Public Policy

Medicare Billing Practices More Transparent as CMS Cracks Down on Overchargers


Dr. Scheurer

The U.S. Department of Health and Human Services (HHS) is putting forth stricter interventions and penalties aimed at curbing acts of careless billing by physicians it refers to as “recalcitrant providers.” Webster’s defines recalcitrant as “obstinately defiant of authority or restraint…difficult to manage or operate.” According to Medicare, these “recalcitrants” are providers who routinely and repeatedly overcharge for services billed through Medicare, despite proper training on how to bill appropriately for these services.1

Medicare has long battled the issue of finding and curbing overcharging and overpayment. CMS estimates that such defiance accounts for up to $6 billion a year in unnecessary Medicare costs, which makes up about 10% of all physician fee payments, given the fact that total Medicare Part B payments are about $65 billion a year.2

CMS estimates that, overall, about 2% of total Medicare licensed providers charged 25% of total payments, and that the total volume of these high-charging outliers increased by 78% between the years 2008 to 2011. A 2009 audit found that more than half of these recalcitrants were internists; other “high offenders” were ophthalmology and radiation oncology.

Medicare has systems in place to prevent, detect, and/or mitigate improper payments, whether they result from mistakes or from intentional fraud. In 2011, CMS’ Center for Program Integrity implemented sophisticated technology, called the Fraud Prevention System (FPS), which uses predictive analytics to detect provider irregularities warranting further inspection. According to their 2012 report, the FPS generated 536 new investigations, assisted in providing additional information for 511 active investigations, and initiated thousands of verification interviews of beneficiaries and providers to validate the legitimate receipt of services and items. The center estimates that in the first year of this program, FPS prevented about $115 million in payments.3

So what is Medicare’s response to providers who are identified as outliers? For overpayments from mistakes, CMS generally aims to recover the overpayments and educate the providers. Tactics range from educational letters and phone calls to on-site reviews and “prepayment medical reviews.” For fraud, on the other hand, Medicare (obviously) pursues more disciplinary sanctions, including criminal or civil penalties.

A New Paradigm

Now CMS is stepping up its expectations of provider accountability, adding heftier penalties for infractions, including higher financial penalties and even expulsion from Medicare, Medicaid, and other federal programs. In addition to these disciplinary actions, the agency plans to utilize recently changed laws to maximize public transparency around provider billing practices.

As of March 2014, Medicare will be able to publicly report all federal payments that have been paid out to individual providers. Although it has not yet disclosed how or when these will be reported, CMS now has the authority, for the first time since 1979, to display this information publicly. The history on this topic is that a federal district judge in Florida in 1979 prohibited the disclosure of individual payments to physicians, based on the contention that such disclosure would be an invasion of physician privacy. This longstanding mandate, which was reversed in May 2012, now allows Medicare to weigh the risks and benefits of individual requests for information on charges/payments by individual physicians. According to a New York Times article, Medicare is now being pressured by advocacy groups (insurers, employers, consumers) to release as much of the data as possible, to aid in data dissection and analysis and prompt early identification of abusive providers.4

Understandably, many physician advocacy groups, such as the American Medical Association, are concerned that such unfiltered access to this raw data may lead to inaccurate and unnecessary conclusions about physician practice and billing patterns.

The good news is that the federal government currently estimates that the recalcitrant provider list comprises a relatively small group of providers, roughly 300 or so. Some of these providers have received up to $3 million in Medicare payments a year. They estimate that, overall, about 2% of total Medicare licensed providers charged 25% of total payments, and that the total volume of these high-charging outliers increased by 78% between the years 2008 to 2011. A 2009 audit found that more than half of these recalcitrants were internists; other “high offenders” were ophthalmology and radiation oncology.

The list of these particular high-outlier offenders will be turned over to the Office of the Inspector General (OIG) at HHS to impose the appropriate degree of penalty. Then the federal government will determine an appropriate process of “screening” for providers that may meet the criteria for penalties and will start with those at the highest levels of cumulative payments. The OIG acknowledges that high payments do not necessarily imply fraud or abuse but believes it is reasonable to start there when analyzing and investigating potential areas of fraud or abuse.

Transparency Is Coming

So, while it is not exactly clear when or how the data will be released, what is clear is that the federal government has been granted the authority to dissect and release the data as it sees fit, opening up a new era of transparency in pricing, cost, charges, billing, and payments.

This change should affect all types of providers that bill Medicare part B, including hospitalists and other physicians, as well as nurse practitioners and physical therapists.5 While this is likely to cause some degree of discomfort and generate many questions from the public, hospitalists should be willing to embrace such transparency and engage in the dialogue needed to help the lay public understand the data. Most hospitalists work in practices that routinely share their data about billing, at least among the group, if not with a larger audience.

This is just one of many examples of how transparency can and should identify those providers considered “recalcitrant” in a number of realms, including patient satisfaction, quality, utilization, or cost. And, similar to other publicly reported “metrics,” release of this data will likely generate more questions than answers in the short run. In the long run, we should all be prepared for the release of data that is coming, one that will usher us into a whole new era of transparency.

Dr. Scheurer is a hospitalist and chief quality officer at the Medical University of South Carolina in Charleston. She is physician editor of The Hospitalist. Email her at [email protected].


    1. Department of Health and Human Services. Centers for Medicare and Medicaid Services. CMS Manual System. Pub 100-08 Medicare program integrity. December 13, 2013. Available at: Accessed April 6, 2014.
    2. Levinson DR. Department of Health and Human Services. Office of Inspector General. Reviews of clinicians associated with high cumulative payments could improve Medicare program integrity efforts. December 2013. Available at: Accessed April 6, 2014.
    3. Department of Health and Human Services. Centers for Medicare and Medicaid Services. Report to Congress: fraud prevention system—first implementation year, 2012. Available at: Accessed April 6, 2014.
    4. Pear R. Doctors abusing Medicare face fines and expulsion. January 25, 2014. The New York Times website. Available at: Accessed April 6, 2014.
    5. Steinbrook R. Public disclosure of Medicare payments to individual physicians. The Journal of the American Medical Association website. April 2, 2014. Available at: Accessed April 6,


Recommended Reading

Medicare Rule Change Raises Stakes for Hospital Discharge Planning
The Hospitalist
SGR Reform, ICD-10 Implementation Delays Frustrate Hospitalists, Physicians
The Hospitalist
Bill to Clarify Three-Midnight Rule for Medicare Patients Gains Support from Congress, Hospitalists
The Hospitalist
Delays, Controversy Muddle CMS’ Two-Midnight Rule for Hospital Patient Admissions
The Hospitalist
Federal Grant Extends Anti-Infection Initiative
The Hospitalist
How Will New Physician Value-Based Payment Modifier Affect Medicare Reimbursements?
The Hospitalist
Shift from Productivity to Value-Based Compensation Gains Momentum
The Hospitalist
How Many Americans Will Remain Uninsured?
The Hospitalist
Hospitalist Rick Hilger, MD, SFHM, Discusses How the ACA Might Accelerate the Drive Toward ACO-style of Care
The Hospitalist
Hospitalist Joshua Lenchus, DO, RPh, SFHM, Says Obamacare Might Impact Patient Access, Physician Workload
The Hospitalist
   Comments ()