Audit finds more than 60% of physical therapy services claims failed to comply with Medicare medical necessity. CMS says auditors were 'inaccurate' in their policy interpretations.
Medicare could be issuing more than $730 million in improper payments each year for outpatient physical therapy services, a government report suggests.
An audit by the Office of the Inspector General at the Department of Health and Human Services examined 300 randomly selected claims physical therapy services between July and December, 2013 and found that 61% of the claims did not comply with Medicare medical necessity.
The 184 improperly paid claims totaled $12,741. Extrapolating the audit findings over six months, OIG estimates that the Medicare improperly paid $367 million for physical therapy services.
The auditors said the overpayments occurred "because the Centers for Medicare & Medicaid Services' controls were not effective in preventing unallowable payments for outpatient physical therapy services."
OIG recommended that CMS:
- Tell Medicare Administrative Contractors to notify providers of potential overpayments so they can exercise reasonable diligence to investigate and return any identified overpayments;
- Establish mechanisms to better monitor the appropriateness of outpatient physical therapy claims;
- Educate providers about Medicare requirements for submitting outpatient physical therapy claims for reimbursement.
In comments responding to the audit, CMS Administrator Seema Verma disagreed with many of the findings and said OIG was "inaccurate" in its interpretation of policy around physical therapy services.
"CMS’s coverage policy for outpatient therapy services makes clear that coverage turns on the beneficiary’s need for skilled therapy services, and such skilled therapy services may be necessary to improve a patient’s current condition, to maintain the patient's current condition, or to prevent or slow further deterioration of the patient’s condition," Verma said.
"The OIG, however, has interpreted CMS’s policy as allowing coverage only when there is an expectation that the patient's condition will improve significantly. This is an inaccurate interpretation of CMS's coverage policy for outpatient services and is contrary to the court-approved settlement in Jimmo v. Sebelius."
"Furthermore, while CMS's coverage of rehabilitation therapy is designed to address the patient's recovery or improvement in function, it does not require 'significant improvement' in the progress they make for their individualized plan of care," Verma said.
John Commins is the news editor for HealthLeaders.