On May 28, 2014, the Office of Inspector General (OIG) published its findings from a study aimed at determining the error rate in physician coding for Evaluation and Management (E/M) services. The study focused on E/M services billed in 2010, noting that these services accounted for nearly 30% of Medicare Part B payments that year. As indicated by its title, Improper Payments for Evaluation and Management Services Cost Medicare Billions in 2010[i], the report suggests a high incidence of miscoding and insufficient documentation in E/M services claims, resulting in overpayments by Medicare. Physicians and physician organizations should be prepared for continued auditing activity and higher scrutiny of E/M services claims, as the OIG urges that the Centers for Medicare and Medicaid Services (CMS) “must use all of the tools at its disposal to more effectively identify and eliminate improper payments associated with E/M services.”[ii]
The OIG’s study was designed to investigate the degree of coding accuracy and documentation sufficiency for E/M services claims paid by Medicare in 2010. The total projected overpayment for E/M services claims based on data from the study is $6.7 billion and represents 21% of Medicare payments for E/M services billed in 2010. The sample was limited to claims for E/M services with complexity levels three to five and physicians with 100 or more E/M services claims in 2010. The sample was then divided into two groups of claims according to physician coding practices: “high-coding physicians”[iii] and “other physicians”[iv]. The report indicates that 55% of E/M services claims reviewed were incorrectly coded or were not supported by sufficient documentation. Other key findings reported include:
Significant limitations of the OIG study include its sample size and how the OIG defined non-respondents. Out of 369,629,103 claims submitted, the OIG selected a random sample of only 673 claims. Several key assumptions likely skewed the findings to show greater overpayments. For example, while the inappropriate payment amount for other error categories was calculated as the difference between what Medicare actually paid and what it should have paid, the entire payment for 39 claims for which the OIG did not receive records—six percent of the total sample size—was considered an overpayment. This further skewed the OIG’s calculated response rate, which is used to project error rates and overpayment to the claims population and stratified groups.
As a result of this study, the OIG urges that the perceived significant error rate associated with E/M services claims “must be addressed to properly safeguard Medicare.”[vi] This extrapolation of data from a potentially non-representative sample could leave even prudent physicians vulnerable to an audit. Physicians who routinely see the sickest patients, and thus bill the highest E/M codes, may be particularly susceptible to routine, ongoing audits and increased scrutiny of E/M services claims. Despite citing a negative return on investment in a prior test phase, CMS states that it will reassess the effectiveness of directing medical review contractors to conduct targeted reviews of E/M services claims submitted by “high coding physicians.” This report is also likely to motivate private insurance providers to scrutinize E/M services claims more closely and may lead to delayed payments or claim denials as a result of increased records requests.
Physicians should continue to take a proactive approach to ensuring the soundness of their coding practices and documentation. Collaboration with electronic medical record (EMR) service providers to develop prompts consistent with components of E/M services codes may be an effective way to improve symmetry between documentation and coding. The OIG study is a good reminder that if it is not documented, it did not happen. Finally, legal counsel can assist physicians in the event of an audit and is most effective when sought upon initial contact by a medical review agency.
If you require assistance with an audit or have any questions related to E/M services claims, please contact Peter Mellette (Peter@mellettepc.com), Harrison Gibbs (Harrison@mellettepc.com), or Nathan Mortier
(Nathan@mellettepc.com) or call Mellette PC at (757) 259-9200https://oig.hhs.gov/oei/reports/oei-04-10-00181.asp.
[ii] OIG, OEI-04-10-00181, IMPROPER PAYMENTS FOR EVALUATION AND MANAGEMENT SERVICES COST MEDICARE BILLIONS IN 2010, 16 (2014).
[iii] Defined as physicians with an average level in the top 1% of their primary specialty and who billed at the two highest levels at least 95% of the time.
[iv] Defined as those who did not meet criteria for classification as “high coding physicians.”
[v] At the 95% confidence level.
[vi] OIG, supra note 2.