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Review of Place-of-Service Coding for Physician Services Processed by Medicare Part B Carriers During Calendar Years 2005 and 2006

We estimated that carriers nationwide overpaid physicians $20.2 million for incorrectly coded services provided during the 2-year period that ended December 31, 2006. The overpayments occurred because physicians did not always correctly code the office place of service on Medicare claims submitted to and paid by Part B carriers. For 129 of the 150 services that we sampled, physicians incorrectly coded the claims by using the office place-of-service code for services that were actually performed in outpatient hospitals or ambulatory surgical centers, resulting in approximately $7,000 in overpayments.

We recommended that the Centers for Medicare & Medicaid Services (CMS) instruct its Part B carriers to (1) recover the $7,000 in overpayments for the sampled services, (2) review our information on the 857,761 nonsampled services to identify services estimated at $20.2 million that were potentially billed with incorrect place-of-service codes and work with the physicians who provided the services to recover any overpayments, (3) strengthen their education process and reemphasize to physicians and their billing agents the importance of correctly coding the place of service and the need for internal controls to prevent Medicare billings with incorrect place-of-service codes, and (4) work with fiscal intermediaries and program safeguard contractors to develop a data match that will identify physician services at high risk for place-of-service miscoding and recover any identified overpayments. CMS concurred with our recommendations and described the actions that it planned to take to implement them.