The Office of Inspector General (OIG) has found that Medicare has been overpaying by billions of dollars for Evaluation & Management services. The OIG did many studies which showed that Medicare paid $32.3 billion for E&M services in total. From 2001 to 2010, physicians increased their billing of higher level codes for E&M services, which are 50% more likely to be paid in error than other types of services. Let’s just say that this raised a red flag.

These studies found that, in total, Medicare inappropriately paid $6.7 billion for claims with E&M services in 2010. These claims were found to be incorrectly coded and/or lacking documentation, representing 21 percent of Medicare payments for E&M services that year.

During a more detailed medical record review, it was specifically found that 42 percent of claims for E&M services in 2010 were either upcoded or downcoded, and 19 percent of E&M claims were lacking documentation. Additionally, it was found that claims from high-coding physicians were more likely to be incorrectly coded or insufficiently documented than claims from other physicians.

After all this data was collected and brought to attention, it was clear that something needed to be addressed and solved. Given the substantial spending on E&M services and the prevalence of error, CMS must use all of the tools at its disposal to more effectively identify and eliminate improper payments associated with these services, a crackdown that physicians are starting to feel now in 2017.

It was recommended by the OIG that CMS should educate physicians on coding and documentation requirements for E&M services either directly or through its contractors. Specifically, CMS should educate physicians on the components used to determine the level of a service and emphasize the documentation needed in the medical record to support that level. CMS should also review its current materials for educating physicians regarding the coding and documentation of E&M services and determine whether any revisions or updates are needed.

Taking the OIG’s advice, CMS directed its contractors to consider high-coding physicians as they prioritize their medical review strategies. To that end, CMS should continue to encourage its contractors to focus medical record reviews of E&M services on claims from high-coding physicians, including those identified in this review and through analysis of subsequent years of claims data. The OIG acknowledges that CMS and its contractors must weigh the costs and benefits of reviewing claims for E&M services against doing so for more costly Part B services. However, by applying the OIG’s criteria and focusing medical record review on high-coding physicians, CMS and its contractors would be more likely to identify errors and improper payments, thereby making reviews of E&M services more cost-effective.

Lastly, it was highly recommended that CMS follow up on claims for E&M services that were paid for in error. CMS should make payment adjustments, as appropriate, to include following up on both overpayments and underpayments.

This is all why it is extremely important for physician offices to really understand E&M services and the documentation around them. Medicare has realized its errors and is now cracking down on upcoding, downcoding, and the associated clinical documentation. If you don’t have these items locked down, then you are putting your office at high risk for audit.