The Latest OIG Report on E/M Coding Finds that Coding Practices are Trending Higher

(June 15, 2012): Evaluation and Management (E/M) coding has been the subject of substantial scrutiny in Medicare post-payment audits and appeals for many years. When a reviewer for the Center for Medicare & Medicaid Services (CMS) audits an E/M claim, the reviewer often appears to utilize the AMA CPT Code Book to assess the proper level the claim should have been billed at, mainly using 3 factors: history, examination, and medical decision making. Notably, of seven overall factors, "time" of an E/M service is the least important. For in-office E/M codes, there are categories for new patients and established patients. These categories are further broken down into 5 levels of service depending on the 3 main factors outlined above. For instance, a relatively simple service, where the patient has a localized complaint and the treatment for the problem is straightforward, may be a level 1 or 2. Conversely, a service for which the patient has a complex history, requires in-depth physical assessment, and treatment for the patient is risky or complicated, or lots of data has to be reviewed, this may warrant a level 4 or 5. Because of this interplay between various elements of a service, E/M coding can be complicated.

I. HHS-OIG Report on E/M Coding:

Recently, the Office of Inspector General (HHS-OIG) for the U.S. Department of Health and Human Services (HHS) issued a report regarding a significant uptick in E/M coding levels over the past 10 years. As the OIG found, "between 2001 and 2010, Medicare payments for Part B good and services [of which E/M services are a part] increased by 43 percent, from $77 billion to $110 billion. During this same time, Medicare payments for [E/M] services increased by 48 percent, from $22.7 billion to $33.5 billion." The OIG’s report further identified 1,700 physicians who "consistently billed higher level E/M codes." Accounting for location, specialty, and beneficiary types, HHS-OIG singled out these physicians as primarily causing the significant increase in Medicare Part B payments. View HHS-OIG's Report Here.

II. HHS-OIG’s Recommendations to CMS:

The OIG has recommended that CMS conduct three specific tasks to help identify, re-educate and audit physicians billing higher than average levels. These 3 recommendations include:

  1. Continue to educate physicians on proper billing for E/M services
  2. Encourage its contractor to review physicians’ billing for E/M services
  3. Review physicians who bill higher level E/M codes for appropriate action.

CMS concurred with the first two of these recommendations and partially concurred with the last, noting that "CMS and the MACs [Medicare Administrative Contractors] must take into account the respective return on investment of medical review activities." CMS noted that while E/M services may be expensive, there are other Part B services which are more expensive and are therefore a possible better return-on-investment for CMS and the Medicare Trust Fund.

III. How Does this Affect You?

Many audits and other actions by CMS have focused on specific types of providers in the past, such as DMEPOS suppliers, laboratory and pharmacy services, community mental health centers, infusion clinics, home health agencies, and other types of providers who do not conduct basic E/M services. CMS has audited these providers because many of the claims they submit are high-dollar and often fraught with fraud. Nevertheless, the report by OIG could signal a sea change in the auditing and re-education efforts of CMS. General practitioners who provide E/M services may be subject to reviews in the near future. Likewise, OIG may initiate audits or investigations on its own of participating providers who it determines may be billing Medicare improperly.

As a result, all physicians should implement an effective compliance plan as soon as possible. This is not to say that other provider groups, such as home health agencies, should not implement a compliance program as well. Indeed, other provider types who may be currently subject to audit should seek to draft and put in place a compliance plan immediately. Moreover, it’s probably not sufficient to merely download a compliance plan from the internet and say you have one. Rather, a good compliance plan will be individualized and specific to your practice, taking into account the various risk areas which could affect you. Finally, your staff needs to be trained on this program, so that they know how to approach coding and billing, business operations, and patient relationships. After all, they are probably the ones conducting the day-to-day affairs of a practice which could be the subject of scrutiny by a government agency or its contractors.

Robert W. Liles - Managing Partner - Senior Health care attorney - Liles Parker

Robert W. Liles is the managing member of Liles Parker PLLC, a health law and business transactions firm. Robert represents healthcare providers and suppliers around the country in Medicare, Medicaid and private payor audits, appeals, and fraud / abuse concerns. Our attorneys can assist in drafting and implementing an effective Compliance Plan and train your healthcare professionals on their various statutory and regulatory obligations. For a free consultation, call toll-free today at 1-800-475-1906