Medicare Rule Puts Patients at Risk

The report said that CMS officials agreed with all recommendations except that which would require a service code modifier, saying "incidental services are often shared by physicians and staff, making definition of a service not 'personally performed' operationally difficult."

However, the report added, CMS "agrees with our 'underlying objective of increasing the available data on services provided 'incident to.'"

The OIG also said it will continue to press CMS to gain the ability to identify and monitor physicians' claims for services doctors bill for, but do not personally perform.

"We believe that the lack of a service code modifier to identify physicians' "incident to" claims represents a significant vulnerability to the Medicare program."

Additionally, Medicare does not require physicians to use identifiers indicating the services were provided "incident to" so it's not possible to determine the extent of the problem. However, in 1996, Medicare began a voluntary two-year demonstration project in five states (Illinois, Maryland, Michigan, Pennsylvania, and Texas) to identify such claims by adding a modifier.

Claims data from 1998 indicated that a minimum of $75 million was allowed for "incident to" services in those five states, the report said. "In 2006, Medicare allowed $58.4 billion for physician fee schedule services under Part B. It is uncertain how much of this amount was for 'incident to' services."

The OIG noted that none of the physicians reviewed in the sample or the non-physicians who provided the services "had been reprimanded, (e.g. suspended license, revoked license or official reprimand) from a state licensing agency and/or had been excluded from federal health care programs. No physicians or non-physicians in our sample had active adverse actions that would have precluded them from providing the services we reviewed," the report said.