The U.S. Department of Health and Human Services Office of Inspector General (HHS OIG) released a study this month on improper payments for evaluation and management (E/M) services. These improper payments cost Medicare $6.7 billion in 2010.

The errors identified occurred due to coding issues and insufficient documentation. A total of 42 percent of all claims were incorrectly coded, with 19 percent lacking documentation. It also was found that claims from high-coding physicians were more likely to be coded incorrectly or not documented sufficiently in comparison to other physicians.

Physicians Need Coding, Documentation Education

The OIG recommended that the Centers for Medicare & Medicaid Services (CMS) educate physicians on coding and documentation requirements for E/M services as well as encourage contractors to review E/M services billed by high-coding physicians. The office also recommended that CMS follow up on claims for E/M services that were paid in error.

CMS agreed with educating physicians on coding and documentation requirements for E/M services, but the agency declined to review E/M services billed by high-coding physicians and somewhat concurred to follow up on claims paid in error.

Analyzed Claims: $32.3 Billion

The study was conducted utilizing a random sample of Part B claims for E/M services from 2010. The analysis was limited to E/M services that corresponded to visit types with three to five complexity levels.

Analyzed codes were 99201-99205, 99211-99215, 99218-99223, 99231-99236, 99241-99245, 99251-99255, 99281-99285, 99304-99310, 99324-99328, 9934-99337, 99341-99346, and 99347-99350, which includes most of the E/M categories. The study also limited the sampling to physicians who had claims for 100 or more E/M services in 2010. The final sampling included 369,629,103 claims with a total Medicare payment of $32.3 billion.

A contractor as well as three certified professional coders and a registered nurse were utilized for the review of E/M services. The registered nurse was contracted to assist with medical necessity questions.

Upcoded Claims Top 25 Percent:

Both the 1995 and 1997 Documentation Guidelines were utilized to determine the appropriate level for each E/M service, using whichever version resulted in the most advantageous code for the physician. It was found that 26 percent of the claims were upcoded and 15 percent were downcoded.

An additional 7 percent of claims for E/M services in 2010 were both incorrectly coded and insufficiently documented. Further breakdown of the claims showed that 79 percent were upcoded or downcoded by one level, and 17 percent and 4 percent of claims, respectively, were upcoded and downcoded by two levels. There were also 0.8 percent of claims that were upcoded by three levels and 0.0004 percent that were upcoded by four levels.

In 2012, the OIG reported that from 2001 to 2010, physicians increased their billing of higher-level codes for E/M services. The OIG also identified 1,669 physicians who routinely billed for the two highest levels of services for E/M services in 2010.

In a 2011 CERT report, the Centers for Medicare & Medicaid Services (CMS) found that E/M services made up a large part of Part B improper payments. Again, these improper payments occurred due to incorrect coding and insufficient documentation.

Although E/M services constitute a small portion of Medicare payments, 370 million E/M services were billed by physicians in 2010, accounting for nearly 30 percent of Part B payments for that year.

CMS will continue to educate physicians on E/M services as well as analyze each overpayment to determine which claims exceed their recovery thresholds and can be collected consistent with relevant policies and procedures. CMS could send educational notices to physicians that billed for these services.

Panacea Healthcare Solutions addresses these issues by offering both E/M coding compliance audits and documentation audits. We can come on site for subsequent physician education or conduct sessions via live webcasts. For more information on Panacea's physician coding audit and education services, contact John Anderson at 800-252-1578 ext. 3425 or register here.