OIG: Medicare Overpayments Due to Coding Discrepancies Totaled $22.5M
Practitioners used improper place-of-service codes when billing for physician services, resulting in $22.5 million in overpayments from Medicare.
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- Medicare improperly paid practitioners at a higher non-facility rate for services provided to skilled nursing facility (SNF) or hospital inpatients, leading to over $22 million in overpayments, a report from the HHS Office of Inspector General (OIG) found.
Medicare pays practitioners different rates for physician services depending on where they are furnished. Payment rates are lower when the patient is an inpatient at a hospital or an SNF with Part A coverage. In these cases, Medicare pays a lower rate to ensure it is not making duplicated payments to the practitioner and the facility for certain expenses. Payment rates are higher when physician services are furnished in a non-facility setting.
Practitioners use a two-digit place-of-service code on a Medicare claim line to indicate where they provided services. Medicare uses the code to determine the proper payment rate.
OIG conducted the audit to assess whether Medicare paid the proper rate for physician services furnished to individuals while they were inpatients of an SNF or hospital. The audit included 2.1 million physician service claim lines between January 1, 2019, and December 31, 2020. The claims lines were for beneficiaries who were Part A inpatients at either an SNF or hospital and whose practitioner used a non-facility place-of-service code.
During the two years, Medicare made overpayments totaling over $22.5 million for 1.1 million claim lines reimbursed at the non-facility rate. These claims were improperly coded as furnished in a nursing facility or SNF setting without Part A coverage, while beneficiaries were Part A SNF inpatients. These beneficiaries incurred additional cost-sharing for deductibles and coinsurances of as much as $5.7 million.
CMS did not have common working file (CWF) system edits to detect the coding errors, the report noted.
Medicare also paid $22.1 million for 1 million physician service claims lines at the non-facility rate for services that were coded as furnished in a non-facility setting but were for beneficiaries who were Part A inpatients at an SNF or hospital. These patients incurred additional cost-sharing of as much as $5.6 million.
The overpayments represent practice expense payments paid to the practitioners that the payments to SNFs and hospitals are intended to cover. However, CMS regulations do not specifically address situations where an SNF or hospital inpatient leaves to receive a physician service in a non-facility setting.
As a result of the findings, OIG recommended that CMS direct its Medicare contractors to reprocess the claims lines that were incorrectly coded and recover the resulting $22.5 million in overpayments. Additionally, CMS should notify the appropriate practitioners so they can identify, report, and return any overpayments in accordance with the 60-day rule.
OIG recommended that CMS establish and apply CWF edits to detect cases where practitioners incorrectly use the non-facility place-of-service code. CMS should also revise its regulations to ensure Medicare appropriately pays for physician services.
Another recommendation included developing a mechanism for facilities to indicate when an inpatient leaves a facility and returns the same day. Finally, OIG recommended CMS provide additional education to practitioners on the appropriate use of place-of-service codes.
CMS agreed with the first three recommendations and the last and said it plans to address them. The agency said it will consider the fourth and fifth recommendations to determine whether it should act.
