Department of Health and Human Services 

OFFICE OF 

INSPECTOR GENERAL 

CARRIER ASSIGNMENT OF MEDICARE 

PROVIDER NUMBERS 

. 

Richard P. Kusserow 

INSPECTOR GENERAL 

APRIL 1992 
OFFICE OF INSPECTOR GENERAL 

The mission of the Office of Inspector General (OIG), as mandated by Public Law 95452, 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 three OIG operating components: the Office of Audit Services, the Office of 

Investigations, and the Office of Evaluation and Inspections. The OIG also informs the Secretary of 

HHS of program and managementproblems, and recommends courses to correct them. 

OFFICE OF AUDIT SERVICES 

The OIG’s Offtce of Audit Services (OAS) provides all auditing services for HHS, either by 

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

examine the performance of HHS programs and/or its grantees and contractors in carrying out their 

respective responsibilities, and are intended to provide independent assessmentsof HHS programs and 

operations in order to reduce waste, abuse and mismanagementand to promote economy and 

efficiency throughout the Department. 

OFFICE OF INVESTIGATIONS 

The OIG’s Office of Investigations (01) conducts criminal, civil, and administrative investigations of 

allegations of wrongdoing in HHS programs or to HHS beneficiaries and of unjust enrichment by 

providers. The investigative efforts of 01 lead to criminal convictions, administrative sanctions, or 

civil money penalties. The 01 also oversees State Medicaid fraud control units which investigate and 

prosecute fraud and patient abuse in the Medicaid program. 

OFFICE OF EVALUATION AND INSPECTIONS 

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

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

the public. The findings and recommendations contained in the inspections reports generate rapid, 

accurate, and up-to-date information on the efficiency, vulnerability, and effectiveness of departmental 

programs. 

Entitled “Carrier Assignment of Medicare Provider Numbers,” this report describes and assessesthe 

process by which Medicare carriers assign provider numbers. This report was prepared under the 

direction of Ralph Tunnell, Regional Inspector General of Region VI, Office of Evaluation and 

Inspections, and Chester B. Slaughter, Deputy Regional Inspector General. Participating in this 

project were the following OIG personnel: 

Region VI, OEI Headquarters, OEI 

Kevin Golladay Wayne Powell 

Leah Bostick 

Douglas Lauver 
Department of Health and Human Services 

OFFICE OF 

INSPECTOR GENERAL 

CARRIER ASSIGNMENT OF MEDICARE 

PROVIDER NUMBERS 

Richard P. Kusserow 

INSPECTOR GENERAL 

OEI-0643940871 
EXECUTIVE SUMMARY 

PURPOSE 

This report describes and assessesthe process by which Medicare carriers assign provider 

numbers. 

Medicare carriers assign provider numbers to qualified providers of Part B services who 

furnish services or supplies to Medicare beneficiaries. The numbers are used in processing 

claims and establishing Medicare pricing and utilization profiles. To obtain a provider 

number from a carrier, providers typically complete the carrier’s provider number application 

form and meet criteria specified by Medicare regulations. Carriers are responsible for 

determining if providers meet Medicare criteria through its number assignment process. 

METHODOLOGY 

This inspection consisted of several phases. First, we conducted a review of relevant Health 

Care Financing Administration (HCFA) policies and Medicare laws and discussions with 

HCFA staff. Next, we requestedcopies of all application forms used by carriers to obtain 

information prior to assigning a number to a provider. To test assignment procedures, we 

reviewed carrier documentation supporting the recent assignment of numbers to more than 

240 providers. Specifically, 40 carriers were asked to supply file documentation for the most 

recent applicant assigned a provider number for seven different types of providers (solo 

physician, physician group or clinic, chiropractor, durable medical equipment supplier, 

ambulance, certified registered nurse anesthetist, and physician assistant). Next, we 

surveyed 38 carrier personnel responsible for assigning numbers. Additionally, we discussed 

provider number assignment vulnerabilities with carrier program integrity staff (25 

respondents) and reviewed files of providers with overpayments selected from the 12/01/89 

HCFA Physician/Supplier Overpayment Report. Finally, we reviewed Management 

Implication Reports (MIRs) prepared by the Office of Inspector General’s Office of 

Investigations (01) suggesting provider number assignment problems and concerns. We 

contacted each of the eight 01 regional offices to obtain case experience and perspectives and 

to discuss prior MIRs. 

FINDINGS 

HCFA’s Direction and Oversight of Carrier Provider Number Assignment Procedures 

are Inadequate. 

The HCFA provides insufficient practical direction to carriers concerning the provider 

number assignment function. Specifically, HCFA has not clearly defined the methods 

or depth of understanding and testing to ensure adequate knowledge about a provider 

before a number is assigned. Our review of carrier instructions in the Medicare 

i 
Carrier Manual (MCM) identified several issuesnot adequately addressed. For 

example, what is a carrier’s responsibility to understandand determine legal 

authorization to practice? This lack of direction and oversight contributes to carrier 

provider number assignment weaknessesand vulnerabilities. 

Carrier Provider Number Assignment Weaknesses and Vulnerabilities Exist. 

0 Many cartiers do not adequately document provider number assignment procedures. 

0 Cartiers obtain or maintain too little provider infomration. 

Application forms often do not obtain sufficient information from providers. 

Little or no businessownership information is required by carriers. 

Ironically, the least regulated providers (e.g., durable medical equipment) are 

the least scrutinized by carriers when applying for a provider number. 

Carrier application forms are often missing or not readily retrievable. 

0 Some carriers fail to verkif provider qualifications prior to assignment of a prwider 

number. 

Some carriers do not validate provider credentials (e.g., State license). 

Many carriers allow reassignmentof benefits without determining if the 

reassignment meets Medicare legal requirements. 

0 Weak provider number assignment procedures contribute to progmm vulnembilities. 

Carrier methods or practice to identify all numbers assigned to a provider are 

inadequate. 

Providers can manipulate multiple numbers and jurisdiction rules to increase 

reimbursement or avoid detection of abusive practices. 

Most carriers do not uniquely identify physician assistantsand thus, cannot 

perform adequateutilization review. 

Carrier computer records maintained on providers need improvement. 

Specifically, provider name irregularities exist and provider State license 

numbers are missing or inaccurately entered. 

0 Many carriers assign additional provider numbers solely for a provider’s 

bookkeeping convenience. 
OIG Recommendations and HCFA Action Plan 

In our draft report, we made specific recommendations to correct the weaknesses cited 

above. (They are included verbatim on page 20 of this final report.) The HCFA provided 

written comments on the draft report. More importantly, however, HCFA itself has 

undertaken several major initiatives to address these problems and related issues raised in a 

prior OIG report entitled “Carrier Maintenance of Medicare Provider Numbers.” We and 

HCFA, therefore, worked together to reach agreement on an action plan to improve the 

provider number process. In light of this, we are no longer designating the problems cited in 

this and the prior report as a material weakness. The following is the agreed upon action 

plan: 

MEDICARE PROVIDER NUMBERS 

ACTION PLAN 

HCFA will issue a modification to the Medicare Carrier Manual which will: 

Clearly state that carriers have a responsibility to ensure the integrity of 

provider numbers and to ensure that only those practitioners and providers 

with legal authority to practice are given and may retain provider 

numbers. 

Require carriers to stay abreast of changes in relevant laws and regulations 

concerning medical practice requirements. 

Require carriers to make every reasonable effort to receive on an ongoing 

basis information from State licensing authorities and other appropriate 

bodies about the currency of licenses. 

Require carriers to maintain provider number applications for at least six 

years after deactivation of the number (the period needed to facilitate 

investigations, prosecutions, and sanctions). This requirement pertains to 

applications from both health professionals and provider entities which are 

discussed separately below. 

Require carriers to periodically purge from their lists of approved numbers 

those that have been inactive and for professionals or entities who no 

longer have valid licenses required by the State. 

HEALTH PROFESSIONALS 

HCFA will continue to vigorously implement and enforce compliance with the 

provisions of the recently established UPIN system for Medicare physicians 

.. . Ill 
(which includes medical doctors, osteopaths, dentists, chiropractors, podiatrists, 

and optometrists). 

HCFA will explore the extension of the UPIN system to cover all limited licensed 

professionals that can bill Medicare directly. HCFA will provide a schedule for 

doing so. This would include clinical psychologists, clinical social workers, and 

certified registered nurse anesthetists. 

All registry data will be made readily available to all carriers on January 1. 1992. 

(Procedures prior to that date only allowed carriers to obtain information about 

professionals within their own jurisdiction.) 

HCFA will monitor and ensure compliance of the carriers with their responsibilities regarding provider numbers as set forth in the Medicare Carrier Manual. (See 

GENERQL section above.) 

HCFA will implement a major reform of the carrier process for dealing with 

certain “suppliers”. (Here, the term is meant to include entities which provide: 

durable medical equipment, routine and readily available supplies, prosthetics, 

orthotics, immunosuppressant drugs, and ESRD services.) 

Some of the more important features of this initiative are: 

Four regional carriers will be responsible for establishing supplier numbers 

and processing all Medicare claims for the above mentioned supplies. 

A clearinghouse which will contain information from supplier number 

applications and whose data will be accessible to all of these carriers. 

A standard application form which includes information to enable the 

carriers to identify each unique entity, their ownership, related entities, 

and sanctions. 

The application form will contain a signed statement of the applicant 

attesting to the veracity of all information provided and acknowledging 

responsibility for false or misleading statements. 

The carriers will be responsible for processing all claims for supplies 

furnished to beneficiaries who reside within their jurisdiction. 

HCFA plans to implement this major reform within the next two years. 

The statement of work for the contract under which these carriers will function 

will include a clear statement of responsibilities concerning supplier numbers 

similar to those listed in the GENERAL. section above. 

iv 
These carriers will be required to use the information in the clearinghouse to 

screen applicants for supplier numbers for such things as relationships to 

sanctioned individuals or business or to businesses suspected of fraud or abuse. 

The carriers will verify the accuracy and completeness of the information 

contained in supplier number applications and files, and will identify and take 

appropriate action against problem suppliers. 

HCFA will vigorously monitor compliance of these carriers with those contractual 

provisions related to the application for, granting of, and maintenance of supplier 

numbers. HCFA is determining how the performance of these carriers will be 

evaluated. 

HCFA will require carriers to reenroll all suppliers every two years to insure that 

the ownership and operating information remains current. 

In the future, HCFA will extend this system to cover other supplier entities such 

as independent physiological labs, magnetic resonance imagers, and ambulance 

companies. In the meantime, however, these other supplier entities will be 

required to use a standard application form with provisions for identifying 

ownership and sanctions, and including the signed veracity certification. 

V 
TABLEOFCONTENTS 

EXECUTIVE SUMMARY 

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

Purpose. .................................................... 1 ’ 

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

Methodology. ................................................ 4 

FINDINGS ,...,................a........................ 6 

HCFA’s Direction and Oversight of Carrier Provider Number Assignment 

Procedures are Inadequate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 

Carrier Provider Number Assignment Weaknesses and Vulnerabilities Exist . . . . . . 7 

Many carriers do not document provider number assignment procedures . . . . . 7 

Carriers obtain or maintain too little provider information . . . . . . . . . . . . . . . . 7 

Some carriers fail to verify provider qualifications . . . . . . . . . . . . . . . . . . . . 10 

Weak provider number assignment procedures contribute to program 

vulnerabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 

Many carriers assign additional provider numbers solely for a provider’s 

bookkeeping convenience . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 

RECOMMENDATIONS . . , . , . , . . . , . . , . . . . . . . . . . . . . . . . . . . . . . . 20 

HCFA RESPONSE AND ACTION PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . 22 

APPENDICES . . . . . . . . . . . . . . . . . . . . . ..a.................. 24 

Appendix A: Part B Providers 

Appendix B: Carrier Respondents and State Jurisdictions 

Appendix C: Examples of Information Requested on Application Forms for 

DME and Physicians 

Appendix D: Claim Jurisdiction Rules Simplified 

Appendix E: Examples of Carrier Methods of Processing PA Claims 

Appendix F: Physician Registry Activity by Carrier 

Appendix G: Carrier Provider Number Assignment Activity 

Appendix H: Carrier Supplied Counts of Various Types of Providers 
INTRODUCTION 

PURPOSE 

This report reviews the processby which Medicare carriers assign provider numbers. 

Specific objectives were to: 

1) describe and assesscarrier provider number assignment procedures and 

2) discuss vulnerabilities in these procedures. 

A recently released report, “Carrier Maintenance of Medicare Provider Numbers” (OEI-06-

89-00870), prepared in conjunction with this inspection, describes and assesseshow carriers 

maintain provider numbers once assigned. 

BACKGROUND 

Carriers are private insurance companies acting under contract with the Health Care 

Financing Administration (HCFA) to processclaims by beneficiaries and providers for 

services or supplies covered under Medicare Part B. While most Stateshave jurisdiction for 

one State, a few carriers handle more than one State. The HCFA provides direction to the 

carriers on payment matters and is ultimately responsible for ensuring carriers adhere to 

applicable program policies and procedures. 

In fiscal year 1989, Part B covered approximately 32 million enrollees and paid benefits of 

about $37 billion for over 407 million claims. With such an enormous expenditure of 

government funds and volume of claims to process, it is imperative carriers ensure payments 

are 1) made only for services covered under the Medicare program, 2) medically necessary 

under recognized standardsof medical care, 3) actually rendered to eligible Medicare 

beneficiaries, 4) reimbursed at appropriate payment levels, and 5) delivered by providers 

meeting standardsrequired by State and Federal law. 

State Licensure and Certification 

Licensing and certifying providers are primarily State functions. Individuals or entities must 

meet State criteria to obtain and maintain a license or certification. The States are 

responsible for regulating the practice of those they have licensed or certified. Statesare 

also responsible for ensuring these providers meet standardsof professional competence and 

personal integrity considered necessaryto protect the public. 

The State license or certificate demonstratesthe provider satisfies the State’s established 

standardsin such areas as education, experience, and ethics. Once licensed or certified, the 

provider must then comply with the State’s prescribed standards for the practice of the 

profession and any other specified criteria for maintaining a license or certification. 
Failure to meet these requirements may result in the State suspendingor restricting the 

license or certificate to provide services. When a provider loses the legal authority to 

practice, no seNices of the provider are covered by Medicare. 

Fedeml Interest in Medical Provider Qual$htions 

The Federal government has shown a strong interest in ensuring medical providers have 

adequatequalifications. The Consolidated Omnibus Budget Reconciliation Act of 1985 

mandated a physician registry and the use of a unique practitioner identifier number (UPIN) 

to prevent duplicate payments for hospital-basedphysicians and interns under the Medicare 

program and to more accurately track Federally-sanctioned physicians. The HCFA oversees 

the registry. 

Another database,the National Practitioner Data Bank, recently began operation monitoring 

State licensed health practitioners. This data bank maintains records of all adverseactions 

(e.g., license revocation, malpractice) taken against medical providers and entities after the 

opening of the data bank. The data bank was authorized by the Health Care Quality 

Improvement Act of 1986 (P.L. 99-660, title IV) and the Medicare and Medicaid Patient and 

Program Protection Act of 1987 (P.L. 100-93, section 5). This databank is monitored by the 

Public Health Service (PHS). 

These two databasesenhancethe Federal government’s ability to monitor providers. 

However, responsibility for ensuring Medicare providers meet licensing and other 

requirements specified by State and Federal law rests ultimately with carriers. 

Carrier Ptvvider Number Assignment 

Carriers assign unique identification numbers (hereafter referred to as provider numbers) to 

providers of Medicare Part B reimbursable servicesor supplies. Provider numbers are used 

in processing claims for services rendered to Medicare beneficiaries. The number is also 

used in establishing Medicare pricing and utilization profiles. If the provider of services 

does not have a provider number, payment probably will not be made for services. To 

obtain a provider number from a carrier, providers must follow the carrier’s application 

procedures. This generally involves completion of the carrier’s provider number application 

form. Additionally, the provider must meet Medicare requirements. Carriers assumeall 

costs for assigning and maintaining provider numbers. 

The accuracy and effectiveness of a carrier in meeting applicable Medicare responsibilities is 

dependent in large measure upon its provider number assignmentprocess. As described thus 

far, the provider number assignment processappearsto be relatively simple. However, its 

simplicity disguises its importance; failure to adequately determine a provider’s qualifications 

and payment variables can have significant consequencesfor the Medicare program in fraud, 

abuse, or error. Prudence and common sensedictate provider numbers should be guarded 

with every reasonablediligence. 
&ledicare Reouirements 

Prior to the issuanceof a provider number, carriers need to establish the following: 

Provider 

Identification 

Credential 

Verification 

Exclusion from 

Participation 

Carrier Claim 

Jurisdiction 

Carrier Pricing 

Rules 

Reassignment 

Limitations 

Reporting 

Requirements 

Utilization Review 

What provider(s) renders services or supplies? 

Does the provider meet Medicare qualifications (e.g., legally authorized by the 

State where services are rendered)? 

Is the provider prohibited from participating in the Medicare program? 

What carrier has jurisdiction for claims submitted by the provider7 

What method of reimbursement applies (e.g., fee schedule)? What is the 

correct customary and prevailing charge to use? What is the specialty of the 

provider7 Is the provider Medicare participating or not? 

Will the payment go to the provider of services or to another (e.g., employer)? 

If so, will the recipient of monies meet Medicare reassignment limitations? 

What information is required for submission of a record by carriers to the 

Physician Registry and to HCFA? 

What review and profiling parameters should apply to this provider7 

Further, Medicare law and policy differentiates between two very different types of 

applicants for Medicare provider numbers: 

0 Providers of services or supplies - entities and individuals actually performing 

services or nrovidinp sun&es to beneficiariq. 

Carriers are responsible for verification of any prerequisite credentials 

(e.g., license, equipment, seller’s permit, etc.) specified by State, local, or 

Federal law. Medicare law and policy place differing requirements on 

different types of providers. Generally, a provider of services must be legally 

authorized to provide the services by the State where services are rendered. 

For example, Medicare law requires covered physician services be rendered by 

licensed physicians who are “legally authorized to practice” (Social Security 

Act, Section 1861) by the State where the services are rendered. 

Although qualifications for other Medicare provider types may include State 

licensure or certification, some providers (e.g., ambulance companies) are 

required to meet additional education, work experience, staff, or equipment 

needs in order to participate in the Medicare program. 
However, this is not to say every provider type must meet specified criteria. 

Some providers, such as durable medical equipment @ME), generally’ do not 

have to meet any criteria except to possessa Social Security number or an 

employer identification number. 

Beyond the need to determine applicant qualifications, there are a variety of 

payment and program integrity responsibilities tied to data collection and 

computer analysis of the service provider’s Medicare experience. 

0 Billers of services and supplies - entities and organizations billin? for the 

services or sunnlies nrovided. 

Carriers must determine if the entity requesting payment meets Medicare 

requirements. If the individual or entity (partnership, professional association, 

clinic, etc.) billing and receiving payment did not actually provide the service 

or supply, carriers must establish the relationship between the biller and 

performer of services. Also, Medicare requires carriers to ensure payment is 

not made to entities or individuals excluded from participation in Medicare. 

Finally, carriers should have sufficient information about the billing entity 

(owners, agents, officers, etc.) in the event questions arise concerning payment 

or if overpayments need to be recovered from liable individuals or entities. 

In addition to the concern over provider number assignment, the areasaddressedin this 

report are considered especially timely in light of physician payment reforms, establishment 

of the Physician Registry, and HCFA’s interest in ensuring the quality of providers of 

Medicare services. 

METHODOLOGY 

This inspection consisted of several phases. First, we conducted a review of relevant HCFA 

policies and Medicare laws and discussionswith HCFA staff. Next, we requestedcopies of 

all application forms used by carriers to obtain information prior to assigning a number to a 

provider. To test assignment procedures, we reviewed carrier documentation supporting the 

recent assignment of numbers to more than 240 providers. Specifically, 40 carriers were 

asked to supply file documentation for the most recent applicant assigneda provider number 

in the following categories: 

0 Solo-practice physician 

0 Physician group or clinic 

0 Chiropractor 

0 Ambulance 

0 Durable medical equipment 

0 Physician assistant (PA) 

0 Certified registered nurse anesthetist (CRNA) 

For this inspection, we excluded any review of providers certified by HCFA for 

participation in Medicare. This was done to limit the scope of work. Additionally, 

4 
this was done in recognition of State survey and certification agency review of the 

provider’s credentials and HCFA’s assignmentof provider numbers rather than carrier 

assignment of provider numbers to many of these types of providers. (See Appendix 

A for a list of Part B providers and those certified by HCFA.) 

Next, we visited three carriers and mailed surveys, with telephone followup, to 35 others. 

(See Appendix B for a complete list of carrier respondentsand Statejurisdictions.) The 38 

respondentswere carrier personnel responsible for assigning numbers. 

Additionally, we discussednumber assignmentvulnerabilities with carrier program integrity 

staff (25 respondents)and reviewed files of providers with overpayments selected from the 

12/01/89 HCFA Physician/Supplier Overpayment Report. 

Finally, we reviewed Management Implication Reports (MJRs) prepared by the Office of 

Inspector General’s Office of Investigations (01) suggestingprovider number assignment 

problems and concerns. We contacted the eight 01 regional offices to obtain caseexperience 

and perspectives and to discussprior MIRs. 
FINDINGS 

HCFA’s Direction and Oversight of Carrier Provider Number Assignment Procedures 

are Inadequate. 

The HCFA provides insufficient practical direction to carriers concerning the provider 

number assignment function. Specifically, HCFA has not clearly defined the methods or 

depth of understanding and testing to insure adequateknowledge about a provider before a 

number is assigned (e.g., DME). Our review of carrier instructions in the Medicare Carrier 

Manual (MCM) identified several issuesnot adequately addressed. Among them are: 

How are carriers to determine legal authorization to practice? 

What is the minimum information to be obtainedfrom providers by carriers? 

What identifying provider information should be maintained in the carrier’s computer system? _ 

How is a physician ‘s specialty to be determined? 

Should providers complete carrier application forms? Should they be maintained? 

When is it appropriate to assign multiple provider numbers to the sameprovider? 

What carrier controls should existfor the utilization review of providers having multiple 

numbers? 

Insufficient direction and oversight has contributed to carrier assignment vulnerabilities. 

Twenty of the carrier provider number assignmentpersonnel contacted recognize weaknesses 

and believe HCFA should play a prominent role by providing more guidance concerning 

number assignment policies. Some areas noted by carriers include the need for: 

More ‘policy issued regarding suppliers - establishing guidelines for qualifying as a 

DME supplier, ownership questions, etc. ” 

More specific guidance on “jurisdiction, multiple ojfice settings, and clinics. ” 

“National standards for non-physicians (e.g., DME). ” 

“Clearer guidelines regarding physicians under contract with groups/clinics and 

other physicians meeting employee status requirements. ” 

“Certification guidelines for physiological laboratories. * 

“Guidance when it is appropriate to have more than one number. ” 
A critical and fundamental point of control for correct payment and detection of abusive 

providers occurs during the provider number assignmentprocess. While the Physician 

Registry is certainly a step in the right direction, many weaknessesand vulnerabilities still 

exist in provider number assignment procedures. These weaknessesor vulnerabilities could 

result in adverse monetary or quality of care consequencesfor the Medicare program or 

beneficiaries. 

Carrier Provider Number Assignment Weaknesses and Vulnerabilities Exist. 

Many caniers do not adequately document provider number assignment pnwdures. 

Nearly 50 percent of carriers (18) have no formal written internal procedures for number 

assignment. A lack of written instructions on provider number assignment may complicate 

training of new staff and may promote inconsistency in the provider number assignment 

process. Additionally, a lack of documented procedures may complicate review by HCFA 

to determine carrier implementation of manual instructions affecting provider number 

assignment. 

Cbniers obtain or main&in too little provider infotmation. 

Application forms often do not obtain sufficient information from providers. 

Carrier applications represent the minimal information required to determine who the 

provider is and what pricing parameters apply (locality, specialty, hospital based, etc.). The 

applications used by carriers raise concern about the rigor with which carriers scrutinize 

providers. This concern is based on the fact that many carrier provider number application 

forms obtain little information from provider number applicants. (See Appendix C for a 

listing of the types of questions being asked on application forms for DME and physicians). 

Many carriers limit applications to a few basic claims questions (name, tax number, address, 

type of provider, and license number); few ask for additional information. (See Figure 1 for 

examples of questions asked by carriers.) By not asking questions beyond basic claims 

information, a carrier may make incorrect assumptions about the provider’s situation. 

Additionally, several carrier application forms lack professionalism. Specifically, the 

application form may not be professional in appearance(i.e., typeset or desktop published). 

Also, questions may not be 1) presented in a logical sequenceor 2) clear in meaning. 

0 
” 

. . 

-- hwtad 

Carriers Require Little 

Do you use a billing agency? What other txovider 

Information From Providers 

::,.,.? ...,:,.:.,.. :’ ., .,., ,,.:... . : 

... j ........ .i ::’‘...:...:.:.:.:.’., ,.:..,. :.:.:. ‘.G*&& D& ..:.:.. :,,,+:.:.::~::.~&f*~ ........ ..‘. .“.” 

.:.. .:i:;:.. :.:.:.. . .Cti+:: :.Pe.tietit

and 

-

-

27 71% 

6 16% numbers with thus earner do VW have? IS RmL 

WQrShnfiage Area? 

ness. 

tions? i I-,­

8 22% 

6 16% I Will VW~- billina for natkant?: .WWw..W” _ -...... .-. in nthnr ct3ta.s c) r-..-..I ..I VU,“, e,a,.zai

I Owner’s name? 

I a, I

?r earner unsdlctlons? al 3 

Figure 1 

0 Little or no businessownership information is required by carriers. 

Over one-third of carriers reviewed (15) do not routinely ask for DME ownership 

information on the application for assignment of a provider number. A slightly higher number (22) of carriers do not routinely ask ambulance companies to identify owners. Only 

one carrier requires ownership information from clinics or professional associations. 

A lack of ownership information leaves the carrier in a position of not being able to 

determine if the company is controlled or owned by an individual, group of individuals, or a 

8 
businessentity who has been convicted of a criminal or sanctionable offense related to 

participation in Medicare and Medicaid. 

Also, failure to obtain ownership allows providers the opportunity to escapecarrier review of 

provider numbers not identified with the owner(s). For example, 12 carriers noted instances 

during the past year where businessentities with overpayments or who were on prepayment 

or postpayment review simply ceasedusing the provider number for the troubled business 

and obtained a new provider number from the same or other carriers. Some providers may 

even use the same employer identification number @IN), social security number (SW), or 

addressbut simply change their name on the new application for a new provider number. 

Without ownership information, alteration of any identifying information (name, EIN, 

address)can disguise the provider enough to obtain a new provider number. Thus, a 

provider may easily escapecarrier controls. 

Even when ownership information is required, many carriers limit ownership questions to a 

single owner’s name. Very few carriers require the supplier to identify all owners, 

individuals with financial interest, directors, and/or officers. 

Carriers have long been criticized for not requiring businessesto disclose ownership. In 

responseto this weakness, Congresshas passedlegislation (Omnibus Budget Reconciliation 

Act of 1990, P.L. 101-508) providing the authority for carriers to obtain ownership and 

financial interest information from suppliers and mobile labs. Although implementing 

regulations are not yet written by HCFA, ownership information should enhancecarrier 

efforts to track problem suppliers. However, carriers must be required to obtain and use 

ownership information if the gathering of such information is to have a real impact on 

deterring fraud and abuse. 

0 Ironically, the least regulated providers are the least scrutinized by carriers when 

applying for a provider number. 

Some nonphysician suppliers are essentially unregulated by State and Federal agencies. 

These entities provide such products as DME, oxygen*, prosthetics, and other similar types 

of supplies. The HCFA does not require carriers to obtain specific information from these 

providers. As a consequence,only a few carriers ask for additional application information 

beyond basic information (e.g., name, address, tax number, phone number) to ensure a 

carrier’s understanding of the provider’s request and situation. Additional information may 

be neededto correctly determine payment or utilization review parameters. 

Some areas not fully explored by all carriers involve ownership, carrier jurisdiction, and the 

provider’s present and past Medicare activity. Such information is crucial as a first step in 

deterring providers from “gaming” the program (a provider’s efforts to maximize 

reimbursement through fraudulent or abusive practices). 

0 Carrier application forms are often missing or not readily retrievable. 

While few (5) carriers reported not requiring completed applications prior to provider 

number assignment, many carriers requiring completed applications do not have applications 

9 
(hardcopy or microfiche) for many active providers. For example, Aetna of Georgia 

estimates only 20 percent of providers have applications on file. The carrier reports, during 

the transition from the prior carrier to Aetna (1989), files were “received incomplete.” 

Equicor (North Carolina) estimates from 15 to 20 percent of applications are missing. Like 

Aetna, Equicor attributes this to the previous carrier which did not always require completed 

applications. Another carrier, Blue Cross and Blue Shield of Alabama, estimates 15 to 25 

percent of applications are missing becausethe carrier’s “application process has been in 

place for only 3 years.” 

The application document acts as a source record if any questions arise concerning possible 

misrepresentation on the part of the provider. According to 01 investigators and HCFA, 

such a record is often very important to criminal casesand civil recovery by the carrier and 

HCFA. 

Additionally, in our review of documentation supporting providers recently assignedprovider 

numbers, we found some key documentation was lacking. For example, the carrier may 

have reported verification of the provider’s license was done by requesting a copy of the 

license from the provider; however, no license was present in the file documentation. 

Additionally, if telephone contact with the licensing board was made, most carriers failed to 

document the call. Our review of documentation for physicians recently assigneda provider 

number, revealed only 19 carriers had adequately documented their method of licensure 

verification, 

Some caniem fail to Ye@,&pmvider q@ficahns prior to assi@unent of a provider 

number. 

Some carriers do not validate provider credentials. 

Several carriers do not validate or document the credentials of Part B providers prior to 

provider number assignment. (SeeFigure 2.) In direct contradiction to Part 4 of the MCM, 

six carriers make no attempt to validate a solo practice physician’s license. The MCM 

(1001.3) specifically states, at a minimum, carriers wilI “verify all physician submitted data 

with the appropriate State licensing board to determine if the physician is registered and 

licensed to practice.” An additional three carriers do not validate credentials of a physician 

in a group or clinic. Again, these carriers are not in compliance with MCM instructions 

which specifically require credential verification “regardless of whether the physician has a 

solo or group practice. ” 

Carriers report validation is not done primarily becauseof a lack of resourcesor funding for 

this activity. None of the carriers attributed their failure to validate a medical physician’s 

license to lack of cooperativenessby the applicable State medical board. During our 

discussions with these State medical boards, each reported it could and would respond in a 

timely manner to carrier attempts to verify a license. 

The MCM does not specify the methods by which carriers must verify provider credentials. 

As a consequence,the methods used differ between carriers. Most carriers verify a 

provider’s license and registration from a board listing of licensed providers. Other carriers 

10 

0 
either contact boards directly or request a copy of the license or registration from the 

provider. (See Figure 2.) 

Provider 

I Two caniera requimd no nwihttion since State does not recognke PAS Source: Camw Survey (37 respondents) 

Figure 2 

The MCM (2070.2) requires carriers to obtain listings from boards for some provider types. 

For example, carriers are required to “secure from the State licensing agency a current 

listing of psychologists holding the required credentials.” We found several carriers not 

maintaining such a listing. They either contact the board for verification, accept a copy of 

the license from the provider, or do not validate the license. Further, the MCM does not 

specify how often the listing must be updated. 

Many carriers allow reassignmentof benefits without determining if the reassignment 

meets Medicare legal requirements. 

Carriers are limited by Medicare law in paying assignedbenefits. Payment is made only to 

the physician or other supplier who furnished the service and may not be made to any other 

person or organization under a reassignment, or power of attorney, or under any other 

arrangement where the other person or organization receives the payment directly. Payment 

is considered to be made directly to an ineligible person or organization if the person or 

organization can convert the payment to its own use and control without the payment first 

passing through the control of the physician or other supplier or a party eligible to receive 

the payment under reassignment exceptions.3 (See Figure 3.) 

11 

0 
Reassignment Exceptions 

1) Payment to Employer - The Medicare program may pay the employer of the 

physician or other supplier if the physician or other supplier is required, as a 

condition of his employment, to turn over to his employer the fees for this 

services. 

2) Payment to Facility - The Medicare program may pay the facility in which the 

service was furnished if there is a contractual arrangement between the facility 

and the physician or other supplier under which the facility bills for the 

physician’s or other supplier’s service. 

3) Payment to Organized Health Care Delivery System - The Medicare program 

may pay an organized health care delivery system if there is a contractual 

arrangement between the organization and the physician or other supplier 

under which the organization bills for the physician or other supplier’s services. 

4) Payment to a Governmental Agency - Medicare law does not preclude 

reassignment to a governmental agency or entity which qualifies for payment 

under 1, 2 or 3 above as an employer, facility, or organization. 

5) Payment Pursuant to a Court Order - Payment may be made provided the 

conditions set forth in the Medicare Carriers Manual, Part II, 5304 are satisfied. 

6) Payment to an Agent - The Medicare program may make payment in the name 

of the provider to an agent who furnishes billing or collection services for a 

provider or entity authorized to receive payment. 

Figure 3 

Although reassignment exceptions should be testedprior to the assignment of a provider 

number, many of the carrier application forms reviewed do not question the provider 

concerning which reassignment exceptions are met. Only 15 carrier application forms 

attempt to test the reassignment exception. For example, Texas Blue Cross and Blue Shield 

requests the applicant to specify if an employee-employer relationship exists. (A W-2 would 

indicate such a relationship, whereas a 1099 indicates a contractor relationship.) 

Additionally, 11 carrier group/clinic application forms involving reassignment do not provide 

a signed acknowledgement of reassignmentby group or clinic members. 

Weak ptvvider number assi@tmentpmcedum contribute to pmgmm vdnembilities. 

0 Carrier methods or practices to identify all provider numbers assigned to a provider 

are inadequate. 

Carrier controls to identify all provider numbers assigned to the same entity are insufficient. 

Most carriers make little effort to link related provider numbers. Only five carriers link 

related provider numbers with a computer linking tag and only sevenother carriers link 

provider numbers through their process of building off of a base number (modifiers added to 

12 
base number). These linking procedures make determination of a provider’s numbers a 

relatively simple matter in most cases. However, in order for the linking process to be 

complete, the carrier must determine all provider numbers related to a provider at the time of 

provider number assignment. 

Other carriers rely on manual and/or computer searching for related provider numbers for 

the same provider. Searching may be done by name, SSN or EIN, license number, 

ownership, UPIN, or address(or a combination of these). However, carriers typically do 

not employ all available searchcriteria to identify related provider numbers. Such limited 

searchesallow for the possibility of missing a related provider number. For example, a 

name search on a businessmight not identify a supplier with several provider numbers under 

differing names (e.g., Allied Medical Supply, AMS, Allied Supply). Additionally, although 

the provider number department may routinely conduct adequatesearchesfor provider 

numbers, other carrier departments (e.g., overpayment recovery, medical review) may not. 

Requesting on the application all additional provider numbers the provider number applicant 

now has or has had with w carrier is a good practice. Many (24) carriers reported 

requiring providers to identify any other provider numbers issued by their carrier. However, 

only 12 carriers report asking for any numbers providers have with other carriers. 

There was no indication in provider files reviewed of searchesfor additional provider 

numbers. Consequently, we have no documentation of the extent of review effort employed 

by carriers. We do lmow, from talking to carrier personnel, at least one carrier makes no 

effort to check for additional provider numbers, relying solely on the provider to list on the 

application any existing provider numbers. 

Providers can manipulate multiple provider numbers and jurisdiction rules to increase 

reimbursement or avoid detection of abusive practices. 

Medicare utilizes a system of provider payment based on historical fee patterns and carriers’ 

discretionary definitions of geographic pay localities, provider specialty, and other payment 

variables. This process results in payment differentials among types of procedures, carrier 

pricing localities, specialties, and sites of care. Additionally, differences exist in carrier UR 

policies. Combined, these factors create an environment where incentives exist for providers 

to misrepresent themselvesor take advantageof regulatory or carrier loopholes in order to 

maximize reimbursement or avoid detection of abusive practices. Two areas especially 

vulnerable to abuse are manipulation of provider numbers to avoid program integrity review 

and manipulation of claim jurisdiction rules. 

Providers with multinle Drovider numbers can weaken a carrier’s oroaram inter&v activities. 

Many of the program integrity staff interviewed report usageof multiple provider numbers 

make medical and utilization reviews (MRKJR) more difficult. A provider with multiple 

provider numbers can knowingly or unknowingly, evade some utilization screens(e.g., initial 

office visits) and possible prepayment or postpayment reviews if all of the provider’s 

numbers are not identified for review and used in the review process. 

13 

0 
One of the primary purposes of postpayment UR is to compare the pattern of practice of 

individual providers with that of their peers in several separatecategories of services, such as 

office and hospital visits. This review involves the computer generation of the previous 

calendar year’s paid claims data for all providers in the carrier’s service area. Since the 

profiles make comparisons to other like providers and predefine4 limits, the failure of the 

carrier to assemblea provider’s fulI service history through its computer could produce 

misleading results. Specifically, the UR report may not reveal an existing aberrant practice. 

For example, a provider with several provider numbers may spreadbillings among the 

provider numbers so that any one provider number will not exceed a UR screen threshold; 

yet, when combined, may exceed the threshold. 

Complicating the adequacyof program integrity activity as well as provider number 

assignment may be a lack of knowledge of each department’s concerns and activities. Only 

four carrier program integrity respondentsstatedthey were more than somewhat familiar 

with assignmentprocedures. Additionally, nearly all program integrity respondentsstated 

more information should be obtained from providers. However, provider assignment 

departments may not be informed of or respond to suggestionsby program integrity staff. 

As one program integrity respondent stated, “they rarely utilize our suggestionsfor change.” 

A lack of communication and coordination may lesson the effectivenessof both program 

integrity functions and the adequacyof provider number assignment. Since each area may 

encounter different problems where improvements in the assignmentprocesscould alleviate, 

both should maintain close ties. Additionally, this should apply to other areasaffected by 

provider number assignmentpolicies (e.g., overpayment recovery). 

Carrier nrovider number aonlication inadeouaciesand weak euidelines allow manipulation 

and abuse of carrier claim iurisdiction, 

Carrier claim jurisdiction issues, addressedin the MCM section 3100, apply to 1) a carrier’s 

determination whether this or another carrier is responsible for processing the provider’s 

claims and 2) what pricing locality within the carrier should be used. (See Appendix D for a 

simplified view of jurisdiction rules.) 

Many carrier provider number applications do not ask sufficient questions to fully test 

jurisdiction rules. As an example, only 12 carriers determine through their application forms 

if durable medical equipment suppliers have salesrepresentativesin the State. This is just 

one of many questions which could help a carrier determine proper claim jurisdiction. 

Failure to ask such questions could causethe carrier to make an incorrect claim jurisdiction 

decision which, in turn, could result in payments from carriers with higher reimbursement 

allowances or less stringent UR policies. 

Carriers indicate concern some providers (e.g., DME) misrepresent themselveswhen 

obtaining provider numbers or manipulate the jurisdiction rules (e.g., point of sale through 

use of l-800 numbers or call forwarding) in order to game the system. Specifically, some 

providers “forum shop” to find the carrier paying the most for specific procedures or 

supplies and/or has the most lenient utilization review policy. Several casesof manipulation 

or abuse have been documented by carriers and 01 investigators. 

14 
Manipulation of Jurisdiction Rules 

Use of l-800 numbers typically involves a company in one state establishing a 

l-800 number in another State for the sole purpose of obtaining a higher 

reimbursement from the other carrier and/or avoiding UR limits. For example, an 

Oklahoma supplier providing supplies to Oklahoma residents may find that California 

has a higher reimbursement rate per item. To get around the jurisdiction rules which 

state that the carrier for the jurisdiction where the order was taken is responsible for 

processing the claim (point of sale), the provider gets a l-800 number in California. 

Instead of making a call to the Oklahoma supplier using a local number, beneficiaries 

are directed to use the l-800 number. Since the point of sale is now California, the 

California carrier makes payment. 

An example of DME jurisdiction abuseunderscoresa lack of carrier controls regarding 

a claim jurisdiction determination: 

Jurisdiction Abuse: A Case Example 

This case involves Medicare Carrier A. Carrier A did not recognize through its 

application process, that a company (Company A) seeking a number was essentially 

a billing entity and not a supplier. Company A had entered into a business 

arrangement with an ostomy supply company (Company 8) operating in another 

state and carrier’s jurisdiction. Company A agreed to buy all invoices for supplies 

sold and delivered from or at Company B. Company A pays Company B 125% of 

the face value of the retail price on the invoice. Company A then bills Carrier A for 

the supplies as if they had supplied them in the first place. Also, Company A is 

alleged to be fragmenting purchased supplies in order to maximize reimbursement. 

Both companies are now under investigation by the OIG. 

The carrier’s application process did not identify whether Company A was actually a 

supplier. Had the carrier scrutinized the company to a greater degree, the intentions 

of the supplier might have been discovered during the application process, rather 

than after significant overpayments had occurred. 

Correct determination of claim jurisdiction may also be an issue with physicians. For 

example, the definition of a physician’s office for purposes of determining the correct locality 

prevailing charge is vague when the physician provides services in multiple pricing localities 

with no clearly defined offices or an office which is primarily just a billing office. 

Claim jurisdiction can be confusing and could be manipulated by providers unless carriers 

carefully scrutinize provider applications to determine the applicant’s situation. Yet, most 

carrier applications do not request sufficient information from providers to test for unusual 

jurisdictional situations. Consequently, it is possible a carrier would not recognize an 

unusual situation and make an incorrect jurisdiction decision resulting in overpayments. 

15 
0 Most carriers do not uniquely identify physician assistantsand thus, cannot perform 

adequateutilization reviews. 

Only five carriers assign provider numbers to PAS. Those not assigning PAS a unique 

identifier number do not have a meansof conducting utilization review. Although carriers 

are required to develop charge profiles for PAS, PAS are not subject to the same UR 

monitoring activity on an individual basis except for a tangential review under the employing 

group or physician. 

While relatively small, the number of PAS has increased the last few years at a rate of over 

2,000 per year nationally. As of the beginning of this year, there were approximately 

23,500 PAS. 

Dependenceon the supervising physician - PA relationship, the small number of PAS, and 

the requirement that PA servicesbe billed by the physician may explain why many carriers 

have devised provider number assignment schemeswhich do not recognize the PA 

independently (PA given a separateprovider number). Although many carriers do require or 

verify a PA’s certification or license, 11 carriers do not. (See Appendix E for a description 

of some carrier methods for processing PA claims.) 

While some carriers do not validate the credentials of a PA, several more do not determine if 

the physician billing the Medicare service is in fact the supervising physician pursuant to 

State registration requirements. An example of such registration requirements exist in Ohio. 

An Ohio PA is only allowed to practice as an employee and under the direction of a 

supervising physician or group of physicians. Further, PAS must be registered with the 

applicable State board. Section 4730.02(f) of the Ohio Revised Code states, “when the 

assistantceasesto be employed by the physician or physicians to whom his certifkate of 

registration is issued, his registration is immediately suspended.” 

0 Carrier computer records maintained on providers need improvement. 

Especially in the caseof computer matcheswith State medical boards to determine legal 

authorization to practice, certain carrier records must be entered accurately. Two fields are 

especially important - provider name and license number. 

Provider name irregularities exist. 

Review of carrier provider files at the three carriers visited revealed carriers enter the name 

as given by the provider on the application. For example, one provider might be listed as 

Robert Stanley Smith Jr. on his license, while the carrier might have entered the name as 

Rob Smith or R. Smith on the carrier’s file. Additionally, we saw many providers with 

multiple provider numbers having different name variations for the same provider. 

Another problem, noted by the Physician Registry, involves hyphenated names. Some 

carriers have entered hyphenated names in their computer system in a manner complicating 

16 
matching with the Registry. As an example, a carrier might submit records having 

hyphenated names where the fust part of the hyphenated name is in the last name field while 

the rest of the name is in the suffix field. This makes computer matching of the name fields 

very difficult according to the Registry. 

The situations mentioned above create unwarranted confusion not only for computer matching 

but for anyone reviewing provider records. 

Provider license numbers are missing or inaccuratelv entered, 

License numbers facilitate communication with licensing agenciesconcerning providers who 

have lost the legal authority to practice. Specifically, it is a crucial data element for 

computer or manual matching which might occur with data supplied by a State licensing 

agency or board. 

While few carriers do not record provider license numbers in the provider’s computer 

record, a considerable number of carriers have only recently begun this activity. 

Additionally, several carriers do not enter the license number for all types of providers. For 

example, 13 carriers do not enter the license number of an independent clinical psychologist. 

This compares to only two carriers not entering the license number of a doctor of medicine. 

Even if the license number is entered, carriers may not be ensuring the accuracy of the 

number. To illustrate, in the three carrier provider Nes reviewed, we encountered error and 

inconsistency in the recording of license numbers. Transposing digits of the number was the 

most frequently encountered error. To a lesser extent, some license numbers were 

incomplete, had too many digits, or included inappropriate prefixes. 

Many caniers assign adZtional provider numbers solely for a ptwider’s bookkeeping 

convenience. 

Several situations can allow a provider to legitimately have more than one provider number 

(or modifier to a base number). Carriers give a physician who practices in both a group and 

a solo practice a number for each. If a provider has a practice in more than one reasonable 

charge locality, carriers assign the provider different provider numbers or modifiers to an 

existing provider number for each of these localities. 

However, a solo provider with the same specialty and practice in the same pay locality can 

have only one customary charge profile regardless of the number of offices maintained 

@KM 5209). Some carriers interpret this to mean the solo provider may have only one 

provider number per pricing locality. To give the provider more provider numbers would 

perform only a bookkeeping purpose for the provider since payment would be the same if an 

additional provider number were given. 

On the other hand, some carriers appear to have fewer limits on the number of provider 

numbers or modifiers given to a provider. For example, a physician with multiple office 

17 
settings in the samepricing locality could be given an additional provider number or a new 

modifier to a base number for each unique address. Also, if the payee or tax identification 

number under which payments are recorded is different, the carrier assignsdifferent provider 

numbers. 

As one carrier medical director stated, “it appearswe are being asked to act as a bookkeeper 

by providing multiple provider numbers.” One example cited by the director involves 

multiple provider numbers assignedto a radiologist “in order to segregatepayments for his 

professional servicesas opposed to payments to the sameradiologist for technical services 

where the equipment may be owned by a different entity.” Several carriers reported that 

giving multiple provider numbers was just a “matter of courtesy to the provider. * One 

carrier cited specific direction from its accounting department to “give multiple provider 

numbers for eachphysician practice location.” 

Figure 4 depicts the different carrier practices in assigning additional provider numbers (or 

modifiers to a base number) to the sameprovider. It also shows some carriers treat certain 

types of providers differently when assigning additional provider numbers for the 

bookkeeping purposesof the provider. 

Many Carriers Give Additional Nunbers for 

the Provider’s Bookkeephg Convenience 

Carriers 

1A 

DME Ambulance 

Source: Carrler Survey (23 rerpondentr) 

Figure 4 

Data supplied HCFA by the Physician Registry confirms many physicians do have more than 

one provider number. (See Figure 5.) Over fifty percent of medical physicians (doctors of 

medicine or osteopathy) have multiple carrier records at the same or other carriers. The 

HCFA refers to such records as active practice settings. 

18 
. . 

Many Medical Physicians Have Multiple Provider Numbers 

with the Same or Multiple Carriers 

Carrier 

rlumbers/ Four or More 

Records One Carrier Two Carriers Three Carriers Carriers Total 

1 187,618 46.3% 0 0.0% 0 0.0% 0 0.00% 197,616 46.3% 

2 92,651 21.7% 28,738 6.7% 0 0.0% 0 0.00% 121,380 28.5% 

3 36,561 8.6% 16,600 3.9% 1,331 0.3% 0 0.00% 54,692 12.8% 

4 15,405 3.6% 8,483 2.0% 1,083 0.3% 75 0.02% 25,056 5.9% 

5 7,246 1.7% 4,338 1.O% 631 0.1% 79 0.02% 12,286 2.9% 

6-10 7,966 1.9% 5,028 1.2% 804 0.2% 145 0.03% 13,943 3.3% 

Ii-46 786 0.2% 581 0.1% 82 0.0% 33 0.01% 1,504 0.4% 

Total 358.237 84.0% 63,979 15.0% 3.851 0.8% 332 0.08% 426.499 100.0% 

source: Preliminary UPIN data presented by HCFA researchers at the 118th Annul Meeting of the 

American Public Health Association, October I, 1990. 

Figure 5 

Variation exists from carrier to carrier concerning the average number of active records 

(practice settings) for physicians with UPINs. Carrier averagesrange from a low of 1.05 to 

as many as 2.49 provider numbers (practice settings) per physician. (See Appendix F.) 

While many factors such as the number of carrier pricing localities or local physician 

practice patterns may help to explain carrier variations, carrier easeof assigning multiple 

provider numbers is surely a significant factor. 

Interestingly, we found three carriers with multi-state jurisdiction, and the States’ averages 

were vktually identical. (See Figure 6.) This finding underscoresthe impact a carrier’s 

provider number assignment policy can have on the average number of provider numbers per 

physician. 

Carrier Policy Impacts Provider Numbers (Records) 

.:. ~.‘..‘.“.. .’.:.:::.- .:.:...:.:.::.::: . 

::. : 

. 

: 

. ,. ;,. :. :. ::. ‘.’ : :. .,. per Physician 

Nationwide Mutual Insurance Ohio 2.20 

West Virginia 2.35 

Aetna Life and Casualty Oklahoma 1.32 

New Mexico 1.32 

., !..: ”1: .:‘?‘I:::I~:]j’l:~:/~~:~f<:.­.-&‘fii& f??I::::::J:,~;::::~:fi~” :I:: ~:.~~:~:::~:~,:::j J Uris& ction Avg. Xdrocords 

‘. 

Blue Cross and Blue Shield of Arkansas Arkansas 2.14 

Louisiana 2.14 

Figure 6 

19 
RECOMMENDATIONS 

The HCFA should: 

0 specify a minimum framework for provider number assignment to be followed by all 

carriers. Within this framework carriers should be allowed flexibility for 

implementation. Additionally, this framework should recognize similarities and 

distinctions between types of providers. Some areas to addressinclude: 

the minimum essential data elements carriers are to maintain in their computer 

systemson providers, 

other information deemed necessaryor valuable for the carrier to obtain from 

providers during the provider number application process, 

provider information to be validated and the method(s) of verification, and 

carrier responsibility to: 

b maintain a list of all Part B provider types with corresponding Federal, 

State and local laws affecting legal authority to practice and the 

carrier’s methods of verifying legal authority. Carriers should be 

required to maintain communication with appropriate agencies (e.g, 

licensing) adequateto understandand monitor changesin legal 

authorization requirements. 

b ensure, before issuing a provider number, adequatedocumentation on 

each provider number assignmentincluding: 

1) a completed application (containing a penalty clause for making 

false statements)signed by the individual provider; the owner, if 

a business; or a company official, if a corporation, 

2) the method and contacts used to verify the provider’s 

credentials, 

3) a list of all other provider numbers assigned the provider (the 

carrier should determine the need for continued use of identified 

numbers and document justification for the new number), and 

4) the specific reassignmentexception(s) applicable as well as a 

statement, signed by the reassigning provider, acknowledging 

the reassignment. 

20 
b query the Registry, prior to assigning a provider number, for all active 

records/practice settings listed for the specified physician. The carrier 

should ascertain a provider’s need for identified provider numbers and 

deactivate those not neededin their jurisdiction. The carrier should 

notify other carriers where numbers exist. Also, if an existing number 

is flagged for any type of carrier review, the new provider number 

should be considered for possible review as well. 

b maintain relevant application documentation (e.g., application form) for 

active provider numbers. 

b verify provider qualifications. 

b have adequatesystem controls to 1) identify all provider numbers 

assignedto a particular provider and 2) ensure providers with multiple 

provider numbers cannot avoid prepayment review or screens, 

postpayment utilization review, and overpayment recovery. 

b identify all providers (e.g., physician assistants)adequatefor 

utilization review on an individual basis. 

b update (at least) annually any listings used for license verification. 

b identify the ownership of providers and maintain such information in 

the carrier’s computer system in a manner ensuring identification of 

entities having the same owners. Carriers should review the ownership 

databasefor sanctionedindividuals or entities. 

b maintain provider records which are complete (e.g., license number 

entered in file) and consistent (e.g., name field should carry the same 

spelling in each record pertaining to the provider). 

b evaluate their provider application forms to ensure they are well 

designed, easy to understand, and professional in appearance. 

b ensure coordination between the provider number assignment staff and 

other departments (specifically, those for program integrity - medical 

and utilization review) for the sharing of experiences and suggestions 

for improvements to provider number assignment procedures. 

0 consider implementation of a system of user fees to defray the costs of provider 

number assignment and maintenance (e.g., determination of legal authorization to 

practice, Physician Registry contact for prior or present practices, more extensive 

review of applicants, assignment of additional provider numbers for a provider’s 

convenience, and efforts to update records). 

21 
0 expand the Physician Registry to include non-physician practitioners such as clinical 

psychologists, audiologists, nurse anesthetists,midwives, physical and occupational 

therapists, nurse practitioners, physician assistants,and clinical social workers. 

0 require the Physician Registry to provide feedback to carriers concerning all active 

practice records (settings) for physicians with unique practitioner identifier numbers. 

0 ensure carrier implementation of HCFA provider number assignment directives. We 

recommend HCFA consider evaluating implementation through a Contractor 

Performance Evaluation Program (CPEP) standard(s). 

HCFARESPONSEAND ACTION PLAN 

The HCFA provided written comments on the draft report. More importantly, however, 

HCFA itself has undertaken several major initiatives to addressthese problems and related 

issuesraised in a prior OIG report entitled “Carrier Maintenance of Medicare Provider 

Numbers. ” We and HCFA, therefore, worked together to reach agreement on an action plan 

to improve the provider number process. In light of this, we are no longer designating the 

problems cited in this and the prior report as a material weakness. The following is the ~ 

agreed upon action plan: 

MEDICARE PROVIDER NUMBERS 

ACTION PLAN 

GEh?ERAL 

HCFA will issuea modification to the Medicare Carrier Manual which will: 

Clearly statethat carriers have a responsibility to ensurethe integrity of 

provider numbersandto ensurethat only thosepractitioners andproviders 

with legal authority to practice are given and may retain provider 

numbers. . 

Require carriersto stayabreastof changesin relevant laws and regulations 

concerningmedical practice requirements. 

Require carriers to make every reasonableeffort to receiveon an ongoing 

basis information from State licensing authorities and other appropriate 

bodies about the currency of licenses. 

Require carriers to maintain provider number applications for at least six 

years after deactivation of the number (the period needed to facilitate 

22 
investigations, prosecutions, and sanctions). This requirement pertains to 

applications from both health professionals and provider entities which are 

discussed separately below. 

Require carriers to periodically purge from their lists of approved numbers 

those that have been inactive and for professionals or entities who no 

longer have valid licenses required by the State. 

EEALlTl PROlTESSIONALS 

HCFA will continue to vigorously implement and enforce compliance with the 

provisions of the recently established UPIN system for Medicare physicians 

(which includes medical doctors, osteopaths, dentists, chiropractors, podiatrists, 

and optometrists). 

HCFA will explore the extension of the UPIN system to cover all limited licensed 

professionals that can bill Medicare directly. HCFA will provide a schedule for 

doing so. This would include clinical psychologists, clinical social workers, and 

certified registered nurse anesthetists. 

All registry data will be made readily available to all carriers on January 1. 1992. 

(Procedures prior to that date only allowed carriers to obtain information about 

professionals within their own jurisdiction.) 

HCFA will monitor and ensure compliance of the carriers with their responsibilities regarding provider numbers as set forth in the Medicare Carrier Manual. (See 

GENERAL section above.) 

SUPPLIERS 

HCFA will implement a major reform of the carrier process for dealing with 

certain “suppliers”. (Here, the term is meant to include entities which provide: 

durable medical equipment, routine and readily available supplies, prosthetics, 

orthotics, immunosuppressant drugs, and ESRD services.) 

Some of the more important features of this initiative are: 

Four regional carriers will be responsible for establishing supplier numbers 

and processing all Medicare claims for the above mentioned supplies. 

A clearinghouse which will contain information from supplier number 

applications and whose data will be accessible to all of these carriers. 

A standard application form which includes information to enable the 

carriers to identify each unique entity, their ownership, related entities, 

and sanctions. 

23 
The application form will contain a signed statement of the applicant 

attesting to the veracity of all information provided and acknowledging 

responsibility for false or misleading statements. 

The carriers will be responsible for processing all claims for supplies 

furnished to beneficiaries who reside within their jurisdiction. 

HCFA plans to implement this major reform within the next two years. 

The statement of work for the contract under which these carriers will function 

will include a clear statement of responsibilities concerning supplier numbers 

similar to those listed in the GENERAL,section above. 

These carriers will be required to use the information in the clearinghouse to 

screen applicants for supplier numbers for such things as relationships to 

sanctioned individuals or business or to businesses suspected of fraud or abuse. 

The carriers will verify the accuracy and completeness of the information 

contained in supplier number applications and files, and will identify and take 

appropriate action against problem suppliers. 

HCFA will vigorously monitor compliance of these carriers with those contractual 

provisions related to the application for, granting of, and maintenance of supplier 

numbers. HCFA is determining how the performance of these carriers will be 

evaluated. 

HCFA will require carriers to reenroll all suppliers every two years to insure that 

the ownership and operating information remains current. 

In the future, HCFA will extend this system to cover other supplier entities such 

as independent physiological labs, magnetic resonance imagers, and ambulance 

companies. In the meantime, however, these other supplier entities will be 

required to use a standard application form with provisions for identifying 

ownership and sanctions, and including the signed veracity certification. 

24 
Endnotes 

1 

Only a few statesmonitor medical suppliers. One state, North Carolina, requires places 

dispensing prescription devices (e.g., TENS units, support hose, catheters) to register 

with the State Board of Pharmacy. An application must be completed before a permit is 

issued. The person issued the permit must supply such information as his education, 

home address, social security number, criminal history, employment history, and photo. 

New York is pursuing legislation to provide similar authority to its pharmacy board. 

Although the Board assignspermits, the Medicare carrier for North Carolina does not 

verify a supplier’s permit prior to assigning provider numbers. 

Another state, California, has passedlegislation giving the Department of Health 

Services (Medi-Cal Prograrh) the authority to require more involved information from 

suppliers of incontinent supplies (e.g., diapers). For example, suppliers must have a 

retail businesslocation (not a P.O. Box) and,inventory. Additionally, operators are 

required to supply such information as owners, interested parties and the driver’s license 

numbers for names reported. Suppliers misrepresenting themselves through either the 

application or supporting documentation are subject to criminal penalties of up to 5 years 

in jail and as much as a $500,000 fine. A State official reports efforts to have the law 

amended to apply to other types of suppliers (e.g., durable medical equipment). 

2 

Suppliers such as DME often provide oxygen and other medical gasesto beneficiaries. 

If the supplier repacks (transfills) the gases, they are required to register with the Food 

and Drug Administration (FDA). FDA conducts annual inspections of registered 

suppliers. Although it is a criminal offense not to register, FDA has not sought 

prosecution. Suppliers who do not register are not inspected and therefore, are not 

required to correct violations of FDA regulations nor stopped from providing gasesif a 

danger to the public exists. None of the carriers contacted require FDA registration 

certificates from suppliers. In fact, no carrier’s application form even asks the supplier 

whether they repack gases. 

3 

A new reassignment exception has been recently added. The exception allows 

physicians covering the practice of another physician to reassign payment to the absent 

physician for a specified period of time. 
APPENDICES 

Appendix A: 

Appendix B: 

Appendix C: 

Appendix D: 

Appendix E: 

Appendix F: 

Appendix G: 

Appendix H: 

Appendix I: 

Part B Providers 

Carrier Respondents and State Jurisdictions 

Examples of Information Requested on Application Forms for 

DME and Physicians 

Claim Jurisdiction Rules Simplified 

Examples of Carrier Methods of Processing PA Claims 

Physician Registry Activity by Carrier 

Carrier Provider Number Assignment Activity 

Carrier Supplied Counts of Various Types of Providers 

HCFA Comments to the Draft Report 
APPENDIX 6 

Part B Providers 
APPENDIX I$ 

* l Blue Cross and Blue Shield of Alabama 

* * Aetna Life and Casualty * * Arkansas Blue Cross and Blue Shield, Inc. 

* * Blue Shield of California 

* Transamerica Occidental Life Insurance 

Blue Cross and Blue Shield of Colorado 

* Travelers Insurance 

* Blue Cross and Blue Shield of Florida, Inc. * *

I 1Aetna Life and Casualty * * Aetna Life! and Casualty * * Equicor * * Health Care Service Corporation * Associate d Insurance l Blue Shield of Iowa 

* Blue Cross and Blue Shield of Kansas 

* Blue Cross and Blue Shield of Kentucky * Blue Cross and Blue Shield of Marvland 

I * I * 1Blue Cross and Blue Shield of Massachusetts 

* * Blue Cross and Blue Shield of Michigan * * General American Life 

* l Blue Cross and Blue Shield of Kansas City 

I

** Blue Cross and Blue Shield of North Dakota has assumed responsibility 

AL 

AZ, NV 

AR,LA 

CA 

CA 

co 

CT 

FL 

IGA 

1HI 

1ID 

I IL 

IN 

IA 

KS 

IKY 

1MD 

Alabama 

Arizona, Nevada 

Arkansas, Louisiana 

California 

California 

Colorado 

Connecticut 

Florida 

1Georgia 

1Hawaii 

1Idaho 

I Illinois 

Indiana 

Iowa 

Kansas 

1Kentucky 

1Marvland 

1MA, ME 1Massachusetts, Maine, 

VT,NH Vermont, New Hampshire 

Ml Michigan 

MO Missouri 

MO,KS Missouri, Kansas (Johnson and 

for Wyoming from Equicor. 
. . . . . . . ,,.:.,: ;:... ..,.,. . . . . ..>::.>:.:.:.:.:.::::.:.:.-.’ “.....‘.....‘.‘.hi,. . ..:..:.::j.:‘:‘..:.. ,:.:-.-: :. . . . . . ...).:,.):.,.:.:::” ,.,...,....~. .‘::::::....: ...,, . ..:::: ...::. . ::, ...;::F:y,,::.. .: . . . :..: . . ..)). . . . :.:: :,... . . ,::::.: . . .. . . . . . . . . . . . . . . . . :.:.. . . ::::::: ,.. .,.,. . . . . . . . . . . .,.,.,.,.,.,. .,.,., .,.,.,., . . . . . . . . . .,., 

. . . . . . . 

. . . . I:I:,:,I;;:;;;~~:~;~~. 

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

APPENDIX 6 

Information Requested on Application Forms for DME 

. .....:.,: ;..:..:.::::::::.:. ,.:.::.:.:.:::.y :::.x... :‘:.:i’;,:,.’1.. j,:,::::: 

.+;w 

:::.:. ...,.,. ...):.))),.:.,.:.:.:.:::.. ::j:::::::.:jj:jjj:j::ky., 

,.,.,. ::

‘?,j;::/:; ..,. :.::3:, ::..::.:: .:Kj:j:j:.: <:j:.:.::.::.::.:: y.., ..:: ..: .,.,. j. .i...../: /,..::::::::::::.,.j.::::j.j:j.:.::.:.:.:,:.:.:..::.:.:.:.:..“‘:.c&e& ‘.&&G&&bata j:j:j:j:.::::::)::,:i:::.j:.::j:i”‘: ....:jjjjj:.:.:. :.: :., .:.::. ..::.::. :.:.,:I,::., .,.....: 

.:. .....

:,,,.,.,::..:::.,, ..i..11/../ :.:::::. :.::.:... . ::::: ‘:..:::i::i:i:‘!::i,::li:; ‘ii~~i;ilil:iiiiiii;~~~~~~~~~~~~~~~~~~~~~~~~~:~~~:~:~: c:,:,::,lfi~~~~mq@& :,jc:j;i:i;i;ji.;:j. $$$ j;:::::;:;i.:z;;...;I;Count:,c.Percent : ...... .. ,.... .;: .,.;;5:;;:.::?;;I:.:3;::: .,.,:$$$,:::,;; .,.,.,..))~,~, ..,.;,. ,. ,:, ,_.,. .,., . .:...: ...:. . .:. ..::.. .,.,., .7 

Background/Profile Information::.jj::ii:.‘..ij:::::~j::.I:jIi::.~~ . . . . .I :I’;;iji,.:s~~~~~~~~:~~~.:~~~~ ./:j)$:.:; y. ;$:I... ‘.:,y:l.;i;;::i. .... .Y.‘jj:iB.. . :..:.I: .,. .:.:: .:::$::I:::, :jji,,x,:j;...1.;;....;. j: ‘.:.: ::yy I .:. ‘fj@& 

Doing Business As (D/B/A) $$,;;;;Bil~ig ~&f&e~, :::ii:llij<,, :iri$$l:‘;i;; $:i;i;; ;..; f:.:.‘:~~;+.;::;:.:I:: +i/;/;..,,;I$;, ,.,;:::l:::; :.;:;,,;: j;:jjl:l:;l:::~:,,~:~ :::::;;.::i,;:)li;jii:T:j ::i:i;:j ;.&:,:,:I::;:::I::,:1::.;.1,.,;y;. .; :A.:.:I.!:x’g 

$;jj:il::B&G&&,(,ffi~ jJ$.J&@,z:~~:i’:‘:;y~ ....;.::.:.x,;j ,~y’$‘!‘:,I:j: .. . . . Bi!iing Te Wme ,,.....:;;::? T’:j;j:;.~$:iji;::i:ij;: .:iij‘.::,;::::y ; :‘:agig .. .. ... . :.:;;y ...;;:::~::i::~, ‘-:::jj:~/ :,.::I:: .:::.,: “‘..’.“‘3$’...:::;;:; 

Request for Some Type of Documentation with Application: 

Certification and Signature on Application: 

Type of Business: 

Questions Concerning What and How Services are Provided: ‘:~:::‘l”(jn~r-~&&~~~~~~s tin y~b&d@,g~lj&ifi&~~\~ mis &g@ :.:. I..: .: :.:.:I)‘..‘I ‘. : l... -3% 

Does the beneficiary sign contract prior to or at the time of delivery,,, 

‘:( Does acontract indicate if the supply is rental or putia;sed .: ...::1. ‘.. : ... .I:j:,:.” :1 .g 

is the equipment provided both purchased and rental items or purchaseonly 

How are prescribin 

3 physicians’ and benef~iaries’ si natures obtained :- :z The names and ad resses of parties supplying your B ME equipment ‘>‘Do safes representzltlves aiways have direct onsite contact with beneficiary at sale :- 2 

Are sales made through catalogs 

;~ 

Describe how orders are received and processed (e.g., phone, mail, or in person) tf testinq is performed, what tape is done and what ohvsician provides trainino 

4 

1 

1z 

3% 

Ownership, Financial Interest, and Employee Questions: 

Owner’s name 22: 59% 

List ail licensed practitioners who are employees, owners or have a financial interest 

list ail licensed ractitioners who are cons&ants or contractors :~ ii; 

Number of emp Povees 1 3% 

Describe how items are .marketed 

(mailorder) 11% 
. . . 

. . 

. . . 

. . 

. . 

. 

Information Requested on Application Forms for DME (cont.) 

.‘. ..:.,. ..( :,). :’ .. : ,: :.,. ..‘,‘. . ........’..,:.,,:. ,.j:::::i:::.. . . :: ..:: .. ...:.. :. .‘. .:.: .... ::. :.:,.s:.. : .,: . ..’ .‘. ‘,,“. .,.: .:.:..::. .:.. ‘I’. .. . . . .. :... .,.,. .... ,:..:. ‘. : ,,,‘, .: .’ .::;:I:.:“:.:“:‘...:.:: ..:,: ,: .,: ,,, .,:: ,:;..:... ~~;:;‘:;;::: .:::;T. 1, .,. .. ;?:: .,... .. : 

: 

?;.:I .j: :,:..,,, ,.::I:. : w’, ; :; pe&.jt . ::::Y?.:..:f...‘.‘. . :j:.:.... ;:.‘.:. ~-I’~f~ation.:Reguested ::;::.::.l:.‘l~:~ ..:..:.I: ,.;,;;:,,,?::..,.:::.::) .’ .“. .: ., : .: ..... :: :: .. 

Billing ,C+estions: ~;:::::;$is-~‘~b;li~g ,:... ..,; ‘e&e u& (pioin&.. . t&$&me and $jdEs) .. .. : .. ,:., .“:. ..,“’ ,, fi . . -1696 

Will this.offie bill by electronic media claims 11% 

::“:“i”!p*&g#&lbcg;ti;ori .&‘~l~ing @Co&-, .ji.:j:;:,. ’ : : ;.. .. .. .....:...:I:j: $g I ,. :; ,,, .::;.::.: . . ...I.. 

fs a.hospital your biifing agency 1 

i:.:.%,bg&$& eentra u,rjg :&jje,-,,, %:..,, ;. . .. ::’ ‘: j ... .., , .j... ....:.;g .,: 

Will you bill from your corporate or office address 1 3% .,. ‘Am.b&hMediwre and NonMedicampaknts charged the same for the same’st&vices ‘.‘. :j :: :’ :.:;.%% 

Will YOUbe biiiina for patients located in other states 3 8% 

Participation Status Question$;. ‘Y$i& j;ou pmicip~e(jtn’.#&d&&ythe && .. ‘:,. .;.... y...;.+. :. .; .. .... ,,, .j.. ~g~.‘,-:I::~.:y;cr% :c. 

Do vou accept assionment (will participate) 2 5% 

Qu,estions to Determine Jurisdiction, Other Provider Numbers, and Service Area : .,“:Do~~~“‘~iii:other &a. i+i&r&$com~$jies : .. .: 1 ‘.: :3%. 

Do you have other numbers with this carrier 5 14% .....Do yo$&&tly have a.Medic& biliihg number in~&&&&s .:,. ,’ ... ,” 9.‘. .::‘24% 

.,Do you bill any of these numbers? if so! what items are billed at each 1 3% 

: Do~o~+~~ers~oljeratorshave&y-other numbers . ” 2 I~ ::tjtg 

Qst ail companies related to yours which are or have been Medicare providers 3 a96 

.‘Arethere any similar companiesin this State in which”owners have a financial interest 3’ ..a96 

in what States have you been located and what numbers were used 2 .13’: :. 5% : ., Do j&‘hab.&f&i.aeli&j ‘&f&s/l~aQon$ jn the St&$<.:<.:.:c: 35% 

Are you pan of a chain of stores with a centralized billing office 3 a96 .. ‘--~I.:if,yes;shwid’corres~de~e be sent to the billing offii ......:: . .. ‘. :. ,:.:,. I : :3% 

..is this company a chain store 1 3% . . 

: ,, fsyou::cdmp~y .assodi~d ~ ‘any othe’r supply cOm:p~~:;l:,~.:, ... “, 1 : :a% 

ff yes, what is the numberof sales outlets, names, .and are charges uniform 1 3% 

W~all.indi\riduals.~a\iing.a-financial’inierestin your company’tio have been in Medicare 2 :5% 

Do,you have a branch office in this State 1 3% 

.~::~::l&~&r?&ffi~@:&&i&f!& ~ain”~ff@ ,,.,,,;j j . ::,;,,, .. ..1: 3% 

is,yw firm a branch office or muiti-state supplier? if so, where are billing and tax records 1 3% 

..‘Doywhave saies’represent&es”in this state (gNe names, addresses and phone %s) 12 

What is the name of your parent company 2 5% 

;Are yw hospital 6-d ;:ji ;, ,:$.; ‘:: 2~ 5% 

is a member of this entity currently employed by another state or out-of-state company 

in a management, accwnting, auditing, or similar capacity 2 5% 

Questions Concerning the Supplier’s Past: 

Datethis business started (or first started providing services) 12 32% 

Have you recently terminated your association with any supply company in this area 1 3% 

Was this company purchased (give business name, previous owner and 1 3% 

were accounts receivable purchased by you) 1 3% 

Have VW had a biiiina number in this area 2 5% 
Some Types of Information Obtained on Physician Application Forms 

3lny provider numbers with other carriers 

Will a billing service be used 
APPENDIX ti 

Claim Jurisdiction Rules Simplified 

TYPE SERVlCES 

Phvsicim Servic88 

S8rvic88 r8nd8d from m office 

In a 8ingle pay lodii 

S8rvic8s r8rd8d from offic88 

in more thm on8 curid 8re6 

No office, us- hom8 8ddra8 

Servica provid#l by ouGd8 

f8cilii (e.g., clinic) 

provide fdii bib for 

884088 of provide-brd phricim 

or phy8ici8n8 who r8nd8r8 88rvic88 

primurily in provider fdi 

8etting 18.0.. 886x8 p8rfornd 

in 8 hapitd 88tting, hcepital bill81 

Provkk-bned phy8icim who m8int8ins 8 

priV8t8 Office for th8 tr88tt,I8nt Of 

hi6 OW” p8ti8tlt8 

Provider-bad phy8icim bilk 

p8tient8 directly or through 

billing 86rvice ~6% doa not 

h8V8 m OffiC8 OUt6id8 the 

provide fdri 

Provider-bm8d phy8icim performing 

88rvica in mor8 thm on8 ftiri 

JURISDICTION 

DETERMINATION 

Curiw 88rvicing offic8 loc8tion 

E8ch offic8 8srviced by 8ppropri8te 

cmitn baed on each office location 

Home ad&m loc8tim 

bC8tiOll Of OUt6id8 f8Cikv 

Lowtion of provider f8cilii 

Priv8te office location 

Loc8tion of provider f8cilii 

Eech providsr f8cilii loaltion for 

8ervic86 r8nder6d therein 

Note: Pnyeiciens who meintain more then one office cennot be nzquired to bill from eech of&e for the services 

renoked h the indduel offie. 

Suodier Servic66 

A 8i,,gl8 OffiC8 8Uppli,,r i6 8 8Uppkr with brmdl OffiC86,88k/rmt8k OUtkt6, or r6qX6J68flt8tiV86 in only on8 CMl’i8r 

jurisdiction. Multi@8 ~8rri8r 8Uppk6 8r8 thO88 6uppk6 with brmCh 0fflC66 or 8d88/rmtd outlstr in more thm 

on8 curkr g8ogrphic ~88. 

single office rupplier Cmiw 88rvicing office loation regardl868 of whsthsr 

8uppkN providm 86rvic86 to cu6tom6~6 out6ide the fxrrier’8 

86rViC8 =88 

Multiplbcarrier 8upplkr Locetion of where the 88rvics i6 fumi8hd to the beneficiwy 

whsther or not the 8uppk 1186s 8 cmtrd billing office (e.g., 

the 8ite where the compmy met with ths beneficiary or 

where the compmny received the b8n8fiCiq’6 c8il - where 

the 88rvice we6 furrkhed) 

DME 6upplier with branch offices Location Of Where purchase m8d8 or c8t6h3g 848 or if no 

branch office or c8tdogua outk. ths location Wh8r8 the 

regiond c8tdogue center is located md from which the 

equipment ~166 8hippod 

SUppli8r Of pOrtti8 X-ray, EKG, Or Location of where the rervice is rendered 

8i,,Iih,r pOrt8b,8 88&X6 

Ind8psndsnt Iabor8tory Locstion of Wh8r8 the labomtory tmt is performed 
APPENDIX E 

Some Carrier Methods of Processing PA Claims 

One carrier reviewed (BC/BS of Minnesota) assigns a provider number (e.g., POO5)to 

physician assistantsalong with a group number to the clinic or group employing the 

PA. Those responsible for filing any claims are told to include the PA’s number in 

item 24H of HCFA form 1500 to indicate the performing provider. The supervising 

physician’s name is to be placed in item 24C and the name and provider number of the 

group or clinic is to be included in item 31. 

Some carriers like Nationwide of Ohio, do not assign a number to a PA, but rather 

flag a supervising physician’s number (e.g., Ohio uses flag 54) to indicate to the 

claims staff that the provider number department has verified that a licensed PA works 

for this provider. A carrier official said that claims should indicate who the PA is that 

did the service, but is not required for the claim to process. However, even if the PA 

is identified on the claim, a claim representative processing the claim could only 

ascertain from the computer that the supervising dot has a PA employed. Only the 

Flag indicator is accessible. Consequently, if a physician employed more than one PA 

or a new PA replaced the PA which was approved by the provider number 

department, the carrier would have no knowledge of what PA performed the service. 

Like Nationwide, Aetna of Georgia does not assign a number to PAS. However the 

carrier does require the claim to indicate the physician assistant who’s qualifications 

are verified at the time of claim processing. A claim representative is instructed to 

enter the first 4 characters of the physician assistant’s name, the first initial of the first 

name, two spaces and the first three initials of the supervising doctor’s name. If the 

physician assistant had been previously credentialed by the carrier (license or 

certification verified) the claim would process. However, if such a mnemonic check 

reveals the physician assistant has not been set up for this physician, the claim will 

suspend and an application will be sent to the submitter of the claim. 
3.098 

IMOI 

87 

Q.Oi 

53 32 - - - 

APPENDIX i 

Carrier Registry (UPIN) Activity 

Total UPINs ( Average Hecords1 

Aetna 

I .T” 

BC/BS of Pennsylvania (a) 1.48 I 

Aetna Life and Casualty (e) , ,- , . . ,--- -,--- 1.48 

Bc/Bs of Kansas 1 KS1 5,673 3,801 1.49 

Life and Casualty (e) NV . . . 1 -,--- 2,068 1.50

Blue Shield of Western New York NY 19,931 13.232 1.51 

BC/BS of Nebraska NE 4,447 

BC/BS of Masaachusetta (a) NH 4,331 

Blue Shield af Iowa IA I= 12.305 

k lllieor -.- ID

BCIB! 5 of Pennsylvania (a) DC -,.-- , 1.64 ..-. I

1 General American Life Insurance Co. MO _IQAlR I 1.64 

I ..T,- , .-,.- , 1.70 

12,030 I 6,990 1 1.72 

1.75 

1.75 

Travelen 1 MS 1 7: 4 7c 

BC/BS of Mervland 1 MD 1 18.1 10,539 I 1.76 

BCIBL -. . --- .__ , 6[1.671 . I 33.6!34 I 1.79 I I TXI __,_. __,__. 

BC/BS of Kanraa Cii MO 1 . ,-- .,---

Equicor (a) TN 20,- I 11,117 1.BO 

BC/BS of Michigan Ml 1 32,785 1 18,079 1.81 

1 Associated Insurance Company ( IN I -_, .--

I 7.259 I, AOR! 1.80 

m.&i!5 I 11,104 1.84 

-,--

BC/BS of Pennsylvania (a) DE 2,637 I,-“” 1 1 , .-. R7 I 

BOBS of Kentucky KY 14,811 7,912 ’ 1 n7 I._, I 

Empire BC/BS NY 76,057 39,950 i , 1.90 1 

Transamertca Occidental Life Ins. Co. CA a- 36,542 1 1. .-- I 

BC/BS of Massachusetts (a) MA 47,909 24,749 1 1.94 I 

California Blue Shield CA 104,248 532 

Equicor (a) 

BC/BS of Florida 

NC 

FL 

28,667 

71,825 

13,9c- ( 

=,= I 

BC/BS of Arkansas (a) AR 11,147 5,216 1 

BC/BS of Arkansas (a) LA 19,900 93 15 2.14 

._,___ I -.-.‘8 2.19 

Heaith Care Service Corporation IL sP.?MI 28,397 1.84 

BC/BS I of Alabama AL lQ.fFi!i 

I Nationwide Mutual Insurance Co. (a) OH --, AS9 , 

1 --, RnA .- ( 7 70

1of Minnesota MN 9,137 1 4,027 1 

wide Mutual Insurance Co. (a) WV 10,016- I 4.255 .~~~1, ; of South Carolina SC 19.2!74 7,733 I 

I10 I 703,102 1 

- letters next to carrier names distinguishes between same carrier but different management control. 

Source: From data supplied the O/G from the Physician Registry 12/9o. 
i 

APPENDIX 6 

Blue Cross and Blue Shield of Alabama 

Eauicor I ID I 30 I 10 I 5 I 5 I 1 

Blue Cross and Blue Shield of 

Travelers Insurance VA l l 5 10 t 

Washington Physicians Service WA 130 20 5 5 15 

Wisconsin Physicians Service WI 100 25 7-10 7-10 . 

a 

This value refers to # assignment for Pennsylvannia only and to newprotiders from out-of-state. 

l Indicates the cam’er did not know 

Source: Cam’er suppfied approximations (5/90) 
APPENDIX ki 

Carrier Counts of Some Part B Providers 
--. -- 

--- -- 

23.670 -- 

--- --- 

Carrier Physician Counts by Type and State 

State 8 Carrier MDs/DOs Dentists Podiatrists Chiropractors Optometrists Clinics 

AL BIB 6,537 1,609 76 364 60 

AR BIB l 3,565 46 301 269 252 

CA BS 35,634 725 1,357 3,721 1,560 1,770 

CA TO 21,771 6,194 1,590 3,550 ia 3,069 12 45 

CO B/B 7,410 1 1,794 1 1431 762 1 3641 131 

CT Tra 12.195 1 659 1 413 I !a11 4861 239 

i DC B/B -.- PA 

___ 1 *I --,---5.234 -,-- I 128 .-- I 124 .-. ..- I 101 .-. I 1261 .-- -jr 5

DE B/B PA * 1,352 I 14 1 341 561 55 1 i4 

FL B/B l 26,767 99 

GA Aet 

r.“. 

IA BIB - l 4,640 343 131 696 536 

ID / BIB -.- 1 l 1,210 16 26 165 74 

IL BIB l 17fc7A RR!! RRA l!iR6 Ifs7 Q6R 

IN BIB 7,923 130 2901 590 1 660 1 320 

HI Am’ i z- 20 125 123 

,KS B/B 4,146 1,042 61 1 499 1 3671 373 

KS B/B KC l 970 29 291 loo I 361 2 

KY B/B I I 8.&i 1 3% I 95 I 4321 A;; -,--- _. .-- .-. 1 Qi 1 

LA BIB AR t 6,761 526 75 512 342 416 

MAA BIB l 19,609 4,256 694 607 1,056 450 

MI D B/B 6,396 1,475 227 196 221 342 

R/q PA l 3,443 93 100 71 69 47 

ME B/E !MA l 2,401 67 56 161 190 66 

MI BIB l --I-- - 3.088 -,--- 798 . -- 1.768 .,. 16AA .,_. 547 - .-

,MN B/B 5,915 613 63 616 439 395 

MLn ‘,’ 

Ml N Tra 2,695 70 75 440 100 

M( 3 BIB l 2,829 62 57 342 177 4 

MO G-A 4.512 338 118 .- a!39 377 -.- 107 .-. 

MS Tra 2,730 1 65 1 321 170 1 1661 

MT BIB l.R45 I Ql I 7R I 1RA I 1RAl 

NE 

NC 

No l indicates the approximate number ofprotider records (i.e., numbers). I- Data supplied by canters to the OIG (10/89). Data applies to 47states and the District of Columbia. I 

I

- Blank cells indicate the carrier has no providers with the indicated specialty or no counts were provided. 

- Clinics are providers listed under HCFA specialty ‘70’ (multispecialty clinic). I 
-- 

-- -- 

I 

10 135 

--- 

Carrier Nonphysician Counts by Type and State 

Physician Nurse NlJW! Physical Occupational 

State 81Carrier Assistants Audioloaists Anesthetists Midwives Therapists Therapists 

I , I I 

I l I 437 1 673 1 I 1 !Dn I I 

t l 331 117 I . 1 

I.. . 

3 l 41 l!.” , I 

B 50 1 

MD B/LB _ 

PA __ t 3 13 I 31 49 4

ME B/B MA l ii 50 36 

MI B/B l 365 1,313 1 96 

MN 

MN 

B/B 

Trr m I I I 

4 

“, 

E 

474 

17E 

I,“, I 

16 

7fl -1 , 

MO GA 

MS Tra 

I I 201 1:ii I 

ii1 

I 391 

ii 1 1 

MT B/B 22 14 26 3 

NE B/B KS 34 6 193 53 2 

NC EcpTN~~1 l 119 13 972 64 2 

ND B/E I l .- .-- I 4 I 

NH B/B M,A (*I 201 641 461 51 

NJ BIB PA l 531 61 11 172 1 6 

NM AetnKw.. I

I I

I I

I ml I MI I mlI 26 I 

AZ l I 12 I 19 1 ,.;I 

MO B/LB l 61 236 I I 91 2 

I 

I l 481 23 1 7 

-_ _~. 

VA Tr. 

VT B/L .-... I I . 

WA PS 67 I 2081 21 264 I I 

WI PS I 361 1431 -44 1 I 

WV NL IOH t 27 1 10 I 27 1 

WY- ­ f Equ l 1 I 31 I 20 1 I 
--- 

-- 

-- 

Carrier Nonphysician _ - Counts by Type and State (cont.)

I 1 Portable 1 Clinical ( Physiological 1 1Other Supply* 

State & Carrier Ambulance X-Ray Labs Labs DME* (e.g., drug) 1 

Al B/B 162 2 61 21 595 

AR B/w‘R t 236 5 47 2 726 

CA BS 150 5i 1,065 69 6,161 473 

CA TO 499 43 594 1,247 3,009 

CO BIB 171 6 57 51 13= 

CT Trr 105 .-- 12 291 722 366

l 11 I -26 1 6 220 237 

PA 1 *I 77 I I 11 56 176 

1 IN BIB I 290 12 135 120 1, 

7 1 166 701 1 

KC t 6 1 5 135 53 

I I 767 10 76 13 1.272 949 

, . . . I I .wll .-- I 11. . I 17s I 113 I 2.231 1 1.9911 

I". , ." -.­

rn D* I *I rl Al 45 7 47 

20 16 292 252 

C77 

B KS I I 241 1 21 16 1 I 1,196 I 21 

BMA l 93 1 1 I 261 41 

I I . . , . . , . .- , -.- _,-_ ­

*nK I I (I7 I 71 RQ I I 1921 

TX B/E 3 25 1 365 1 991 3260 1 9631 

TN Equ l 176 5 202 92 166 1,765 

UT B/B 66 2 18 446 

VA Tra 64 6 34 13 211 643 

VT B/B MA 69 4 , 129 136 

WA PS 177 107 515 1,039 

WI PS 361 6 24 249 1,251 

WV NMOH l 152 4 56 494 243 

WY Equ t 63 27 32 129 

Total 10,600 553 6,583 1,725 45,653 36,996 

I

l Other Supply consists of counts supplied by carriers under HCFA specialty code 87. DME consists of counts 

supplied under HCFA specialty codes 51-58. During the course of contacting some carriers, we discovered some 

carriers include DME under specialty 87 rather than specialty 54 as prescribed by HCFA. I