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Medicare Overpaid Physicians $6.7B For Miscoded Claims

 |  By cclark@healthleadersmedia.com  
   May 30, 2014

An examination of medical claims records by federal officials finds that more than half of doctors' claims for patient evaluations and related services had incorrect codes or lacked the necessary documentation.

Suggesting physician upcoding practices on a major scale, an Office of Inspector General report Thursday said Medicare overpaid physicians $6.7 billion in 2010.

The overpayments were claims reimbursements for evaluation and management (E/M) services submitted with frequently exaggerated severity codes, the report said.

After examining medical records for a large sample of those claims, the OIG found that 26% of the claims were upcoded to reflect a higher level of severity than what was justified by the patient's record, amounting to $4.6 billion in overpayments. Another 14.5% were downcoded, reflecting a lower level of severity than what was warranted, for an underpayment of $1.8 billion.

Another 12% of the claims were insufficiently documented, which meant Medicare overpaid $2.6 billion and 7% were undocumented, representing $2 billion in overpayments. About 2% of claims had other coding errors, amounting to about $500 million in overpayments.

In all, 55% of claims for E/M services had incorrect codes or lacked the necessary documentation.

Medicare paid $32.3 billion for E/M services in 2010, an amount that represented 30% of all Part B payments that year.

Severity CPT coding or Current Procedural Terminology, is determined by federal guidelines, and is based on seven factors: patient history, physical examination, medical decision-making complexity, counseling, coordination of care, the nature of the patient's problems, and the amount of time.

The OIG looked at claims from two types of physicians to draw its conclusions. The first group comprised a sample from 828,646 claims billed by physicians with a history of high-coded claims. The doctors in this group were in the top 1% of their primary specialties and billed at the two highest level codes (4 and 5) for E/M services at least 95% of the time.

The second and larger group sampled nearly 369 million claims from doctors without a history of high coding. Physicians can score CPT codes at levels from one to five, but for this review, the OIG limited its scrutiny to those visits coded at level 3, 4, or 5.

From both groups, a sample of 673 claims were examined in detail to determine the justification for higher codes.

The OIG review found more inappropriate coding within the first group of doctors—those with a history of submitting high-coded claims.

The report informed the Centers for Medicare & Medicaid Services that it should do a better job to

  • Educate physicians on coding and documentation requirements, including consolidation of two somewhat different CMS Documentation Guideline manuals issued in 1995 and 1997.
  • Continue to encourage audit contractors to review E/M service billings from physicians with a history of high coding claims
  • Follow up on claims for E/M services to correct errors.

In a response, attached to the OIG report, CMS Administrator Marilyn Tavenner said she did not agree that CMS should encourage contractors to target physicians with a history of high-coding practices, saying such a practice "has resulted in a negative return on investment to CMS."

The agency also said that the per-claim overpayment amount is "approximately $33," and since four-year claim reopening period window is about to close for this period covering 2010, the OIG should turn over to the agency the provider number, claim payment amount, correct code for each claim, overpayment amount, Medicare contractor number, claim paid date and other details.

After that information is received, CMS said, it would "analyze each overpayment to determine which claims exceed CMS recovery threshold and can be collected consistent with agency's policies and procedures."

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