Medicare Provider Enrollment: Opportunities to Enhance Program Integrity Efforts
Released: 2003-03-17T00:00:00

Letter

Background

Beneficiaries are generally the only parties under Medicare statute who are entitled to receive Medicare payments for physician services. However, they can “assign” their rights to payment to physicians, other providers, and suppliers who directly deliver the care or service and then submit claims to Medicare. These physicians as well as other providers and suppliers must meet criteria for enrollment in the Medicare program. To bill Medicare, CMS requires that physicians, other providers, and suppliers use a standardized, five-digit coding system on the claim forms to identify the medical services and procedures that were provided. These billing codes describe the type of medical, surgical, and diagnostic service rendered. For E&M services, these codes also designate the level—or intensity—of care provided. Emergency department E&M codes range from 99281 to 99285. Typically, the higher the E&M code, the more complex the consultation, or level of care involved, and the higher the Medicare payment.

CMS has delegated the authority for enrolling physicians and other entities into the Medicare program to its claims administration contractors—the fiscal intermediaries and carriers—that help it manage the Medicare program. As carriers are responsible for the administration of Part B services, they are therefore tasked with managing the enrollment of physicians in Medicare. Before enrolling individual physicians and other entities, the carriers determine whether applicants meet Medicare eligibility criteria and assess, based on information provided, whether they appear to pose a potential threat to program integrity. For example, applicants are required to disclose their legal business names and ownership, adverse legal actions, and outstanding Medicare debt from previous enrollment along with copies of their medical licenses. The carriers also have the authority to request additional documentation to validate information included in the enrollment application, such as articles of incorporation and partnership agreements. In addition to verifying the required information, the carriers may access several national databases to identify adverse reports on applicants that may affect their ability to become enrolled in Medicare. Once physicians are enrolled, the carriers assign each physician an individual provider identification number (PIN), which serves as a unique identifier. Similarly, entities that are eligible to enroll in Medicare and therefore directly bill the program—such as physician partnerships or staffing companies that employ physicians— obtain group PINs.

As specified by law, physicians can only “reassign” their payment rights to certain other entities, such as the hospitals or other facilities where services were performed or to their employers. Emergency department staffing companies generally do not own the facilities where services are performed and those that retain contractor physicians are not considered the physicians’ employers. As a result, Medicare payments cannot be reassigned to emergency department staffing companies that retain contractor physicians, and these companies are not permitted to enroll in and directly bill Medicare or be assigned group PINs. However, these staffing companies may submit claims on behalf of their contractor physicians, using the physicians’ individual PINs. Although the physicians are ultimately responsible for the claims submitted on their behalf, they may not be aware of how the staffing companies code the services billed to Medicare.

Carriers may use an individual or a group PIN to facilitate their program integrity activities. PINs allow carriers to link the individual physicians who actually rendered the services and the entities with which they are affiliated. Carriers are then able to monitor billing patterns and compare billings of both individual physicians and groups. By analyzing the billing patterns associated with both the PINs of individual physicians and these entities, carriers can identify meaningful differences and detect potential instances of improper payments or fraud. Because staffing companies that retain contractor physicians may not be reassigned benefits and cannot enroll in Medicare, they do not receive group PINs. Consequently, they are not identified on Medicare claim forms and are not subjected to such scrutiny.

Contractor Physicians Billed Similarly to Their Counterparts for Emergency Department Services

Our comparison of the billings by contractor physicians retained by staffing companies to other affiliated physicians—such as those practicing in partnerships, medical groups, and employee-based staffing companies— showed that contractor physicians and those with other affiliations both billed for higher-level E&M services at comparable rates in four of the five states we reviewed and at a lower rate in the fifth state we reviewed. Moreover, the rates at which other services—such as ambulance transportation, hospital admission, and diagnostic testing—were rendered in conjunction with the higher-level E&M services were similar for contractor physicians and those with other affiliations, providing an indication that the patients of both types of physicians were comparable.

Higher-Level E&M Services Billed at Similar Rates

Comparing the emergency department E&M billings of contractor physicians with other affiliated physicians showed that physicians involved with the two types of staffing arrangements billed Medicare for the higher-level services at similar rates in four of the five states we reviewed. The payment amounts for the higher-level services—codes 99284 and 99285—are, on average, about three times greater than the average payment amounts for lower-level services—codes 99281, 99282, and 99283. As table 1 shows, contractor physicians in Alabama, Florida, Pennsylvania, and Texas billed nearly the same proportion of higher-level E&M services as their counterparts in those states. The largest difference we identified was in West Virginia, where contractor physicians associated with staffing companies billed the higher-level services 55 percent of the time while other affiliated physicians billed for these services 74 percent of the time. We were unable to determine the cause of this variation.

Patients of Contractor Physicians and Other Affiliated Physicians Received Similar Services

Regardless of whether emergency department patients were treated by contractor physicians or other emergency department physicians, those receiving higher-level E&M services received other services at similar rates in the five states we reviewed. To determine the comparability of patients treated by both types of physicians, we examined the rates at which patients had been transported by ambulance to the emergency department, received diagnostic tests, or were admitted to the hospital within 24 hours of the emergency department visit. As table 2 shows, patients generally received ambulance, hospital admissions, and diagnostic testing services at similar rates when higher-level E&M services were billed, regardless of the physicians’ staffing arrangements.

Patients treated by contractor physicians in Alabama, Pennsylvania, Texas, and West Virginia had slightly higher ambulance, hospital admissions, and diagnostic testing rates than patients treated by other physicians. However, as noted earlier, these physicians did not bill for higher-level services at rates significantly greater than physicians with other affiliations in these four states. The opposite pattern occurred only in Florida. There, contractor physicians treated patients who received fewer other services, but billed higher-level E&M services slightly more often. In Florida, these physicians billed Medicare for higher-level services 69 percent of the time as compared to 64 percent by other affiliated physicians.

Despite Representing a Significant Share of Billings, Staffing Companies That Retain Contractor Physicians Are Practically Invisible to Oversight

In four of the five states we examined, a substantial percentage of the physicians providing emergency department care were contractor physicians associated with staffing companies. These physicians also received a significant share of Medicare payments for these services. However, because the staffing companies are not subject to the enrollment procedures that the carriers routinely conduct for physicians and medical groups before they are allowed to bill Medicare, CMS does not collect critical information that would enable it to identify claims that are submitted by staffing companies on behalf of their contractor physicians. Without such information, CMS cannot routinely link the claims that these companies submit on behalf of their physicians to assess the billing patterns of physicians contracting with specific staffing companies compared to the billing patterns of other physicians.

Contractor Physicians Account for Significant but Variable Share of Medicare Billings

Our five-state analysis of Medicare emergency department claims data and physician payment information showed that contractor physicians with staffing company affiliations accounted for a significant share of billings overall, but this varied by state. In four of the five states studied, from 27 to 58 percent of the physicians with substantial emergency department practices were contractor physicians associated with staffing companies. As table 3 shows, in Alabama, 58 percent of the 351 physicians we identified as having substantial emergency department practices were contractor physicians. Though the percentage of these physicians was lower in Florida, Texas, and West Virginia, they still provided a significant portion of emergency care for Medicare beneficiaries in those states and received a proportionate share of Medicare E&M payments for their services. In contrast, a considerably lower percentage of Pennsylvania physicians were contractors associated with staffing companies. We were unable to determine why contractor physicians had a relatively small presence in this state.

Program Safeguards Hindered by Lack of Information

Despite the significant share of Medicare payments for emergency department E&M services made to contractor physicians, the staffing companies that retain these physicians are not subject to the screening or systematic scrutiny that carriers impose on other entities that are eligible to enroll in Medicare. During the enrollment process, carriers obtain substantial information about providers that can be used to identify applicants who may be more likely to submit improper billings. Because staffing companies that retain contractor physicians may not be reassigned benefits and cannot enroll in the program, they are not assigned PINs and such information about them is not collected. Medicare cannot identify which physicians are associated with a specific company.

For entities that are enrolled in Medicare, carriers can track the billings of specific providers associated with an entity over time, compare the billings of similar provider types, and examine claims submitted by physicians affiliated with different entities. These analyses allow the carriers to spot billing patterns that are markedly different from the norm, which could suggest potential improper billing. The carriers cannot perform this analysis for staffing companies that retain contractor physicians because these companies do not have group PINs that would enable carriers to link physicians’ billings to the companies. As our hypothetical example contained in figure 1 demonstrates, important differences in billing practices across companies can be missed when the carriers cannot identify company affiliation.

If a carrier determines that a medical group’s billings differ significantly from other similar providers, the carrier may review the entity’s claims to identify the reasons for the variance. If the review finds improper bills, the carrier can take corrective action, including an assessment of amounts paid in error that must be repaid to Medicare. For repeated billing abuses, the carrier can take steps to further protect the Medicare program. For example, it can delay payment of some or all claims, pending more intense screening. When the group is enrolled in Medicare, the carrier may hold accountable, not just the physicians responsible for the improper billings, but the group, partnership, or entity employing those physicians as well. For example, if the physician stops billing Medicare before the amount of the overpayment can be withheld from subsequent payments or if the physician is unable to return the amount of the overpayment, plus applicable penalties and interest, the carrier may be able to recover the funds from a partnership or staffing company that employed the physician. Such steps cannot be taken against staffing companies that retain contractor physicians. Because staffing companies that retain contractor physicians may not be reassigned benefits and are not enrolled in Medicare, CMS has no information on these companies and cannot associate the billings of individual contractor physicians with specific staffing companies.

Under current law, CMS lacks the capability to readily identify contractor physicians and the staffing companies with which they associate. We engaged in a time-consuming and labor-intensive process that is not routinely performed by CMS or its carriers. We had to extract and match physician information from multiple sources, including Medicare emergency department claims data, Medicare cost reports, a staffing company database voluntarily provided by one staffing company, and hospitals we contacted in the five states we reviewed.

CMS officials acknowledge the limitations in the current reassignment and enrollment policies and the lack of information on staffing companies that retain contractor physicians. They explained that although Medicare statute expressly provides for certain types of entities—such as medical groups and health care delivery systems—to enroll and have group PINs, that law does not have comparable provisions for staffing companies that retain contractor physicians. CMS officials, therefore, maintain that they lack the authority to change CMS policy to permit the enrollment of these staffing companies and assignment of group PINs to them.

Conclusions

Across the five states, contractor physicians billed Medicare similarly to other affiliated physicians. While these similarities were observed at an aggregate level, contractor physicians associated with specific companies may nonetheless have billing patterns that differ markedly from the norm. This, coupled with the significant share of Medicare payments that these staffing companies receive, albeit indirectly, for emergency services in four of the five states we studied, suggests that it is important for CMS to be able to monitor the billing practices of individual companies using contract physicians. However, the law prohibiting staffing companies from being reassigned Medicare paymentswith the result that they are not permitted to enroll in Medicare and receive group PINshas limited CMS’s ability to conduct oversight. CMS’s carriers cannot identify claims submitted by these staffing companies and, therefore, cannot subject them to same systematic scrutiny as those of other groups. Although our work did not include an analysis of billings by contractor physicians who specialize in the provision of other medical services, such as radiology or anesthesiology, these companies remain as invisible to CMS’s oversight as those providing emergency department care.

Matters for Congressional Consideration

In order to enhance Medicare’s program integrity, Congress may wish to amend the Social Security Act to (1) permit the reassignment of benefits to staffing companies that retain contractor physicians to treat Medicare beneficiaries so that CMS may enroll these companies if they meet appropriate criteria and (2) require these staffing companies to seek enrollment in Medicare.

Recommendation for Executive Action

To facilitate improvements in program integrity, the CMS Administrator should propose legislation permitting the reassignment of benefits to staffing companies that retain contractor physicians to treat Medicare beneficiaries and requiring that these companies seek enrollment in Medicare.

Agency Comments

In written comments on a draft of this report, CMS agreed that a legislative amendment is needed. CMS recommended that we revise the draft report to reflect that, under current law, staffing companies that retain contractor physicians are not enrolled in Medicare because they are generally not eligible to be reassigned benefits. We have revised the report to fully reflect this.

We have reprinted CMS’s letter in appendix II. CMS also provided us with technical comments, which we have incorporated as appropriate.

We are sending copies of this report to the Administrator of CMS and other interested parties. In addition, this report will be available at no charge on GAO’s Web site at http://www.gao.gov. We will also make copies available to others upon request.

If you or your staffs have any questions about this report, please call me at (312) 220-7600. An additional GAO contact and other staff members who prepared this report are listed in appendix III.

Appendix I: Scope and Methodology

To study the billing patterns of emergency department staffing companies that retain contractor physicians, we obtained Medicare claims data paid in 2000 for beneficiaries in five states—Alabama, Florida, Pennsylvania, Texas, and West Virginia. We analyzed all the emergency department evaluation and management (E&M) claims—about 2.8 million—from the five carriers and six fiscal intermediaries that processed Medicare claims for these states during this period. These claims represented about 20 percent of all Medicare emergency department E&M services paid in 2000. We interviewed representatives from the Centers for Medicare & Medicaid Services (CMS), officials from the five Medicare carriers and several of the fiscal intermediaries serving the five states we reviewed, and three professional associations that represent emergency department physicians—the American College of Emergency Physicians, the Emergency Department Practice Management Association, and the American Academy of Emergency Medicine. Several of the officials from these organizations were also physicians who have experience working in hospital emergency departments. We also contacted hospitals in the 5 states we reviewed.

To determine how the use of staffing companies that retain contractor physicians has affected CMS’s ability to monitor emergency department billings, we reviewed documentation related to the provider enrollment process. This included criteria for qualifying for an individual or group PIN and the processes for assessing their integrity. We reviewed applicable laws, CMS regulations, and program guidance. We also reviewed applicable laws and regulations on provider enrollment, Medicare cost reports, as well as reports and other relevant materials from staffing companies.

State Selection Criteria

We selected the five states in our study based on several factors. We chose Florida, Texas, and Pennsylvania because, according to 2000 U.S. Census Bureau data, they were among the states with the largest number of Medicare beneficiaries. Because carrier officials indicated that billing improprieties might be more likely to occur in states that exceed the national average for higher-level E&M services, we chose West Virginia as one such state. As shown in table 4, Florida and Texas also exceeded the national average in the use of higher-level codes. Finally, we selected Alabama because the carrier serving beneficiaries in that state had developed extensive experience identifying and addressing provider enrollment problems. Our results cannot be generalized to other states.

Method for Distinguishing Contractor Physicians Associated with Staffing Companies from Physicians with Other Affiliations

We developed a method for categorizing physicians by their type of staffing arrangement, based on Medicare claims data. Our analysis was limited to physicians with substantial emergency department practices in 2000. We defined a “substantial practice” as one in which at least (1) 50 percent of the physician’s Medicare payments were for emergency department E&M services and (2) $20,000 in Medicare payments were for emergency department E&M services. For physicians meeting these criteria, carriers provided summary data containing the physicians’ names, provider identification number (PIN), practice addresses, payment addresses, payments received, and Medicare group numbers, where applicable.

Using individual PINs, group PINs, and payment addresses, we placed physicians in one of two categories—contractor physicians and other physicians. We used a multistep process that entailed extracting and matching information from various sources. First, we used information from Medicare claims data to place physicians whose individual PINs were associated with group PINs in the other physicians category. Second, we placed physicians who did not have group PINs into the contractor physician category if their Medicare payments were sent to addresses used by at least one other physician or if they practiced in rural areas. We used Medicare emergency department claims data, private databases, and public records to identify payment addresses and practice locations. According to CMS officials, physicians who do not have group PINs and whose payments are sent to addresses similar to another physician are likely to be contractors retained by staffing companies. Third, we excluded physicians who did not have group PINs, payment addresses in common with another physician, or who practiced in rural locations. Less than 1 percent of the physicians were excluded. Table 5 summarizes the results of our analysis.

Methods for Comparing Billing Patterns

To determine whether contractor physicians retained by staffing companies bill Medicare for the higher-level services at rates comparable to other emergency department physicians, we did the following. We asked the carriers to provide us with frequency distributions of the E&M services provided by physicians in our study. We combined the less costly codes (99281, 99282, and 99283) to form a lower-level service category and the more costly codes (99284 and 99285) to form a higher-level category. Of the five procedural codes, 99284 and 99285 were claimed 56 percent of the time. The carriers derived this information from Medicare claims data.

We also used Medicare claims data to determine whether patients treated by contractor physicians and those treated by other affiliated physicians received comparable services. We asked carriers to identify patients who received higher-level E&M services from physicians in both arrangements and the dates of the E&M services. We then compared this information with all Medicare claims paid from January 1, 2000, through November 30, 2000. We did this to determine whether patients receiving higher-level E&M services were also transported by ambulance, received at least one diagnostic test, or were admitted to the hospital. Carrier officials provided us with a list of service codes that when present on a claim, indicate one of these three services. Our analysis included a search for such services delivered on the same day, 1 day before, or 1 day after the higher-level E&M service was received.

Because carrier officials told us that it would be unusual for a patient who received a higher-level E&M code to not receive any of the three selected services, we analyzed such instances. We randomly selected 15 patients in each of the five states who received a higher-level E&M service without also receiving a selected service. The carriers reviewed the patients’ Medicare claims information on services rendered within 1 week before and 1 week after the date of the higher-level E&M service. We did not ask that the carriers conduct medical reviews to determine whether claims were properly coded.

Appendix II: Comments from the Centers for Medicare & Medicaid Services

Appendix III: GAO Contact and Staff Acknowledgments

GAO Contact

Acknowledgments

Enchelle D. Bolden, Shaunessye D. Curry, Richard M. Lipinski, and Craig Winslow made major contributions to this report.

Related GAO Products

HIPAA Standards: Dual Code Sets Are Acceptable for Reporting Medical Procedures. GAO-02-796. Washington, D.C.: August 9, 2002.

Medicare Hospital and Physician Payments: Geographic Cost Adjustments Important to Preserve Beneficiary Access to Services. GAO-02-968T. Washington, D.C.: July 23, 2002.

Medicare: Recent CMS Reforms Address Carrier Scrutiny of Physicians’ Claims for Payment. GAO-02-693. Washington, D.C.: May 28, 2002.

Medicare: HCFA to Strengthen Medicare Provider Enrollment Significantly, but Implementation Behind Schedule. GAO-01-114R. Washington, D.C.: November 2, 2000.