MEDICARE 

PROGRAM 

INTEGRITY

Few Payments in 2011 

Exceeded Limits 

under One Kind of 

Prepayment Control, 

but Reassessing Limits 

Could Be Helpful

Report to Congressional Requesters

May 2013

GAO-13-430

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-13-430, a report to 

congressional requesters

May 2013

MEDICARE PROGRAM INTEGRITY

Few Payments in 2011 Exceeded Limits under One 

Kind of Prepayment Control, but Reassessing Limits 

Could Be Helpful

Why GAO Did This Study

CMS has estimated improper 

Medicare fee-for-service payments of 

$29.6 billion in fiscal year 2012. To 

help prevent improper payments, CMS 

has implemented national MUEs, 

which limit the amount of a service that 

is paid when billed by a provider for a 

beneficiary on the same day. The limits 

for certain services that have been 

fraudulently or abusively billed are 

unpublished to deter providers from 

billing up to the maximum allowable 

limit.

GAO was asked to review issues 

related to MUEs. This report 

examines the extent to which CMS has 

(1) paid for services that exceeded the 

unpublished MUE limits and 

(2) examined billing from providers that 

exceeded unpublished MUE limits. 

GAO analyzed Medicare claims related 

to these limits in 2011, and interviewed 

CMS officials and selected contractors 

in states with high improper payments.

What GAO Recommends

GAO recommends that CMS examine 

contractor edits to determine if any 

national unpublished MUE limits 

should be revised; and consider 

reviewing claims to identify providers 

that exceed the unpublished MUE 

limits, and determine whether their 

billing was proper. In its written 

comments, HHS concurred with both 

our recommendations.

What GAO Found

Less than 0.1 percent of payments Medicare made in 2011 were for amounts of 

services that exceeded certain unpublished limits for excess billing and where 

the claims did not include information from the providers to indicate why the 

additional services were medically necessary. These limits are set by the Centers 

for Medicare & Medicaid Services (CMS)—an agency within the Department of 

Health and Human Services (HHS)—as a means to avoid potentially improper 

payments. To implement these limits, CMS established automated controls in its 

payment systems called Medically Unlikely Edits (MUE). These MUEs compare 

the number of certain services billed against limits for the amount of services 

likely to be provided under normal medical practice to a beneficiary by the same 

provider on the same day—for example, no more than one of the same operation 

on each eye. GAO analysis of 2011 claims data found approximately $14 million 

out of a total of $23.9 billion in Medicare payments for services that exceeded 

unpublished MUE limits and where the claims did not include information from 

the providers to indicate why the additional services were medically necessary. 

As GAO has previously reported, claims could exceed the limits because the 

MUEs are not set up as per-day limits that assess all services billed by a provider 

for a single beneficiary on the same day. CMS plans to begin implementing 

MUEs for some services as per-day limits for services where it would be 

impossible to exceed the limits for anatomical or other reasons. Medicare 

contractors that pay claims may develop local edits, which can set more 

restrictive limits for some services than the national unpublished MUE limits. 

GAO’s analysis of claims data applying a few of these more restrictive local limits 

showed that by applying them instead of the relevant national MUE limits, CMS 

could have lowered payments by an additional $7.8 million. However, CMS is not 

evaluating these local edits to determine if these lower limits might be more 

appropriate. To the extent that these and other local edits are not evaluated more 

systematically, CMS may be missing an opportunity to achieve savings by 

revising some national MUEs to correspond with more restrictive local limits.

CMS and its contractors did not have a system in place for examining claims to 

determine the extent to which providers may be exceeding unpublished MUE 

limits and whether payments for such services were proper. CMS officials and 

contractors told us that they examine aberrant billing patterns at a provider level, 

that is, across all services billed by the provider, but not specifically for services 

with unpublished MUE limits. GAO found that payments that exceeded MUE 

limits were concentrated among certain providers and types of specialties, in 

certain states, and for certain services. For example, the top 100 providers with 

payments that exceeded the MUE limits accounted for nearly 44 percent of total 

payments that exceeded the MUE limits, although they accounted for only about 

1 percent of total payments for all services with unpublished MUEs. Moreover, 

about 26 percent of the top 100 providers included clinical laboratories and 

durable medical equipment providers, both of which have been identified in the 

past as having high potential for fraudulent billings. Because unpublished MUEs 

were developed for services and items that have been fraudulently or abusively 

billed in the past, without systematically examining billing information and claims 

from the top providers exceeding those limits CMS may be missing another

opportunity to improve its program integrity efforts.

View GAO-13-430. For more information, 

contact Kathleen M. King at (202) 512-7114 or 

kingk@gao.gov.
Page i GAO-13-430 Medicare Medically Unlikely Edits

Letter 1 

Background 4

Almost All 2011 Payments for Services with Unpublished MUEs 

Were within Established Limits 7

CMS Has Not Systematically Examined Claims That Exceeded 

Unpublished MUE Limits to Determine Whether They Were 

Proper 10

Conclusions 12

Recommendations for Executive Action 13

Agency Comments 13

Appendix I Comments from the Department of Health and Human 

Services 16

Appendix II GAO Contact and Staff Acknowledgments 18

Abbreviations

AMA American Medical Association

CMS Centers for Medicare & Medicaid Services

DME durable medical equipment

DOS date-of-service 

FFS fee-for-service 

HHS Department of Health and Human Services

MAC Medicare Administrative Contractor

MUE Medically Unlikely Edit

RA Recovery Audit contractor

ZPIC Zone Program Integrity Contractor

Contents 

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Page 1 GAO-13-430 Medicare Medically Unlikely Edits

441 G St. N.W.

Washington, DC 20548

May 9, 2013

Congressional Requesters

In 2012, Medicare covered over 49 million elderly and disabled 

beneficiaries and had estimated outlays of $555 billion. Because of its 

size, complexity, and susceptibility to improper payments, we have 

designated Medicare as a high-risk program.1 The Centers for Medicare 

& Medicaid Services (CMS), an agency within the Department of Health 

and Human Services (HHS), has estimated improper Medicare fee-forservice (FFS) payments of $29.6 billion in fiscal year 2012.2 Over half 

(52 percent) of these improper payments were for services under 

Medicare Part B, although these services accounted for 29 percent of 

total Medicare FFS payments.3 One internal control strategy that CMS 

uses to prevent improper payments is the application of “prepayment 

edits”—automated checks in the electronic claims processing systems 

that approve or deny claims on the basis of national Medicare coverage 

and payment policies that apply to all beneficiaries.4

 

1

GAO, High Risk-Series: An Update, 

One type of these 

GAO-13-283 (Washington, D.C.: February 2013).

2

Medicare fee-for-service consists of Medicare Part A and Medicare Part B. Medicare Part 

A covers inpatient hospital care, skilled nursing facility care, some home health services, 

and hospice care. Medicare Part B covers outpatient services including physician, 

hospital, diagnostic and laboratory, ambulance, durable medical equipment (DME) such 

as oxygen equipment, wheelchairs, and diabetic supplies. Part B also covers certain home 

health services, including physical therapy, speech therapy, and supplies and equipment 

provided to beneficiaries in their homes (rather than in an institutional setting). Providers 

bill for Part B services using a standardized coding system, known as the Healthcare 

Common Procedure Coding System.

3

Services provided by physicians, diagnostic and laboratory facilities and ambulance 

providers accounted for about 26 percent of total FFS payments and about 32 percent of 

improper payments, while DME services accounted for only 3 percent of total FFS 

payments, but about 22 percent of improper payments. The estimated improper payment 

rate for DME services is therefore considerably higher than the overall rate for all FFS 

payments—66 percent compared to 8.5 percent respectively.

4

See GAO, Standards for Internal Control in the Federal Government, 

GAO/AIMD-00-21.3.1 (Washington, D.C.: November 1999). Internal control comprises 

the plans, methods, and procedures used to meet missions, goals, and objectives.

Most prepayment edits are fully automated within the electronic system—if a claim meets 

the denial criteria of the edit, it is automatically denied—while other prepayment edits are 

manual, meaning that they flag individual claims for medical review by a trained individual 

to determine if beneficiaries’ medical conditions meet Medicare coverage criteria.

 
 

Page 2 GAO-13-430 Medicare Medically Unlikely Edits

national edits for Part B services is the “Medically Unlikely Edit” (MUE), 

which sets limits on the maximum units of services that may be billed by a 

provider for a beneficiary on a single date of service. For example, a 

provider may bill for no more than five biopsies of soft tissue in the 

forearm or wrist for a beneficiary on a given day. CMS allows additional 

units in excess of the MUEs to be billed when providers believe the 

services are clinically appropriate. In such cases, special codes, or 

modifiers, may be included on the claim to indicate why the services were 

clinically appropriate.5

CMS has developed MUEs for three types of services: services provided 

by physicians and other practitioners; durable medical equipment (DME) 

services; and services provided in an outpatient hospital setting. While 

most of the MUEs are publicly available on the CMS website, MUEs for 

certain services are not published so as to deter providers from billing up 

to the maximum allowable MUE limit. These unpublished MUEs are for 

services and items that have been billed fraudulently or abusively in the 

past, including certain Part B drugs and certain DME items. As of 

January 1, 2013, CMS had implemented 20,750 published and 4,150 

unpublished MUEs for the three types of services. Medicare 

Administrative Contractors (MAC) that process and pay claims in specific 

geographical jurisdictions6 have also developed local edits that set limits 

on the number of units of a particular service that may be billed by a 

provider for a beneficiary on the same day.7

We issued a report last year on CMS’s use of prepayment edits and 

identified about $8.6 million in payments for services that exceeded the 

published MUE limits in fiscal year 2010.8

 

5

For example, providers may use modifiers ‘RT’ and ‘LT’ to indicate a procedure 

performed twice, on the right and left side respectively. However, some modifiers are 

descriptive and may not explain the need for additional services. For example, modifier 

‘AQ’ indicates services performed in a health professional shortage area.

We also identified weaknesses 

6

Each MAC covers one or more specific geographical jurisdictions, each made up of one 

or more states.

7

These limits may be set for a single day or for a period of time, such as 1 month. In some 

cases, both local edits and national MUEs may exist for the same service, and the local 

limit may have been less restrictive if it was developed prior to the national MUE limit. In 

such cases, the more restrictive national MUE limit applies.

8

GAO, Medicare Program Integrity: Greater Prepayment Control Efforts Could Increase 

Savings and Better Ensure Proper Payment, GAO-13-102 (Washington, D.C.: Nov. 13, 

2012).
 

Page 3 GAO-13-430 Medicare Medically Unlikely Edits

in how the MUEs were operationalized, and recommended that CMS 

implement MUEs that assess all quantities of services provided to the 

same beneficiary by the same provider on the same day, allowing 

providers to bill for additional units if they included modifiers that 

explained the medical necessity of exceeding the limits. HHS agreed to 

further investigate how to address the recommendation and noted that 

there are numerous clinical situations in which MUE limits can reasonably 

be exceeded.

You requested that we further examine issues related to MUEs. This 

report examines the extent to which CMS has (1) paid for services that 

exceeded the unpublished MUE limits and (2) examined billing from 

providers that exceeded unpublished MUE limits to determine if it was 

proper.

To examine the extent to which CMS has paid for services that exceeded 

the unpublished MUE limits, we analyzed Medicare claims data and 

interviewed five MACs. Specifically, we analyzed Medicare paid claims in 

calendar year 2011 from CMS’s Carrier Part B 100 percent Standard 

Analytic File (which contains claims data about noninstitutional providers, 

such as physicians and other practitioners), as well as their 100 percent 

DME claims file.9 We obtained the unpublished MUE limits for calendar 

year 2011 from CMS and analyzed the extent to which payments 

exceeded the per-day MUE limits. About 1,800 of the 4,150 services with 

unpublished MUEs were included in the Carrier Part B Standard Analytic 

File and DME claims files, and these were the services we analyzed. We 

excluded any services billed with modifiers that potentially explained the 

reason for claiming additional units.10 We reviewed relevant 

documentation describing how claims data are collected and processed, 

and examined other research, including our prior reports, that have used 

these data. We determined that the data we used were sufficiently 

reliable for the purposes of our work. We also interviewed five Part A/B 

and DME MACs11

 

9

We did not examine hospital outpatient claims.

in three states that CMS had identified as having high 

10We did not exclude claim lines with modifiers that were descriptive and did not explain 

why the additional units were medically necessary.

11Part A/B MACs process claims from institutional providers such as hospitals, and 

noninstitutional providers such as physicians and other practitioners, while DME MACs 

process claims from DME providers. 
 

Page 4 GAO-13-430 Medicare Medically Unlikely Edits

improper billing and suspected fraud (California, Florida, and Texas).12

To examine the extent to which CMS examined billing from providers that 

exceeded the unpublished MUE limits, we interviewed officials from CMS 

and the five MACs. We also reviewed materials from CMS regarding the 

activities of its contractors that are tasked with reducing fraud and 

improper payments.

We requested local edits the MACs had developed for their jurisdictions 

that, similar to the national unpublished MUEs, set limits on the number of 

units of a service that could be billed by a physician for a beneficiary on 

the same day. We selected 13 high-volume services where the local limits 

were more restrictive than the national unpublished MUE limits. We 

estimated the extent of potential savings if CMS were to implement these 

local limits on a national basis in place of the unpublished MUE limits. We 

consulted with the MACs and the MUE contractor on an ongoing basis to 

ensure the validity of our results. Finally, we identified which internal 

controls were significant for our engagement and then compared them to 

the processes CMS uses to ensure adequate communication with, and 

collection of information from, its contractors and adequate monitoring of 

program activities.

We conducted our work from August 2012 to May 2013 in accordance 

with generally accepted government auditing standards. Those standards 

require that we plan and perform the audit to obtain sufficient, appropriate 

evidence to provide a reasonable basis for our findings and conclusions 

based on our audit objectives. We believe that the evidence obtained 

provides a reasonable basis for our findings and conclusions based on 

our audit objectives.

Most Medicare beneficiaries receive their care on an FFS basis, with 

providers submitting claims for payment for each service provided. In 

addition to the Part A/B and DME MACs that process and pay claims, 

CMS also employs other types of contractors to specifically address fraud 

and improper payments. These include: Recovery Audit contractors (RA), 

which review claims postpayment in four RA jurisdictions to identify 

improper payments and Zone Program Integrity Contractors (ZPIC), 

 

12Overall, the MACs we interviewed were responsible for processing and paying Medicare 

Part A/B and DME claims in 31 other states.

Background 
 

Page 5 GAO-13-430 Medicare Medically Unlikely Edits

which review claims on a pre- and postpayment basis in seven ZPIC 

jurisdictions to identify potential fraud.

All of these contractors use data analysis to identify providers who bill 

improperly, whether by mistake or intentionally, to help target their claims 

review. CMS has expanded its Integrated Data Repository, which was set 

up to integrate Medicare and Medicaid claims, beneficiary, provider, and 

other data, and is currently populated with 5 years of historical Part A, 

Part B, and Part D paid claims data.13

CMS has also recently developed a “Fraud Prevention System” which 

uses predictive modeling technology to screen all FFS claims before 

payment is made. Claims are streamed through the Fraud Prevention 

System prior to payment and analyzed on the basis of algorithms that 

include other information, such as past billing, to identify patterns of 

potentially fraudulent billing by providers. The billing is prioritized for risk 

of fraud, with the highest-priority cases investigated by ZPICs. Prior to 

applying predictive models to claims prepayment, CMS tests the 

algorithms to try to ensure that resources are targeted to the highest-risk 

claims or providers while payment of claims to legitimate providers 

continues to occur without disruption.

CMS’s contractors can use these 

data to analyze previously undetected indicators of aberrant billing activity 

throughout the claims processing cycle. CMS intends to develop shared 

data models and is pursuing data sharing and matching agreements with 

other federal agencies to identify potential fraud, waste, and abuse 

throughout federal health care programs. CMS has set expectations that 

RAs and ZPICs will provide information on types of potentially 

problematic claims to help the agency identify vulnerabilities.

Consistent with Medicare law, CMS sets national coverage and payment 

policies regarding when and how services will be covered by Medicare, 

as well as coding and billing requirements for claims.14

 

13Part D provides a voluntary, outpatient prescription drug benefit for eligible individuals 

65 years and older and eligible individuals with disabilities.

CMS has 

developed national payment policies related to MUEs to limit potentially 

14However, most coverage decisions are made by MACs using local coverage 

determinations, which delineate the circumstances specific to that geographic area under 

which services are considered reasonable and necessary and are therefore covered in the 

jurisdiction where that MAC processes claims.

Development and 

Implementation of MUEs
 

Page 6 GAO-13-430 Medicare Medically Unlikely Edits

improper and excess payments to providers for many services, especially 

those that are prone to potential fraud or that result from billing errors.15 A 

CMS MUE Workgroup, which includes staff from CMS and the MUE 

contractor, is responsible for developing the national MUE limits, in 

consultation with the medical community. MUE limits are developed as 

per-day limits on the number of units of a given service or medical 

product that can be provided by the same physician to the same 

beneficiary. The limits are developed on the basis of coding conventions 

defined in the American Medical Association’s (AMA) Current Procedural 

Terminology manual,16

Although MUEs were developed as limits on the number of units of a 

service a provider could bill for a beneficiary in a single day, as we 

previously reported

national and local policies and edits, coding 

guidelines developed by national societies, analysis of standard medical 

and surgical practice, as well as an analysis of current provider billing 

practices. Prior to their implementation, proposed MUE limits are released 

for a review and comment period to the AMA, national medical/surgical 

societies, and other national health care organizations. However, 

unpublished MUEs are not released for comment. The MUE files are 

updated quarterly and new limits may be added at these times.

17

 

15For example, a provider may mistakenly bill 1,000 units instead of a 100 units of a 

particular service.

they are not implemented as such. Specifically, they 

do not look at total units on all claims from one provider for the same 

beneficiary across an entire day, and the limits may therefore be 

exceeded. A claim can have multiple lines and providers may bill multiple 

units of the same service for the same beneficiary on the same day on 

multiple lines of a claim. In processing the claim, contractors’ automated 

systems only examine the number of units on each claim line. If the 

number of units on the claim line exceeds the MUE limit, the entire claim 

line is denied. However, as long as the units on a claim line are at or 

below the MUE limit, they are paid. Thus, the automated claimsprocessing systems allow the MUE per-day limits to be exceeded for a 

beneficiary if providers bill multiple units of the same service on multiple 

claim lines. The systems also allow limits to be exceeded for a beneficiary 

if a provider bills for multiple units of the same service performed on the 

16The manual includes five-digit codes that physicians and other providers use to report 

medical services and procedures that they perform.

17See GAO-13-102. 
 

Page 7 GAO-13-430 Medicare Medically Unlikely Edits

same day on different claims. When claiming multiple units of the same 

service for one beneficiary, providers may, but are not required to, include 

a “modifier”— a special code that indicates why the additional units are 

medically necessary.

MACs may develop local coverage policies as long as these policies are 

consistent with national policies. To implement these local policies, some 

MACs have developed local edits for certain services. Similar to the 

national MUEs, these local edits set limits on the maximum number of 

units that may be billed by a provider for the same beneficiary on the 

same day.18 Providers may not exceed the local limits by billing additional 

units on multiple claim lines, unless they include modifiers to explain why 

the additional units are medically necessary. The local edits were 

developed for services that may be overused or abused in their 

jurisdiction, including services for which the MUE limits were being 

frequently exceeded. Without these local edits, the MUE limits would be 

exceeded much more frequently. The local limits were developed on the 

basis of clinical input from the MAC’s medical directors and other 

clinicians, as well as analysis of claims data.19

The vast majority of Medicare payments in 2011 for services with 

unpublished MUEs were for services where the numbers of units were at 

or below the per-day MUE limits. However, because the MUE limits were 

not implemented as per-day limits, approximately $14 million was paid for 

services that exceeded MUE limits. Moreover, by applying on a national 

basis the more restrictive local limits used by some contractors, (which 

are implemented as per-day limits), we found that CMS could have 

lowered payments by an additional $7.8 million. We also found that 

payments exceeding unpublished MUE limits were concentrated within 

certain services and states.

 

18In some cases, the local edits may be for a longer period of time, such as a month or a 

year. In implementing the edits, all services billed during that time span are assessed 

against the local limit.

19Limits set by local edits may differ from MUEs because of differences in how services 

are utilized in a particular region compared to the rest of the country. They may also differ 

because MUEs are based on coding and payment rules rather than medical necessity or 

utilization limits, while the local edits are intended specifically to address medical 

necessity or utilization limits.

MAC Local Coverage 

Policies

Almost All 2011 

Payments for Services 

with Unpublished 

MUEs Were within 

Established Limits
 

Page 8 GAO-13-430 Medicare Medically Unlikely Edits

In 2011, Medicare paid approximately $23.9 billion for 1,845 types 

of services with unpublished MUEs. The vast majority—about 

99.9 percent—was paid for services where the number of units providers 

billed was at or below the per-day MUE limits. The MUE contractor 

indicated that the limits were generally set high, so that the MUEs would 

not deny claims for medically necessary services.

However, because MUEs were not implemented as per-day limits, 

approximately $14 million was paid for services where total units billed by 

a provider for a beneficiary on the same day exceeded the MUE limits.

20

The MUE contractor recently announced that CMS began converting 

some MUEs from claim-line edits to “date-of-service” (DOS) edits as of 

April 1, 2013, and other services will be converted in future quarters. As a 

DOS edit, all units billed by a provider for a beneficiary on a particular 

date of service would be totaled across all claims and claim lines to see if 

they exceed the MUE limit. Depending on how it is implemented, this 

change could address a recommendation in our previous report that CMS 

should implement MUEs that assess all quantities of services provided to 

the same beneficiary by the same provider on the same day.

These payments were made for units of services exceeding MUE limits 

that were billed on multiple lines of a claim or across multiple claims.

Although the automated claims-processing systems check each claim 

line, they do not check all units billed by a provider for a beneficiary on 

the same day to see if they exceed the limit. While providers may use 

modifiers on claim lines to indicate when it is medically necessary to 

exceed the MUE limits, no modifiers were included for the approximately 

$14 million in payments that we identified as exceeding the unpublished 

MUE limits to explain why the additional units were medically appropriate. 

CMS does not expect its contractors to check claims to determine if 

modifiers are included when billing additional units of services related to 

unpublished MUEs on multiple lines. CMS officials stated that because 

the MUEs are unpublished, providers may not know a given service has 

an MUE and therefore may not include a modifier when billing for 

services. 

21

 

20This estimate is based upon CMS’s policy of denying the total units on a claim line if 

billed units exceed the MUE, not just the excess units over the MUE limit.

CMS 

officials said the criteria CMS plans to use are still being developed, but 

21See GAO-13-102. 

Over 99 Percent of 2011 

Payments Were for 

Services under 

Unpublished MUE Limits
 

Page 9 GAO-13-430 Medicare Medically Unlikely Edits

some MUEs that are likely to become DOS edits include those where it is 

anatomically impossible to exceed the MUE limit. For example, 

anatomical limits such as having only two eyes limits the number of times 

a given procedure could be performed for which a provider could submit a 

claim on the same day for the same patient. CMS officials told us that 

they probably will not apply this policy to some of the unpublished MUEs 

where clear anatomical or other restrictions may not exist, such as those 

for some Part B drugs and DME. Contractors that we interviewed were 

aware of the new policy, had seen the draft version, and were generally 

supportive of the effort.

Our examination of 13 services where MACs developed more restrictive 

local edits than the unpublished MUEs showed Medicare payments could 

have been reduced had CMS examined these edits and adopted them as 

part of its program integrity responsibilities. If CMS had used these limits 

and implemented them as per-day edits, instead of using the unpublished 

MUE limits on these services, Medicare payments would have been 

lowered by an additional $7.8 million. This indicates that there is a 

potential for additional savings if some of these local edits were applied 

nationally. Four of the MACs from whom we requested local edits had 

implemented edits related to unpublished MUEs.22 At least three of the 

contractors had more restrictive limits for the 13 services we analyzed.23

Contractors told us that they had developed more restrictive edits 

because the MUE limits were being exceeded frequently or they had 

observed potentially fraudulent or abusive billing for these services. While 

the unpublished MUE limits were implemented at a claim-line level, 

contractors told us that their local limits were implemented as per-day 

limits.24

 

22The fifth contractor was transitioning responsibility for its jurisdiction to a different MAC 

and was therefore not able to provide us its local edits on a timely basis.

Contractors also told us that CMS does not request information 

23Some limits specified in these local edits were less restrictive than the unpublished 

MUEs for certain services. Contractors told us that some of the less restrictive local limits 

were developed prior to the implementation of CMS’s unpublished MUEs, and that since 

the implementation of the unpublished MUEs, these more restrictive limits would always 

be applied in such circumstances.

24In some cases, local edits set limits for periods of time longer than 1 day—for example a 

month. In these cases, the total units billed by a provider for a beneficiary across all claim 

lines or multiple claim lines during this period were assessed against the limit.

Use of More Restrictive 

Local Contractor Edits for 

Certain Services Could 

Have Reduced Payments 

by an Additional 

$7.8 Million
 

Page 10 GAO-13-430 Medicare Medically Unlikely Edits

on their local edits, nor do they routinely share them with CMS. The MUE 

contractor told us that the MUE Workgroup was aware of one contractor’s 

local edits for certain services with unpublished MUEs, but was not aware 

of other contractors’ local edits for these services. Because CMS has not 

communicated with its contractors regarding their local edits or monitored 

their use, it is not evaluating these local edits. As a result, it may be 

missing an opportunity to identify situations in which savings could be 

achieved by implementing some of the local edits nationally.

Payments for services that exceeded the per-day MUE limits were 

concentrated within certain services. For example, of the over 

1,800 services with unpublished MUEs, 717 had payments that exceeded 

the MUE limits. Of these, 20 services accounted for almost half of all 

payments that exceeded the MUE limits, with the top service alone 

accounting for over 8 percent of such payments. Many of these top 

20 services were for prescription drugs, DME, and clinical laboratory 

services. 

Payments for services that exceeded the unpublished MUE limits also 

tended to be concentrated in certain states. Five states with the highest 

payments that exceeded the MUE limits (Arkansas, California, New York, 

Pennsylvania, and Texas) accounted for almost half of these payments, 

although they accounted for 30 percent of total payments for all services 

with unpublished MUEs.

CMS and its contractors do not have a system in place for examining 

claims to determine the extent to which providers may be exceeding 

unpublished MUE limits and whether payments for such services were 

proper. Payments that exceeded MUE limits were concentrated among 

certain providers, which could facilitate such examination.

Payments That Exceeded 

MUE Limits Were 

Concentrated within 

Certain Services and States

CMS Has Not 

Systematically 

Examined Claims 

That Exceeded 

Unpublished MUE 

Limits to Determine 

Whether They Were 

Proper 
 

Page 11 GAO-13-430 Medicare Medically Unlikely Edits

CMS officials and contractors that we interviewed said they do not have a 

system in place for regularly examining claims related to services with 

unpublished MUEs from providers that most often exceeded MUE limits.25

We provided a list of 10 providers with payments of at least $3,000 that 

exceeded the unpublished MUE limits in each contractor’s jurisdiction to 

the contractors we interviewed to determine if they were scrutinizing 

these providers’ billing patterns. One contractor told us that it was 

reviewing claims submitted by 1 of the 10 providers that was included on 

the list we had forwarded to them. The contractor had received a potential 

fraud referral on this provider, although not specifically related to billings 

for services with unpublished MUEs. However, the remaining contractors 

were not reviewing any of the providers we identified.

While CMS has several strategies to reduce improper payments, and it 

reviews aberrant billing patterns at a provider level, that is, across all 

services billed by the provider, officials told us that they have no plans to 

review services specifically related to MUEs. Similarly, contractors told us 

that they do not examine claims specifically related to MUEs, although 

they do review claims to detect other aberrant billing patterns and identify 

emerging new vulnerabilities. For example, one contractor told us it 

evaluates weekly billing reports to examine whether its medical review 

strategies are appropriate and focused on problem areas. It also reviews 

data from multiple other sources including reports from the Office of the 

Inspector General and those we have issued, and findings from the RAs. 

However, the contractor’s reviews are conducted at a provider level, that 

is, across all services billed by the provider but not specifically for 

services with unpublished MUE limits. As a result, providers may be 

unlikely to have their billing reviewed more closely if they frequently bill 

above unpublished MUE limits, but do not have other aberrant billing 

patterns.

We found that a small number of providers accounted for a large share of 

payments for services that exceeded the unpublished MUE limits. For 

example, 419 providers received at least $5,000 for services that 

exceeded the unpublished MUEs in 2011. Of these, the 100 providers 

with the highest payments that exceeded the MUE limits accounted for 

 

25While the claims-processing systems automatically deny units of services that exceed 

the MUE limit on an individual claim line, they do not check all units billed by a physician 

for a beneficiary on the same day.

CMS’s Contractors Did Not 

Systematically Examine 

Claims for Services above 

Unpublished MUE Limits 

to Determine If They Were 

Appropriate 

Payments That Exceeded 

MUE Limits Were 

Concentrated among 

Certain Providers
 

Page 12 GAO-13-430 Medicare Medically Unlikely Edits

nearly 44 percent of total excess payments, although they accounted for 

only about 1 percent of total payments for all services with unpublished 

MUEs. In addition, the provider with the highest payments that exceeded 

the unpublished MUE limits alone accounted for about 4 percent of these 

payments, although this provider accounted for less than 0.1 percent of 

total payments for all services with unpublished MUEs.

Certain provider types were more likely to have payments that exceeded 

the MUE limits. About 26 percent of the top 100 providers exceeding 

unpublished MUE limits included clinical laboratories and DME providers. 

Researchers have noted that there is potential for fraud and abuse with 

some laboratory services that can be self-referred, such as certain 

pathology tests. For example, a pathologist examining a surgical 

pathology specimen may self-refer by ordering and performing additional 

tests on the pathology specimen without seeking the consent of the 

original ordering physician. Some contractors we interviewed told us that 

certain DME items, such as diabetic testing supplies, are prone to 

potentially fraudulent billing. CMS has also estimated improper DME 

billing of 66 percent in fiscal year 2012—higher than for any other service 

measured.26

Developing more cost-effective strategies for ensuring the 

appropriateness of Medicare payments could help ensure the long-term 

sustainability of the program. Although almost all payments for services 

with unpublished MUEs were made for services at or below the MUE 

limits, we found that there are still opportunities to realize savings. When 

analyzed on a per-day basis, payments that potentially should not have 

been made for services that exceeded the unpublished MUE limits totaled 

approximately $14 million. In November 2012, we recommended that 

CMS implement MUEs that assess all quantities of services provided to 

the same beneficiary by the same provider on the same day—in other 

words, as per-day limits—but allow the limits to be exceeded if the 

provider included modifiers to explain the medical necessity of exceeding 

the limits. The MUE contractor recently announced that CMS began 

implementing our recommendation for certain services as of April 1, 2013.

However, CMS officials told us these are unlikely to be applied to some of 

 

26The HHS Office of the Inspector General has also issued several reports on potentially 

fraudulent billing practices by clinical laboratories.

Conclusions 
 

Page 13 GAO-13-430 Medicare Medically Unlikely Edits

the services with unpublished MUEs, such as Part B Drugs and DME 

services. We continue to believe that our recommendation should be 

implemented for all MUEs to help strengthen the financial health of the 

program.

Continuously seeking new methods for improving oversight of provider 

payments is another important way to strengthen program integrity.

Contractors’ local edits could serve as a resource for CMS to use in 

developing or revising MUEs and in reducing payments for services that 

are potentially improperly billed. Unpublished MUEs were developed for 

services and items that have been fraudulently or abusively billed in the 

past. Therefore, systematically examining billing information and claims 

from providers that exceed these limits and do not use modifiers to 

indicate the excess units are medically appropriate, could help identify 

improper payments and could inform CMS’s program integrity efforts.

To improve the effectiveness of the unpublished MUEs and better ensure 

Medicare program integrity, we recommend that the CMS Administrator 

take the following two actions:

• examine contractor local edits related to unpublished MUEs to 

determine whether any of the national unpublished MUE limits should 

be revised; and

• consider periodically reviewing claims to identify the providers 

exceeding the unpublished MUE limits and determine whether their 

billing was proper.

We provided a draft of this report to HHS for comment and received 

written comments, which are reprinted in appendix I. In its written 

comments, HHS concurred with both our recommendations. For the 

recommendation to examine contractor local edits related to unpublished 

MUEs, HHS concurred and indicated that CMS would review making 

revisions to the MUEs in order to ensure that the edit levels are 

appropriate on the basis of input from national health care organizations, 

providers, Medicare Administrative Contractors, and CMS personnel, as 

well as data analysis. For the second recommendation, HHS concurred 

and indicated that CMS would conduct further analysis to determine the 

appropriate actions, if necessary.

Recommendations for 

Executive Action

Agency Comments
 

Page 14 GAO-13-430 Medicare Medically Unlikely Edits

As agreed with your offices, unless you publicly announce the contents of 

this report earlier, we plan no further distribution until 30 days from the 

report date. At that time, we will send copies to the Secretary of Health 

and Human Services, the Administrator of CMS, and other interested 

parties. In addition, the report will be available at no charge on the GAO 

website at http://www.gao.gov. 

If you or your staffs have any questions regarding this report, please 

contact me at (202) 512-7114 or kingk@gao.gov. Contact points for our 

Offices of Congressional Relations and Public Affairs may be found on 

the last page of this report. GAO staff who made major contributions to 

this report are listed in appendix II. 

Kathleen M. King

Director, Health Care
Page 15 GAO-13-430 Medicare Medically Unlikely Edits

List of Requesters

The Honorable Thomas R. Carper

Chairman

The Honorable Tom Coburn

Ranking Member

Committee on Homeland Security and Governmental Affairs

United States Senate

The Honorable Claire McCaskill

Chairman

Subcommittee on Financial and Contracting Oversight

Committee on Homeland Security and Governmental Affairs

United States Senate

The Honorable John S. McCain

United States Senate
Appendix I: Comments from the Department of 

Health and Human Services

Page 16 GAO-13-430 Medicare Medically Unlikely Edits

Appendix I: Comments from the Department 

of Health and Human Services
Appendix I: Comments from the Department of 

Health and Human Services

Page 17 GAO-13-430 Medicare Medically Unlikely Edits
Appendix II: GAO Contact and Staff 

Acknowledgments

Page 18 GAO-13-430 Medicare Medically Unlikely Edits

Kathleen M. King, (202) 512-7114 or kingk@gao.gov

In addition to the contact named above, Sheila K. Avruch, Assistant 

Director; Iola D’Souza; Eagan Kemp; Richard Lipinski; and Laurie Pachter 

made key contributions to this report.

Appendix II: GAO Contact and Staff 

Acknowledgments 

GAO Contact

Staff 

Acknowledgments 

(291066)
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