Beneficiary complaints, provider numbers and carrier shopping: Medicare contractor operations.

The number of Medicare claims processed annually will double in the next 10 years, making it imperative that contractors review claims accurately and ensure that payments are made only for medically necessary, high-quality care. Effective identification and prosecution of fraud and abuse in the Medicare program will depend on a cooperative effort between Medicare contractors, the Health Care Financing Administration, and the Office of Inspector General.

Fighting Medicare and Medicaid fraud and abuse.

The Department of Health and Human Services' inspector general has become more aggressive in recent years in ferreting out cases of fraud and abuse against the Medicare and Medicaid programs. Where will this "watchdog" focus future efforts?

DRG "creep". Pitfalls and sanctions to avoid.

In 1983, with the advent of the Medicare prospective payment system, the physician's role became crucial in determining a hospital's reimbursement for treatment of a Medicare patient. The correct diagnosis-related group assignment depends upon the physician's accurate designation of the primary and secondary discharge diagnoses. Manipulation of this information can result in an inaccurate payment, and the physician is ultimately responsible for the misrepresentation. Physicians' recognition of the importance of their responsibility to designate complete and accurate diagnostic and procedural information can help avoid problems, including the potential for sanctions against physicians who unwittingly contribute to fraud and abuse.

Accuracy of diagnostic coding for Medicare patients under the prospective-payment system.

Reimbursement of hospitals by Medicare under the prospective-payment system is based on patients' diagnoses as coded at discharge. During the period October 1984 through March 1985, we studied the accuracy of the coding for diagnosis-related groups (DRGs) in hospitals receiving Medicare reimbursement. We used a two-stage cluster method to sample 7050 medical records from 239 hospitals that were stratified according to size. Using blinded techniques with reliability checks, medical-record specialists reabstracted the International Classification of Diseases, Ninth Revision, Clinical Modification (ICD-9-CM) codes to assign correct DRGs to discharged patients. The correct DRGs were then compared with those originally assigned by the physician and the hospital administration. The study revealed an error rate of 20.8 percent in DRG coding. Errors were distributed equally between physicians and hospitals. Small hospitals had significantly higher error rates. Previous studies had found that errors occurred randomly, so that half the errors benefited the hospital financially and half penalized the hospital. The present study found that a statistically significant 61.7 percent of coding errors favored the hospital. These errors caused the average hospital's case-mix index--a measure of the complexity of illness of the hospital's patients--to increase by 1.9 percent. As a result, hospitals received higher net reimbursement from Medicare than was supportable by the medical records. We conclude that "creep" does occur in the coding of DRGs, resulting in overpayment to hospitals for patients covered by Medicare.

An overview of state medical discipline.

The Office of Inspector General's responsibility for financially penalizing and excluding health care professionals from Medicare and Medicaid participation led to an interest in examining the state medical boards' licensure and discipline processes. This article discusses the results of the subsequent study and focuses only on medical discipline issues. We found that the rate of disciplinary actions taken by boards has been increasing. However, revocations and suspensions, the most serious category of actions, have remained relatively constant. Additionally, consumers and law enforcement agencies are the most active sources of possible violations. Individual health care professionals, hospitals, peer review organizations, and medical societies provide strikingly few reports. To rectify these problems, we encourage states to increase physician license renewal fees to fund expansion and improvement of boards' enforcement activities and to consider ways to limit the legal liability of those making good-faith referrals.