Carrier and Intermediary Medical Review educating providers; and (5) to identify situations where prepayment controls are necessary. The postpayment review process begins with the selection of a 3-percent sample of physicians and suppliers who exceed utilization norms for the greatest number of categories (for example, office, home, hospital, skilled nursing facility, and nursing home visits, injections, electrocardiograms, surgery, office lab services, X-rays, physical therapy, consultations, and other carrier-proposed categories). Physicians and suppliers who fall into this initial 3-percent investigation list are subjected to additional review to determine if other areas of their practices need to be examined. Carriers first try to explain the abnormal practice patterns based on knowledge of local conditions or circumstances. Failing that, they initiate efforts to educate providers about their billing practices and provision of services. If these efforts prove unsuccessful, or fraud or abuse is suspected, an integrity review is performed, consisting of an examination of at least 15 beneficiary claims from each suspect category. Consultation with the carrier's medical staff is solicited, if necessary. For integrity reviews triggered by suspicion of fraud, however, medical review is not required at this stage. Further, when integrity review findings are reported to HCFA, no distinction is made between abuse situations involving "propriety or medical necessity of services" and fraud situations where a concern could be "whether or not services were in fact rendered as billed." If problems are confirmed during the integrity review, a full-scale review is conducted. This review could involve obtaining medical records from physicians, skilled nursing facilities, and hospitals, as well as contacting beneficiaries to verify services if medical records do not support billing or if a physician shows an abnormally high rate of home visits. The medical necessity and reasonableness of services and supplies are verified by carrier physician reviewers. 7Overutilization is considered the most serious type of abuse to which part B services are vulnerable. Other types of abuse include, but are not limited to "excessive charges for services or supplies," "claims for services not medically necessary, or if medically necessary, not to the extent rendered," "breach of assignment" (violating Medicare regulations by billing patients on assigned claims for amounts exceeding the difference between the Medicare payment and the Medicare-approved charge), using a "separate schedule of charges for Medicare and non-Medicare patients," and "gang visits" (billing simultaneously for visiting several patients "without rendering any specific services to individual patients"). Carrier and Intermediary Medical Review Providers who have been identified for further review are placed on the Physician/Supplier Action File. This file contains the names (and provider numbers) of providers who are under investigation for abuse and the action being taken against them. Only a small number of investigations related to utilization issues (as opposed to fraudulent or abusive billing practices) lead to official sanctions.8 National data for 1985, supplied to us by HCFA, indicated that seven sanctions finalized by the Office of the Inspector General related to utilization and 18 related to utilization were pending. The Carrier Manual also states that severe and longstanding problems with providers should be reported to PROS, peer groups, or other professional organizations capable of exerting corrective influence. Quality-Related Activities Although most carriers confine their quality-related review activities to identification of unnecessary or inappropriate care, 10 carriers reported using some screens specifically focused on quality of care in their review of part B claims. These screens are based on criteria developed by practitioner groups and peer review societies, practitioner and staff advisory boards, or medical policy committees, and in one case, the length-of-stay guidelines developed by the Commission on Professional and Hospital Activities. Carriers also undertake special studies addressing topics of concern in their service areas. For example, one carrier conducted a study that identified abuses in the provision of dermatology, psychiatric, and anesthesia services.9 Another example is a study of coronary bypass graft operations, which was contracted to a local university.10 Special studies like this could be useful in monitoring quality of care in the Medicare program because they can be tailored to carrier-identified problems. Like basic review activities, however, they generally focus on issues of overutilization and the investigation of possible fraud, and not on underutilization or substandard care. In addition, these are one-time efforts, rather than continuing reviews. 8Sanctions include fines and exclusion from the Medicare program. "In one case, for example, an anesthesiologist did not provide direct, personal, and continuous supervision of a nonphysician anesthetist, and overpayment of $176,631 was identified. 10 The main finding of the study was that as the volume of these operations at a particular facility increases, the length-of-stay and mortality rates decrease. Carrier and Intermediary Medical Review HCFA Evaluations of HCFA has instituted a system for assessing carrier (and intermediary) CPEP reviews focus, for the most part, on contract compliance and efficiency. In 1987, the first standard used to evaluate carriers' medical review activities was the cost-effectiveness of its medical review program. This standard was scored on a 10-point scale, with a 10 representing medical review programs that recovered $25.01 or more per dollar spent on medical review, and a 0 representing recovery of $1.99 or less. A second standard addressed the accuracy of medical review determina- HCFA. HCFA's standards for evaluating the accuracy of medical review reports 11The fiscal year 1988 CPEP criteria, issued after a draft of this report was provided to HHS for review, place more emphasis on carriers' compliance with medical review standards and the accuracy of medical review determinations, and somewhat less on cost-effectiveness. (See appendix VII.) Carrier and Intermediary Medical Review Intermediaries Hospital Review Intermediaries process claims for inpatient hospital services and outpatient surgery, which are paid for prospectively, and for outpatient hospital services and subacute care services, which are reimbursed using retrospective cost-based payment methodologies. Their medical review activities focus on the necessity of the services rendered and the appropriateness of the setting in which services were provided. However, the need to coordinate the review of part A services over the course of patients' episodes of care is requiring intermediaries to take a more comprehensive view of quality issues. Because medical review of acute care inpatient claims is performed by The code editor program also flags 12 principal diagnoses that are Cases with “unacceptable” diagnoses are returned to the hospital for correction. Bills with “questionable” diagnoses continue through the 12 Altogether, intermediaries processed about 44 million outpatient hospital claims, including all types of outpatient surgery, therapies, tests, and so on. Outpatient physical therapy bill review is discussed below. Carrier and Intermediary Medical Review Skilled Nursing Facility intermediary bill processing cycle, but are referred to PROS for postpayment review. Intermediaries keep track of the coding of "nonspecific" operating room procedures, and when providers submit too many such codes (more than 10 percent of monthly bills), intermediaries contact them to determine whether there is a need for additional education regarding the use of the procedure codes. In addition to the mandated medical review edits, intermediaries may employ optional screens to detect utilization problems. Our survey of intermediaries indicated, however, that most intermediaries do not use optional screens when reviewing hospital claims. (See appendix III.) The Medicare skilled nursing facility benefit is designed to provide For all admissions to hospital-based skilled nursing facilities, the intermediary must request medical records and review every claim to make a determination about the medical necessity of the admission and appropriateness of the level of care. Where the admission is necessary but the appropriate level of care required is higher than that provided in these facilities, the intermediary must report the case to the HCFA regional office. For admissions to non-hospital-based skilled facilities, the intermediary must select at least 30 percent of admissions for medical review (or, under alternative review plans approved by the regional office, another sampling fraction that must include, at minimum, a 20-percent random selection). When a significant pattern of unnecessary admissions to a particular facility (over 5 percent) is noted over a calendar 13 The Medicare skilled nursing facility benefit is limited to individuals who need daily skilled nursing care or rehabilitative services following a period of 3 or more days of hospital care. In most cases, the admissions must take place within 30 days of hospital discharge. According to discharge data compiled by the Commission on Professional and Hospital Activities, about 8.5 percent of Medicare discharges were to skilled nursing facilities in 1984; the proportion of these stays actually covered by Medicare (as opposed to other payors), however, is not known. (Otis R. Bowen, M.D., Secretary of Health and Human Services, Report to Congress: The Impact of the Medicare Hospital Prospective Payment System, 1985 Annual Report, draft, 1987.) |