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Department of Health and Human Services

Office of Inspector General -- AUDIT

"Review of Ambulatory Surgical Services Performed in Hospital Outpatient Departments - Procedure Coding Differences," (A-01-94-00507)

December 12, 1994

Complete Text of Report is available in PDF format (1.59 MB). Copies can also be obtained by contacting the Office of Public Affairs at 202-619-1343.


This final report provides the results of our review to determine if coding differences exist between hospital outpatient departments (OPD) and physicians in the procedure coding of ambulatory surgeries and whether these differences have a significant effect on the Medicare program. The financial integrity of the Medicare program is dependent upon accurate coding of rendered medical services. When a beneficiary undergoes an ambulatory surgery, e.g., cataract surgery, one would expect both the OPD and the physician to bill for the same procedure. Yet, in Region I, a 23 percent rate of inconsistency exists between the OPD's procedure code and the physicians's procedure code for the same ambulatory surgery. Additional analysis showed a similar rate of inconsistency exists nationwide. The procedure coding differences have an immediate and future effect on the Medicare program. First, a significant number of incorrect payments (overpayments and/or underpayments) to both OPDs and/or physicians are made. Second, beneficiaries are making incorrect payments of their 20 percent coinsurance. Finally, data which HCFA may utilize in developing future reimbursement rates are inaccurate. Recommendations call for actions HCFA should take to address these procedure coding differences.