Miscoded Evaluation and Management Services Cost Medicare $6.7 Billion

Evaluation and Management Services

(June 25, 2014) Officials at the Department of Health and Human Services, Office of Inspector General (OIG) recently examined medical records from 2010 for claims related to evaluation and management services (E/M services). The results are astounding. OIG determined that Medicare inappropriately paid $6.7 BILLION for E/M services that year due to claims that were incorrectly coded and/or lacking the necessary documentation. In total, over half of the claims for E/M services submitted in 2010 had incorrect codes or lacked the necessary documentation.

I. Coding and Documentation Requirements for Evaluation and Management Services:

E/M services are visits performed by physicians and nonphysician practitioners to assess and manage a beneficiary’s health. These services are divided into different categories known as “visit types” that reflect the type of service, the place of service, and the patient’s status. Most visit types are further divided into three to five levels, which correspond to the complexity of a visit and the Current Procedural Terminology (CPT) codes for billing purposes.

The level of an E/M service for CPT coding is determined by seven components: patient history, physical examination, medical decision-making, counseling, coordination of care, the nature of the patient’s presenting problem(s), and time. The first three components are important in determining the correct code for the E/M service. Higher level codes for a visit type indicates increased complexity of the E/M service. More importantly, it corresponds to higher reimbursement rates.

In order to be reimbursed for E/M services, the services must be medically reasonable and necessary. The services must also meet the individual requirements of the CPT code that is used on the claim. However, if services are billed at a higher level than were actually performed, the medical necessity requirement is not met. Providers must therefore ensure that the claims they submit to Medicare accurately reflect the E/M services provided and are billed at the appropriate level.

Physicians’ documentation is also an important part of the reimbursement process. The documentation must support the medical necessity and appropriateness, as well as the level, of the E/M service. In order to accurately reflect this, the medical record documentation must be clear and concise. The records should reflect the care the patient received as well as the relevant facts, findings, and observations about the patient’s history. Moreover, Medicare requires that the services be authenticated, either through a handwritten or electronic signature. If the medical record fails to include a proper attestation, CMS concludes that the claim is insufficiently documented.

II. Physicians Increase their Billing of High Level Codes, Leading to Higher Payment Amounts:

In 2012, an OIG report analyzed E/M services (all visit types) from 2001 to 2010 and noted that physicians had been increasing their billing of higher level codes. This process would obviously yield higher reimbursement amounts. Additionally, the Centers for Medicare and Medicaid (CMS) has determined that E/M services are 50% more likely to be incorrectly paid compared to other Part B services. These improper payments are more likely to result from errors in coding and/or insufficient documentation.

OIG then conducted a medical record review of a random sample of Part B claims for E/M services from 2010. In this review, OIG stratified claims from physicians who consistently billed higher level codes for E/M services and claims from other physicians. The first group of claims came from “high-coding physicians”. They comprised a sample from 828,646 claims billed by physicians with a history of high-coded claims. These high-coding physicians represented the top 1% of their primary specialties and billed at the two highest level codes (4 and 5) for E/M services at least 95% of the time. The second and larger group – claims from other physicians – included nearly 369 million claims from doctors without a history of high coding. OIG then had certified professional coders review the claims determine whether the E/M service documented in the medical record for each sample claim was correctly coded and/or sufficiently documented.

III. Medicare Inappropriately Paid $6.7 Billion for Evaluation and Management Claims that were Incorrectly Coded and/or Lacked Necessary Documentation:

The results of OIG’s report are disturbing. Notably, Medicare paid approximately $32.3 billion for E/M services in 2010. However, 21% of this figure corresponded to claims for E/M services that were improperly paid. In total, OIG found that Medicare inappropriately paid $6.7 billion for claims for E/M services in 2010 that were incorrectly coded and/or lacking documentation.

Specifically, OIG determined that 42% of claims for E/M services in 2010 were incorrectly coded, whether the claims were upcoded or downcoded . The upcoded claims represented $4.6 billion in overpayments whereas Medicare underpaid providers approximately $1.8 billion in downcoded claims. Furthermore, 19% of E/M claims lacked the necessary documentation. This includes 12% of the claims that were insufficiently documented, whereby Medicare made $2.6 billion in overpayments. On the other hand, 7% of the claims were undocumented and these represented $2 billion in overpayments.

Overall, OIG found that 55% of claims for E/M services were incorrectly coded or lacked the necessary documentation for reimbursement.
Additionally, OIG determined that claims from high-coding physicians were more likely to be incorrectly coded or insufficiently documented than claims from other physicians.

IV. Recommendations:

OIG recognized that its findings highlight errors associated with E/M services that must be addressed to properly safeguard the federal Medicare program. Based on the results of its study, OIG made three notable recommendations for CMS:

  1. Education 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 claims for E/M services that were paid for in error.

Interestingly, CMS only concurred with the first recommendation. It partially concurred with the third recommendation but did not concur with the second recommendation.

V. Final Remarks:

The results of this latest OIG report are particularly troublesome. Problems associated with incorrect coding and improper documentation is clearly a widespread problem for E/M claims. In this case, over half of the claims for E/M services were incorrectly coded (whether upcoded or downcoded) or lacked necessary documentation. That is a significant percentage of the $32.3 billion Medicare paid out for E/M services in 2010. Furthermore, the report indicates that the “high-coding physicians” – those with a history of high coding and who are in the top 1% of their primary specialties – are the most likely providers to upcode their claims.

If you are a Medicare provider performing E/M services – especially if you fall into the “high-coding physician” category – what should you do? The most important action you can take is to ensure that your claims accurately reflect the medical necessity requirements for Medicare reimbursement. This includes ensuring that the claims you submit to Medicare accurately reflect the E/M services provided and the billing levels appropriately correspond to those services.

Providers must also confirm that the documentation accurately supports the medical necessity and appropriateness, as well as the level, of the E/M service. The medical records should reflect clear and concise documentation. Physicians must document the care a patient receives, as well as the pertinent facts, findings, and observations about the patient’s history. The record should be complete and legible. It should also include the date and a legible identity of the physician who furnished the E/M service. Moreover, the provider must ensure that the services are authenticated by the author of the record. This may be in the form of a handwritten or electronic signature.

As CMS increases the intensity of its fraud fighting capabilities, providers must be ready for an audit of their claims and medical record documentation. While you may not fall into the “high-coding physician” category, this does not necessarily protect you from an audit. If – and when – you find yourself subject to an audit of your E/M claims, one of the best ways to fight for your reimbursements is through proper legal representation. Please feel free to give us a call today at 1 (800) 475-1906.

Saltaformaggio, Robert

Robert Saltaformaggio, Esq., serves as an Associate at Liles Parker, Attorneys & Counselors at Law. Liles Parker attorneys represent health care providers and suppliers around the country in connection with Medicare audits by ZPICs and other CMS program integrity contractors. The firm also represents health care providers in HIPAA Omnibus Rule risk assessments, privacy breach matters, State Medical Board inquiries and regulatory compliance reviews. For a free consultation, call 1 (800) 475-1906.