OIG Report on Physician Compliance with E/M Coding: 6 Key Takeaways

The Office of Inspector General (OIG) for the Department of Health and Human Services (HHS) posted a report on May 29, 2014 titled “Improper Payments for Evaluation and Management Services Cost Medicare Billions in 2010” which set forth the results of the OIG’s review of Part B claims for Evaluation and Management (E/M) services and evaluated physician compliance with E/M documentation requirements.

The review was conducted by certified professional coders and resulted in a finding that Medicare inappropriately paid $6.7 billion for claims for E/M services in 2010 that were incorrectly coded or lacking documentation.  This number represents 21% of the payments for E/M services in that year.  The OIG alleged that 42 percent of E/M claims for that year were incorrectly coded (including both upcoding and downcoding) and that 19 percent were lacking documentation.  The OIG also found that physicians who consistently billed at higher code levels (“high-coding” physicians) were more likely to have incorrectly coded claims or insufficient documentation than other physicians were.

The OIG recommended that the Centers for Medicare & Medicaid Services (CMS) do the following:

  1. educate physicians on coding and documentation requirements for E/M services;
  2. continue to encourage contractors to review E/M services billed for by high-coding physicians;  and
  3. follow up on E/M services that were paid in error.

The OIG report stated that CMS concurred with the first recommendation, did not concur with the second and partially concurred with the third recommendation.  With regard to its failure to concur with the second recommendation, CMS stated that it was not cost-effective to review E/M claims.  Specifically, CMs stated that it has experienced a negative return on investment with regard to its initial phase of a two-phase approach to reviewing high-coding physicians.  With regard to the OIG’s third recommendation, CMS partially concurred stating that it would analyze the overpayments to determine which claims exceeded its overpayment recovery threshold and could be collected pursuant to CMS policies and procedures.  CMS specifically noted that many of the claims identified by the OIG would have exceeded the 4-year claim reopening period.  For overpayments that will not be collected, CMS stated that it could send educational notices to the physicians at issue identifying the reason that the overpayment is not being recovered and educational information for future E/M billing.

6 key takeaways from this report:

  1. Physicians who bill for high level E/M codes continue to be heavily scrutinized by the OIG and CMS contractors.
  2. Physicians may receive overpayment demands for E/M services that were reviewed by the OIG and referred to CMS.
  3. Physicians who received educational notifications related to this OIG review could be targeted for future audits and should consider doing self-audits as part of their billing compliance program in order to best prepare for audits.
  4. A large percentage of the “errors” identified by the OIG were actually downcoding – this trend often occurs when physicians have been targeted by audit or fear an audit and start billing for E/M codes that do not reflect the level of service provided.  This is an area where an effective billing compliance program can actually save money if physicians are educated through self-audits and have the confidence to bill for the level of code that they provided.
  5. Physicians can expect to see additional educational documents from CMS and its contractors in response to the OIG’s recommendations.
  6. Physicians who are outliers can expect to see comparative billing reports for evaluation and management services as this was a solution discussed by CMS.  Comparative billing reports should be used to evaluate physician compliance as part of a proactive billing compliance program.

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