Two recent reports from the U.S. Department of Health and Human Services Office of Inspector General (OIG) estimate that Medicare Part B contractors may have overpaid $29 million for claims submitted in 2008 and 2009 due to incorrect “place-of-service” coding based on the OIG’s review of 100 sample claims in each of 2008 and 2009.  Physicians are required to identify the place of service on the health insurance claims forms they submit to Medicare contractors.  The reimbursement rate is lower for physician services provided in an ambulatory surgical center (ASC) or hospital outpatient setting because Medicare reimburses the overhead expenses to the facility rather than to the physician.  Thus, inappropriate use of the office place-of-service code results in physician overpayments for services actually provided in an ASC or outpatient center.

Physician claims correctly coded non-facility place-of-service for only 11 out of the 100 claims sampled for 2008 and only 17 of the 100 claims sampled for 2009.  The incorrect coding of the remaining 89 claims in 2008 resulted in approximately $4,600 in overpayments, and the incorrect coding of the remaining 83 claims in 2009 resulted in approximately and $3,000 in overpayments.  Based on these sample results, the OIG estimated that Medicare contractors nationwide overpaid physicians $19.3 million in 2008 and $9.5 million in 2009.

In both reports, the OIG attributed the overpayments to internal control weaknesses at the physician billing level and insufficient post-payment reviews by Medicare contractors.  The OIG recommended in both reports that the Centers for Medicare and Medicaid Services (CMS): (1) recover the overpayments for the sampled services; (2) immediately reopen the claims associated with the non-sampled services, review information on these claims and work with physicians to recover any overpayments; (3) strengthen physician and billing agent education on correctly coding place of service; and (4) continue to work with contractors to identify physicians who are at a high risk of place-of-service miscoding.  CMS agreed with the OIG’s recommendations and stated that it was working to recover the overpayments.

The 2008 OIG report is available by clicking here, and the 2009 report is available by clicking here.