Medicare overpaid docs billions for office visits, OIG says

Medicare overpaid physicians $6.7 billion in 2010 for evaluation and management services, HHS' Office of Inspector General said in a study released Thursday. The overpayments, which allegedly stemmed from incorrect coding and poor documentation, accounted for more than one-fifth of the $32.3 billion the CMS paid for E/M services that year. E/M services are basic patient health assessments performed at a physician's office or clinic.

In a podcast, OIG officials Dwayne Grant and Rachel Bessette said they conducted the most recent study based on preliminary findings from 2012. In that report, the government found E/M services are “vulnerable to fraud and abuse” and that upcoding—billing Medicare for visits at higher, more expensive levels than they should've been—was rampant from 2001 to 2010. However, the agency was not able to discern if those E/M payments from its initial 2012 study were inappropriate.

“These higher level codes represent more complex visits, and higher reimbursement rates for physicians,” Bessette said in the podcast, talking about why the OIG re-evaluated the issue. “We also identified nearly 1,700 high-coding physicians who consistently billed these higher level codes in 2010.”

The newest report said 42% of office billings had incorrect codes, including those that were upcoded and downcoded, and 19% did not have sufficient documentation. The results came from a stratified random sample. The higher coders also were more likely to have errors or lack documentation, according to the report.

The OIG recommended the CMS take three steps: better educate physicians on what is needed for E/M claims, follow up on erroneous claims and prompt private contractors to closely monitor E/M claims from high-coding physicians.

Medicare officials said they would ramp up education efforts, but they do not want to further audit doctors. The CMS said it has already completed one phase of medical reviews for high-coding physicians and started the second phase last August.

The first phase resulted in a loss of $160,000, officials said. “Based on the results of this effort, CMS will reassess the effectiveness of reviewing claims for high-coding physicians versus other efforts such as Comparative Billing Reports,” CMS Administrator Marilyn Tavenner wrote.

The findings of the report were not surprising, said Paula Sanders, chair of the healthcare group for Philadelphia-based law firm Post & Schell, which represents hospitals and other providers. If anything, she said it reinforces the trend that providers have inadequate access to monitor and evaluate claims information. “The government is putting a lot of data out there, but it's not always easy on the provider side to trend your own data,” Sanders said.

E/M services were on the nation's radar last month after the CMS publicly released data on Medicare Part B payments. Those visits were found to be the most commonly billed item in 2012 even though they amounted to just one-seventh of the $77 billion in Part B reimbursements. Tavenner and other top CMS officials have since defended the release of the data, saying the transparency could help the government improve the Medicare program.

Follow Bob Herman on Twitter: @MHbherman