Medicare Lost Billions Due to Improper Payments – A Detailed View

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Medicare Lost Billions Due to Improper Payments – A Detailed View Inappropriate Medicare payments are always a major concern. There are several reports showing that each year through improper payments to hospitals and doctors, Medicare is losing billions. Earlier in 2012, CMS announced several demonstration programs that will target some of the most common factors that lead to erroneous payments.

Clear and concise medical record documentation is crucial for physicians to receive accurate and timely payment for services provided to their patients.

Medicare Fee-for-Service (FFS) program provides hospital insurance (Part A) and supplementary medical insurance (Part B) to eligible citizens. While Part A is provided to persons 65 and over who qualify for Social Security benefits and pay for

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hospital, skilled nursing facility and hospice care, Part B is optional coverage that pays for physician, outpatient hospital, home health, laboratory tests, durable medical equipment and other services not covered by Part A. Inaccurate Payment in Evaluation and Management Services – OIG Report Incorrect coding includes both upcoding and downcoding. The level of an E/M service is based on seven components such as patient history, physical examination, medical decision making, counseling, care coordination, the nature of the patient's problem(s), and time.

The physicians’ documentation must support the medical necessity and level of the E/M service. E/M coding involves translating physician patient encounters into five digit CPT codes for medical billing purposes.

A review conducted by the Office of the Inspector General (OIG), released in May 2014, estimates that overpayments account for 21 percent of the $32.3 billion spent on Part B claims for evaluation and management services in 2010. In total, the program paid $6.7 billion for healthcare visits that were improperly coded and lacked documentation.

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In 2012, another OIG study also concluded that from 2001 to 2010, physicians had increased their billing of higher level codes for these services in all visit types.

For review purpose, the medical records associated with 657 Medicare claims were gathered and certified professional coders were asked to see whether the records justified the rates charged. More than half of the claims were found to be billed at the wrong rate or lacked documentation to justify the service.

Sometimes physicians billed for a lower-cost service than the one they delivered, but more often they billed for a more expensive one.

It was found that: ďƒ˜ 42 percent of claims for E/M services in 2010 were incorrectly coded, which included both upcoding and downcoding (i.e., billing at levels higher and lower than warranted, respectively), and ďƒ˜ 19 percent were lacking documentation They also found that claims from high-coding physicians were more likely to be incorrectly coded or insufficiently documented than claims from other physicians.

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Based on the findings, OIG has recommended CMS to: •

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Educate physicians on coding and documentation requirements Consider making E/M claims submitted by high-coding physicians a priority in medical review strategies; and Follow up miscoded claims identified in the sample with payment adjustments, as appropriate.

In 2011, through the Comprehensive Error Rate Testing (CERT) program, CMS found that E/M services were 50 percent more likely to be paid for in error than other Part B services.

CPI Reports An investigation report by the Center for Public Integrity (CPI), a nonprofit, nonpartisan investigative news organization in Washington, D.C. found that Medicare Advantage health plans received nearly $70 billion in improper payments between 2008 and 2013.

Based on the analysis of Medicare Advantage enrollment data from 2007 through 2011, as well as thousands of pages of government

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audits, research papers and other documents, the center finds that: •

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Risk score errors led to nearly $70 billion in “improper” payments to Medicare Advantage plans from 2008 through 2013 — mostly overbillings, as per government estimates.

In at least 1,000 counties nationwide, risk scores of Medicare Advantage patients increased sharply in plans between 2007 and 2011, I increasing taxpayer costs by more than $36 billion over estimated costs for caring for patients in standard Medicare.

In more than 200 of these counties, the cost of some Medicare Advantage plans was at least 25 percent higher than the cost of providing standard Medicare coverage. The wide swing in costs was most evident in five states: South Dakota, New Mexico, Colorado, Texas and Arkansas.

Often payment errors occur due to the use of wrong medical codes and inaccurate documentation.

Physicians relying on experienced healthcare documentation services can get rid of such issues ensure clean claims and receive reimbursement without delay.