 

CMS should finalize its proposed CoPs for CMHCs and implement them 

as soon as possible. Without them, the Medicare program has limited 

ability to oversee the quality, health, and safety of care provided in 

CMHCs. In States that oversee CMHCs through licensure or certification 

requirements, CMHCs had lower rates of questionable billing compared to 

rates in States with no licensure or certification requirements. Similarly, 

CoPs can help to ensure that all CMHCs are subject to a consistent level of 

oversight. 

Furthermore, after finalizing the CoPs for CMHCs, CMS should establish 

an appropriate minimum survey cycle to verify CMHCs’ compliance with 

the CoPs. In doing so, CMS should consider seeking statutory authority, if 

necessary, to grant deeming authority to accreditation organizations. This 

can assist CMS in ensuring that CMHCs are surveyed according to the 

established survey cycle. 

Review and Take Appropriate Action Against CMHCs With 

Questionable Billing 

In a separate memorandum, we will refer the CMHCs with questionable 

billing that we identified to CMS for appropriate action. CMS could 

determine whether the services billed by these CMHCs were inappropriate 

or fraudulent by conducting medical record reviews; conducting site visits, 

particularly in States that do not require CMHCs to be licensed or 

certified; implementing prepay reviews; or referring CMHCs to law 

enforcement for investigation. 

Questionable Billing by Community Mental Health Centers (OEI-04-11-00100) 20 
 

AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 

RESPONSE 

CMS concurred with all four of our recommendations and provided 

information about its efforts to address vulnerabilities in Medicare 

payments to CMHCs for PHPs. Specifically, CMS will provide ZPICs 

with a copy of this report to incorporate OIG’s questionable billing 

characteristics into their business and investigative processes as 

appropriate. CMS will also consider incorporating these characteristics 

into its Fraud Prevention System models. Finally, these characteristics 

will be considered in the development of a pilot project focused on 

CMHCs in the three highest risk States of Florida, Texas, and Louisiana. 

With regard to the second recommendation, CMS will develop an edit in 

the claims processing system to ensure that the certifying physicians are 

listed on the PHP claims submitted by CMHCs. 

With regard to the third recommendation, CMS expects to publish the 

final rule for CMHC CoPs in the spring of 2013. CMS plans to establish a 

5-year survey cycle to verify a CMHC’s compliance with CoPs. 

Additionally, CMS will consider seeking statutory authority to grant 

deeming status to accreditation organizations. 

With regard to our fourth recommendation, CMS will share the CMHCs 

with questionable billing identified in this report with MACs to consider 

when prioritizing their work. CMS will also share information about these 

CMHCs with Recovery Audit Contractors to consider as they decide 

which claims processed by MACs to review. 

We support CMS’s efforts to address these issues and encourage it to 

continue making progress. For the full text of CMS’s comments, see 

Appendix E. 

Questionable Billing by Community Mental Health Centers (OEI-04-11-00100) 21 
 

      

 

APPENDIX A 

Number of Community Mental Health Centers and 

Medicare Payments in Each State, 2010 

State 

Total 

Number 

of 

CMHCs Total Medicare Payment 

Florida 72 $82,389,314 

Louisiana 57 $60,725,138 

Texas 23 $50,403,363 

Mississippi 4 $6,728,693 

Tennessee 4 $4,007,575 

Massachusetts 10 $3,192,482 

Georgia 3 $2,153,531 

North Carolina 1 $2,135,432 

South Carolina 1 $1,630,377 

California 4 $1,614,811 

Alabama 6 $841,167 

Michigan 1 $748,687 

Arizona 1 $541,137 

West Virginia 1 $270,169 

Connecticut 2 $259,370 

Maryland 1 $250,238 

New York 1 $177,722 

Minnesota 3 $121,685 

Illinois 2 $113,998 

Nebraska 1 $102,492 

Pennsylvania 4 $67,346 

Utah 1 $55,915 

Iowa 1 $49,584 

Missouri 1 $16, 815 

Puerto Rico 1 $1,078

 Total 206 $218.6 million 

Source: Office of Inspector General analysis of 2010 Medicare Partial 

Hospitalization Program claims data. 

Questionable Billing by Community Mental Health Centers (OEI-04-11-00100) 22 
 

 

APPENDIX B 

Healthcare Common Procedure Coding System Codes Used on Partial 

Hospitalization Program Claims 

Code Description 

90801 or 90802 Behavioral Health Treatments/Services 

90801, 90802, 90899 Psychiatric General Services 

90816, 90817, 90818, 

90819, 90821, 90822, 

90823, 90824, 90826, 

90827, 90828, 90829, 

90845, 90865, 90880 Individual Psychotherapy 

90846 or 90847 Family Psychotherapy 

96101, 96102, 96116, 

96118, 96119, or 96120 Psychiatric Testing 

G0129 Occupational Therapy 

G0176 Activity Therapy 

G0410 or G0411 Group Psychotherapy 

G0177 Education Training 

Source: Centers for Medicare & Medicaid Services, Medicare Claims Processing Manual, Pub. No. 

100-04, ch. 4, § 260.1.1. 

Questionable Billing by Community Mental Health Centers (OEI-04-11-00100) 23 
 

 

APPENDIX C 

Number of Beneficiaries With Cognitive Disorders Who Participated in Partial Hospitalization Programs, 

2010 

Diagnosis 

Code Description Number of Beneficiaries* 

3310 Alzheimer's disease 1,254 

29410 

Dementia in conditions classified elsewhere without behavioral 

disturbance 683 

29411 

Dementia in conditions classified elsewhere with behavioral 

disturbance 423 

317 Mild intellectual disabilities 404 

2900 Senile dementia, uncomplicated 361 

319 Unspecified intellectual disabilities 353 

29040 Vascular dementia, uncomplicated 205 

33183 Mild cognitive impairment, so stated 168 

29043 Vascular dementia, with depressed mood 119 

29021 Senile dementia with depressive features 115 

29020 Senile dementia with delusional features 109 

3109 

Unspecified nonpsychotic mental disorder following organic 

brain damage 105 

33182 Dementia with Lewy bodies 100 

29010 Presenile dementia, uncomplicated 95 

29013 Presenile dementia with depressive features 77 

3180 Moderate intellectual disabilities 73 

2903 Senile dementia with delirium 51 

29041 Vascular dementia, with delirium 50 

29042 Vascular dementia, with delusions 43 

29012 Presenile dementia with delusional features 25 

29011 Presenile dementia with delirium 18 

2908 Other specified senile psychotic conditions 18 

2909 Unspecified senile psychotic conditions 17 

3181 Severe intellectual disabilities 10 

33119 Other frontotemporal dementia 10 

3182 Profound intellectual disabilities 4 

*Some beneficiaries had more than one cognitive disorder during partial hospitalization program (PHP) participation. 

Sources: Centers for Medicare & Medicaid Services, Version 28 Full and Abbreviated Diagnosis Code Titles, Office of 

Inspector General analysis of 2010 Medicare PHP, physician, and inpatient claims. 

Questionable Billing by Community Mental Health Centers (OEI-04-11-00100) 24 
 

 

APPENDIX D 

Percentage of Community Mental Health Centers With Questionable Billing by Metropolitan Area and 

Characteristic, 2010 

Questionable 

Billing 

Characteristic 

National 

(N=102) 

Jacksonville 

(N=3) 

Houston 

(N=13) 

Tampa 

(N=5) 

Lafayette 

(N=2) 

San 

Antonio 

(N=2) 

Baton 

Rouge 

(N=11) 

Houma 

(N=2) 

Miami 

(N=32) 

Beneficiaries who 

received only 

group 

psychotherapy 

during their partial 

hospitalization 

program (PHP) 

participation 42% 33% 54% 20% 0% 100% 0% 0% 53% 

Beneficiaries who 

were not referred 

to PHPs by health 

care facilities 34% 100% 85% 80% 0% 0% 0% 0% 22% 

Beneficiaries who 

were not 

evaluated by 

physicians during 

their PHP 

participation 21% 33% 0% 0% 0% 0% 55% 0% 25% 

Beneficiaries with 

no mental health 

diagnoses a year 

prior to 

participating in 

PHPs 16% 0% 0% 0% 0% 0% 27% 100% 19% 

Beneficiaries who 

participated in 

PHPs at 

community 

mental health 

centers (CMHC) 

outside their 

communities 

15% 67% 8% 0% 0% 50% 18% 0% 16% 

Beneficiaries who 

participated in 

PHPs at more 

than one CMHC 5% 0% 8% 0% 0% 0% 9% 0% 9% 

Beneficiaries with 

cognitive 

disorders who 

participated in 

PHPs 4% 0% 0% 0% 0% 0% 0% 0% 6% 

Beneficiaries with 

long durations of 

PHP participation 3% 0% 8% 0% 0% 0% 9% 0% 0% 

Beneficiaries who 

were readmitted 

to inpatient 

treatment 3% 0% 0% 0% 100% 0% 0% 0% 0% 

Note: Bold type indicates that the percentage was greater than the national percentage. 

Source: Office of Inspector General analysis of 2009 and 2010 Medicare PHP, physician, and inpatient claims. 

Questionable Billing by Community Mental Health Centers (OEI-04-11-00100) 25 
 

 

APPENDIX E 

Agency Comments 

Questionable Billing by Community Mental Health Centers (OEI-04-11-00100) 26 
 

Questionable Billing by Community Mental Health Centers (OEI-04-11-00100) 27 
 

Questionable Billing by Community Mental Health Centers (OEI-04-11-00100) 28 
 

Questionable Billing by Community Mental Health Centers (OEI-04-11-00100) 29 
 

ACKNOWLEDGMENTS 

This report was prepared under the direction of Dwayne Grant, Regional 

Inspector General for Evaluation and Inspections in the Atlanta regional 

office, and Jaime Durley, Deputy Regional Inspector General. 

Latrice Rollins served as the lead analyst for this study. Other principal 

Office of Evaluation and Inspections staff from the Atlanta regional office 

who contributed to the report include Evan Godfrey and Holly Williams; 

central office staff who contributed include Kevin Farber, Scott Horning, 

Sandy Khoury, Berivan Demir Neubert, and Debra Roush. 

Questionable Billing by Community Mental Health Centers (OEI-04-11-00100) 30 
 

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.