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Department of Health and Human Services

Office of Inspector General -- AUDIT

"Review of Medicare Outpatient Cardiac Rehabilitation Provided by Hospitals," (A-05-03-00102)

August 18, 2005

Complete Text of Report is available in PDF format (383 kb). Copies can also be obtained by contacting the Office of Public Affairs at 202-619-1343.


This report consolidates the results of our audits of Medicare outpatient cardiac rehabilitation provided by 34 hospitals.  Our objective was to determine whether hospitals had complied with national Medicare outpatient cardiac rehabilitation coverage requirements for direct physician supervision and “incident to” services.  Twenty-nine of the 34 hospitals in our sample relied on emergency physicians or “code” teams in other parts of the hospital to provide physician supervision when the medical directors were not available, while the remaining 5 hospitals designated a particular physician to provide direct physician supervision.  Thirty-two of the 34 hospitals considered the patient’s referring physician as the physician whose professional services the cardiac rehabilitation was provided “incident to,” while the other 2 hospitals relied on the professional services of a hospital physician.  We attributed this to inconsistent guidance in the Medicare Coverage Issues Manual, Hospital Manual, and Intermediary Manual.   

We recommended that CMS: (1) clarify national Medicare cardiac rehabilitation coverage requirements on the provision of direct physician supervision and the physician (referring or hospital) whose professional services the cardiac rehabilitation must be “incident to” and (2) direct fiscal intermediaries to educate hospitals on the clarified national Medicare coverage policy for outpatient cardiac rehabilitation services.  In its comments on our draft report, CMS agreed to develop and publish provider education materials to clarify the direct physician supervision and “incident to” provisions of the cardiac rehabilitation benefit.