According to a report from the U.S. Department of Health and Human Services Office of Inspector General (the “OIG”), CMS paid nearly $38 million in 2008 for improper diagnostic radiology services performed in hospital outpatient emergency departments. The OIG based the $38 million figure off of its review of a 440-claim sample of outpatient diagnostic radiology services in 2008, the results of which it extrapolated to the claims population (9.6 million allowed claims in 2008 totaling approximately $215 million). The Social Security Act and CMS regulations governing Medicare payments for radiology services require that such services be ordered by physicians, have supporting documentation and be medically necessary. Additionally, as a condition of fee schedule payment, services must contribute directly to the diagnosis or treatment of an individual beneficiary.

Specifically, the OIG examined a sample of 220 claims for computed tomography (CT) and magnetic resonance imaging (MRI) services, and 220 claims for x-ray services and determined that, out of a total of nearly 3 million allowed claims for interpretation and reports of CT and MRI services, Medicare allowed 19 percent in error, totaling nearly $29 million in improper payments and, out of a total of nearly 6.6 million allowed x-ray claims, Medicare allowed 14 percent in error, totaling nearly $9 million in improper payments. In reviewing the sample claims, the OIG analyzed whether each claim included supporting documentation and considered a claim to be erroneous if the documentation did not support the claim or if the claim lacked a physician order.

The OIG also analyzed whether the corresponding interpretation and reports were performed during beneficiaries’ diagnoses and treatments in hospital emergency departments, and whether the interpretation and reports were consistent with the American College of Radiology’s suggested documentation practice guidelines. The OIG found that 16 percent of interpretive x-ray diagnostic services and 12 percent of interpretive CT and MRI diagnostic services were performed after the patient left the emergency room, and that 71 percent of x-ray services and 69 percent of CT and MRI services did not follow suggested American College of Radiology documentation guidelines.

The OIG recommended that CMS: (1) educate providers on the requirement to maintain documentation on submitted claims, including a reminder that the medical record documentation must include physicians’ orders to support diagnostic radiology services and complete interpretation and reports; (2) adopt a uniform policy for single and multiple claims for interpretation and reports of diagnostic radiology services to require that claimed services be contemporaneous (or identify circumstances in which noncontemporaneous interpretations may contribute to the diagnosis and treatment of beneficiaries in hospital outpatient emergency departments; and (3) take appropriate action on the identified, erroneously allowed claims.

CMS concurred with the first and third recommendations, stating that it would issue an educational article to the provider community and take appropriate action on the erroneously allowed claims, including forwarding the list of questionable claims to Recovery Audit Contractors and Medicare Administrative Contractors. As for the second recommendation, CMS did not concur, and stated that it did not believe that a single billed interpretation must, in all cases, be contemporaneous with the beneficiary’s diagnosis and treatment to contribute to that diagnosis and treatment. CMS further stated that continued diagnosis and treatment can extend beyond the emergency encounter to other settings, such as a physician’s office. For the full text of the OIG’s report, click here.