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From Health Law Daily, January 14, 2015

In random sample of 110, only one Medicare payment correctly paid

By Patricia K. Ruiz, J.D.

CMS made improper payments of more than $4 million for evaluation and management (E/M) outpatient clinic visits during calendar year (CY) 2012, according to the HHS Office of Inspector General (OIG). In its report, the OIG analyzed a random sample of 110 payment items and found only one entry that resulted in a correct payment. Another 16 items were incorrectly paid, but were in the process of being recovered. The error was found to be a result of clerical and programming errors, inconsistent verification processes, and a lack of understanding and compliance with procedures and Medicare billing requirements (OIG Report, A-04-13-06168, December 29, 2014).

Background. E/M services are utilized to assess and manage the health of patients and are provided typically at a physician’s office or an outpatient or other ambulatory facility. Services include clinic visits, emergency department visits, and critical care services. Payments made by Medicare to hospitals for E/M visits at outpatient clinics depend on whether the patient is new or established, meaning he or she has been treated more than once at the same hospital during a three-year period.

For the years 2008 through 2011, CMS found that E/M services were frequently miscoded, and, in 2009, CMS received a settlement of more than $10 million from two health care entities that fraudulently billed Medicare for such services. A 2014 report further found that CMS paid $7.5 million for incorrect outpatient payments that occurred during CYs 2010 and 2011. In the December 2014 report, the OIG sought to determine whether certain CMS payments were correctly made for established patients’ clinic visits in CY 2012.

Incorrect outpatient payments. The OIG found that, of 110 randomly sampled items for which CMS made Medicare payments for established patients’ clinic visits, only one was correct.  Sixteen were treated as correct because 10 of those items were refunded, two were under investigation, and four were under review by another entity. The remaining 93 line items resulted in overpayments of more than $2,600, which, extrapolated for the whole of CY 2012, resulted in more than $4 million in incorrect payments to hospitals. The incorrect payments were attributed by the hospitals to clerical and programming errors, a lack of verification of whether the patient was registered as an inpatient or outpatient of the hospital within the last three years, failure to follow procedures, failure to fully understand Medicare billing requirements, and reliance on the code that the treating physician noted for certain visits.

Recommendations. The OIG recommended that CMS work with its Medicare Administrative Contractors (MACs) to recover the $2,600 in incorrect payments identified in the sample and resolve the remaining overpayments for CY 2012 to the extent feasible and allowed under the law. CMS concurred with the first recommendation. For the second recommendation, CMS partially concurred, stating, “While CMS does take the recovery of overpayments seriously, we believe that efforts to correct and recoup improper payments should also serve to educate and result in improvements to a provider or facility’s current billing practices.”

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