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Independent Diagnostic Testing Facilities

How can medical facilities bill Medicare for services on a day when OIG evaluators visit their locations and discover they're closed or don't even exist? Yet, this is exactly what OIG found at 39 Independent Diagnostic Testing Facilities (IDTF) during site visits to IDTFs in the Miami and Los Angeles areas.

Two 2011 OIG reports, one on IDTFs in Miami and another on IDTFs in Los Angeles, shed light on the persistent misuse and abuse of Medicare's coverage of IDTF services. Combined, the reports found that of 224 actively enrolled IDTFs in these two cities, 73 were not open during regular business hours at the location on file, as required by the Centers for Medicare & Medicaid Services (CMS).

Background on Independent Diagnostic Testing Facilities:
A History of Abuse

An IDTF is a type of Medicare provider that offers diagnostic services and is independent of a physician's office or hospital. Medicare allowed almost $1 billion for IDTF claims for 2.4 million beneficiaries in 2010. Of this, $38.7 million was for claims by IDTFs in the Los Angeles area and $23.4 million for claims in the Miami area.

IDTF services have historically been vulnerable to abuse. For more than a decade, they have been a topic of interest for OIG and CMS. For example:

An abandoned hospital room
  • In site visits in 1997, OIG found that 20 percent of IDTFs (referred to as Independent Physiological Laboratories in the report, a term which was later changed to IDTFs for clarity) were not at the location on file with CMS. Projected figures suggest that Medicare could have paid about $11.6 million in 1996 to IDTFs that could no longer be located.
  • A 2001 review of IDTF claims by OIG projected $71.5 million in improper Medicare payments for these services. The review sampled 230 beneficiaries who received 1,804 IDTF services and found that nearly 70 percent of these services did not comply with applicable Federal laws, regulations, and guidelines. Almost 90 percent of these noncompliant IDTF services were billed by providers in California and Florida for just 55 of the beneficiaries, a marked pattern of repetitive use and possible abuse.
  • In 2007, CMS reported that it had denied $163 million in IDTF charges and terminated Medicare billing privileges for 83 IDTFs in Los Angeles.

More Than 1/3 of IDTFs Failed to Meet Standards in Los Angeles

OIG performed unannounced site visits in May and June 2010 and found that 46 of the 132 Los Angeles-area IDTFs failed to comply with selected Medicare standards. As a result, OIG recommended that CMS periodically conduct unannounced site visits to IDTFs and take action against the noncompliant IDTFs identified. Due to the high potential of fraud, OIG also recommended CMS implement a moratorium, or temporary ban, on the enrollment of IDTFs in the Los Angeles area until additional safeguards against fraud are developed. CMS agreed with the first two recommendations and is strongly considering the third.

Actions Taken against Non-Compliant IDTFs in Miami

In the Miami area, OIG performed unannounced site visits in May 2010 and found that 27 of the 92 IDTFs failed to comply with selected Medicare standards. CMS was concurrently involved in a special project involving IDTFs in the same area which, combined with routine oversight, resulted in action being taken against 23 of these 27 noncompliant IDTFs.

However, three IDTFs continued to receive Medicare payments while CMS was revoking their billing privileges. CMS took an average of 17 weeks to revoke the Medicare billing privileges during which Medicare allowed $146,000 for claims submitted by these IDTFs. CMS agreed with OIG's recommendations to periodically conduct unannounced site visits to IDTFs and immediately stop payments to IDTFs whose billing privileges are being revoked. A moratorium was not recommended in this case because of CMS's special project.

Related OIG Work: Enforcement and Compliance

OIG has prosecuted several cases involving IDTFs. One such example is National Cardio Labs LLC, (NCL), which was operating as an IDTF that received, analyzed, and printed out data from Holter heart monitors and other medical devices. According to the investigation, NCL defrauded Medicare by billing for services that were not reimbursable, services with no written physician's order, services not listed on its Medicare application, and services not provided. NCL also "unbundled" services, procedures, and supplies and rebilled them to obtain duplicative reimbursement. In 2010, NCL agreed to pay $3.6 million to resolve allegations.

OIG also issued an advisory opinion on IDTFs that responds to a provider's request for legal advice regarding compliance with applicable laws.

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Office of Inspector General, U.S. Department of Health and Human Services | 330 Independence Avenue, SW, Washington, DC 20201