August 2, 2006—In an audit of claims paid by the Centers for Medicare and Medicaid Services (CMS) to independent diagnostic testing facilities (IDTFs) dated June 30, 2006, the Office of Inspector General (OIG) reported that Medicare overpaid IDTFs by $164,839 in 2001—and that HHS suspects up to $71.5 million in improper payments elsewhere.

Services provided to Medicare beneficiaries by IDTFs were not always reasonable and necessary, ordered by a physician, or sufficiently documented, according to the report, which was commissioned by the Department of Health and Human Services. “Of the 230 sampled beneficiaries, who received 1,804 IDTF services,” the report notes, “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.”

Staff at the OIG was not immediately able to calculate what percentage of improper payments were made for imaging tests or how many of the tests were performed at freestanding imaging centers. Sleep and allergy tests are mentioned in the report, as well as ultrasounds and EKGs.

The report traces many of the 2001 overpayments to irregularities in reporting—191 of the sampled IDTFs failed to report operational changes, including changes in the number or identity of employed technicians and physicians, changes in the equipment used to perform diagnostic tests, changes in the number of owners, and changes in the location of the practice or the number of service sites.

Another section of the report deals with physician oversight requirements: 133 IDTFs did not report changes in the identity of supervising physicians, and six ceased to employ a supervising physician at all. Another 34 IDTFS employed or contracted with physicians who supervised multiple IDTFs, often over wide geographic areas. “For example,” the report notes, “in addition to being an executive at a major pharmaceutical company, one physician was responsible for a multi-state IDTF’s mid-Atlantic area, including sites in Pennsylvania, New Jersey, Maryland, and Massachusetts.”

HHS recommends that CMS require its carriers to recover the $164,839, as well as “identify and recover a potential $71.5 million in improper payments,” based on 10 carriers’ suspected reporting errors extrapolated across 5 years. HHS also recommended that carriers “consider performing site visits to monitor compliance with IDTFs’ initial enrollment applications and subsequent updates.”

In its comments on the draft report, CMS agreed to recover Medicare overpayments, subject to verification by Medicare contractors, and asked that HHS provide the data necessary to identify and recover potential improper payments. However, due to inadequate funding, CMS replied that it was unable to require its carriers to perform site visits to contracted IDTFs, and HHS agreed to modify its recommendations to acknowledge the lack of funding.

—Cat Vasko