Healthcare Business News

Fraud, higher coding cited for cost increases

By Rich Daly
Posted: May 9, 2012 - 2:30 pm ET

Rapid growth in Medicare spending on evaluation and management visits in recent years has been driven, in part, by fraud and more physicians billing for the most expensive types of those services, according to a report by HHS' inspector general (PDF).

The report concluded that such E/M billing grew by 48% to $33.5 billion by 2010 from $22.7 billion in 2001. That helped drive an overall 43% increase in Medicare Part B payments in that timeframe to $110 billion from $77 billion.

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Also in that timeframe, physicians increased their billing of more complex and more expensive E/M codes in all 15 visit types. The shift to costlier codes occurred in office visits, inpatient hospital care and emergency department visits, according to the report.

In response, the CMS plans to continue educating physicians on proper billing for E/M services and to encourage its contractor to review physicians' billing for E/M services.

The inspector general also encouraged the CMS to review physicians who bill higher level E/M codes and provided a list of about 1,700 physicians who billed under such costlier codes at least 95% of the time in 2010.

In response, Marilyn Tavenner, acting administrator of the CMS, wrote that her agency plans to urge each Medicare Administrative Contractor to review the top 10 high billers in their jurisdictions. However, the CMS warned that it and its contractors “must weigh the cost and benefit of E/M reviews against reviews of more costly Part B services,” the report stated.

The report also highlighted recent evidence of the vulnerability of E/M services to fraud and abuse. For example, the CMS found that certain types of E/M services had the most improper payments of all Medicare Part B service types in 2008.

Approximately 30 million beneficiaries received E/M services from physicians in 2010.

The report is the first in a series evaluating E/M services. Subsequent reports will determine the appropriateness of Medicare payments for E/M services and the extent of documentation vulnerabilities in E/M services.

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