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Department of Health and Human Services

Office of Inspector General -- AUDIT

"Review of Place of Service Coding for Physician Services," (A-02-04-01010)

January 26, 2005

Complete Text of Report is available in PDF format (259 kb). Copies can also be obtained by contacting the Office of Public Affairs at 202-619-1343.


The objective of this audit was to determine the extent of Medicare Part B overpayments made to physicians by Empire Medicare Services (Empire) for billings with an incorrect place of service code.  Eighty-eight of 100 sampled physician services were performed in a facility, but were incorrectly billed by the physicians to Medicare Part B using the “office” place of service code.  To account for the increased practice expense incurred by physicians in their offices, Medicare reimburses a higher amount for services performed in this setting.  We recommended that Empire:  (1) recover $3,641 of identified overpayments; (2) work with the physicians represented in the population of potential errors to reassess their billings and to refund any overpayments estimated at $1,467,318; (3) strengthen its education process and re-emphasize to physicians, the importance of correctly reporting the place of service, and the need for internal control systems to prevent Medicare billings with incorrect place of service codes; (4) instruct physicians to notify their billing agents of the importance of using correct place of service codes; and (5) work with the Program Safeguard Contractor or the Fiscal Intermediary to perform a data match on an ongoing basis, to identify physician services having a high potential for error due to place of service miscoding, and to recover program overpayments that result from these errors.  Empire generally concurred with our findings and recommendations.