U.S. flag

An official website of the United States government

Dot gov

The .gov means it's official.
Federal government websites often end in .gov or .mil. Before sharing sensitive information, make sure you're on a federal government site.


The site is secure.
The https:// ensures that you are connecting to the official website and that any information you provide is encrypted and transmitted securely.

Department of Health and Human Services

Office of Inspector General -- AUDIT

"Review of Medicare Payments for Services Provided to Incarcerated Beneficiaries in the State of Texas," (A-06-02-00008)

October 31, 2002

Complete Text of Report is available in PDF format (782 kb). Copies can also be obtained by contacting the Office of Public Affairs at 202-619-1343.


The objective of this review was to determine whether Medicare payments for services provided to incarcerated beneficiaries in Texas during  the period January 1, 1997 through December 31, 1999 were in compliance with Federal regulations and Centers for Medicare & Medicaid Services (CMS)  guidelines. We reviewed a randomly selected statistical sample of 100 claims.  Payment for 90 of the 100 claims were allowable.  However, we found that Medicare payments for five claims were improper because, at the time the service was provided, the five beneficiaries came under the jurisdiction of the Texas Department of Criminal Justice or local jurisdictions. The State of Texas or the local government was responsible for their health needs. We were unable to determine the exact whereabouts of five beneficiaries at the time the services were rendered for the remaining five claims.  Therefore, we could not determine Medicare allowability.  CMS plans to establish an edit in its Common Working File (CWF) that will deny claims for incarcerated beneficiaries.  We believe the planned edit will prevent many improper payments for claims of incarcerated beneficiaries. However, we believe CMS and its contractors will need to educate suppliers and providers on the proper use of the modifier or condition code. Also, claims with the modifier or condition code must be monitored to assure the conditions under regulations at 42 CFR 411.4 (b) required for payment are, indeed, being met. In their written response to our draft report, CMS officials agreed with the findings and recommendations and stated they will work with the contractors in Region VI to ensure that our recommendations are carried out properly.