According to a report issued in May by the Department of Health and Human Services Office of Inspector General (OIG), fifty-five percent of claims for E/M services were incorrectly coded and/or lacking documentation in 2010, resulting in $6.7 billion in improper Medicare payments.

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The report, entitled Improper Payments for Evaluation and Management Services Cost Medicare Billions in 2010, said that Medicare paid $32.3 billion for E/M services in 2010, representing nearly 30 percent of Part B payments that year. In 2012, the OIG reported that physicians increased their billing of higher level codes, which yield higher payment amounts, for E/M services in all visit types from 2001 to 2010. The Centers for Medicare & Medicaid Services (CMS) has found that E/M claims are 50 percent more likely to be paid for in error than other Part B services, with most improper payments result from errors in coding and from insufficient documentation.

For the study, CMS conducted a medical record review of a random sample of Part B claims for E/M services from 2010, separating claims from physicians who consistently billed higher level codes for E/M services and claims from other physicians. Certified professional coders reviewed the claims to determine whether the E/M service documented in the medical record for each sampled claim was correctly coded and/or sufficiently documented.

In total, the report said, the $6.7 billion for claims for E/M services in 2010 that Medicare inappropriately paid represented 21 percent of Medicare payments for E/M services that year. Reviewers found that 42 percent of claims for E/M services in 2010 were incorrectly coded, which included both upcoding and downcoding (i.e., billing at levels higher and lower than warranted, respectively), and 19 percent were lacking documentation.

Takeaways for practices

According to experts at health law firm Fehn, Robichaud & Colagiovanni, PLLC, there are several takeaways from the OIG report, including:

  1. Physicians who bill for high level E/M codes continue to be heavily scrutinized by the OIG and CMS contractors.
  2. A large percentage of the “errors” identified by the OIG were actually downcoding – this trend often occurs when physicians have been targeted for audit or fear an audit and start billing for E/M codes that are lower than the level of service provided.
  3. Physicians who are outliers can expect to see comparative billing reports for evaluation and management services, as this was a solution discussed by CMS.

Practice management consultants also recommend that you conduct at least yearly chart reviews to find E/M issues, and that practice managers should review and benchmark CPT code utilization regularly.

Another key takeaway is that your EMR software should include tools to help you insure that you are coding correctly, not upcoding or downcoding. Upcoding obviously puts your practice at risk for audits and overpayment demands, but as you have seen, downcoding presents a large risk as well. Downcoding runs the risk of not only triggering audits, but also loss of genuinely deserved revenue.

If your EMR software doesn’t provide tools to assist with appropriate coding, as MediTouch does, you should reevaluate your choice of electronic medical records software. MediTouch will recommend appropriate codes for you to choose from, remembers prior diagnoses for patients, and provides the reports you need to see your billing trends.

Not all EMR vendors are created equal. Don’t put your practice at risk with an EHR system that doesn’t measure up.