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Department of Health and Human Services

Office of Inspector General -- AUDIT

"Review of Claims Billed by Independent Diagnostic Testing Facilities for Services Provided to Medicare Beneficiaries During Calendar Year 2001," (A-03-03-00002)

June 30, 2006

Complete Text of Report is available in PDF format (1.1 mb). Copies can also be obtained by contacting the Office of Public Affairs at 202-619-1343.


Our objectives were to determine whether:  (1) services that IDTFs provided to Medicare beneficiaries with 100 or fewer services during CY 2001 were (a) reasonable and necessary, (b) ordered by a physician, and (c) sufficiently documented in accordance with Federal laws, regulations, and guidelines; and, (2) IDTFs operated in accordance with their initial enrollment applications and subsequent updates filed with the carriers.  Services that IDTFs provided to Medicare beneficiaries were not always reasonable and necessary, ordered by a physician, or sufficiently documented.  Of the 230 sampled beneficiaries, who received 1,804 IDTF services, 80 beneficiaries received 1,231 services that did not comply with applicable Federal laws, regulations, and guidelines.  We also found a marked pattern of repetitive use of services.  Fifty-five of the sampled beneficiaries accounted for 1,095 of the 1,231 questioned services.  These beneficiaries received their services from IDTFs in California and Florida.

Of the 219 IDTFs that provided services to the sampled beneficiaries, 191 did not comply with initial enrollment application and subsequent update requirements.  IDTFs did not report operational changes such as the identity and number of technicians, supervising and interpreting physicians, type and model number of equipment, and tests performed.  IDTFs also failed to report changes in their ownership and location.

We recommended that CMS require its carriers to:  (1) recover the $164,839 in overpayments that we identified; (2) perform follow-up reviews to identify and recover a potential $71.5 million in improper payments made to IDTFs by the 10 selected carriers, in particular those in California and Florida; and (3) consider performing site visits to monitor compliance with IDTFs’ initial enrollment applications and subsequent updates should funding become available. 

In its comments on our draft report, CMS agreed with the first two recommendations subject to verification of the overpayments by the Medicare contractors and other conditions.  With respect to the third recommendation, CMS stated that, because of funding limitations, it was not able to require Medicare carriers to conduct site visits to monitor IDTF compliance.  While we continue to believe that onsite visits are a useful tool to ensure that only legitimate IDTFs are enrolled in the Medicare program, we recognize that funding limitations may preclude carriers from performing such visits.  Accordingly, we have modified our third recommendation to acknowledge those funding limitations.