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Improper Payments for Evaluation and Management Services Cost Medicare Billions in 2010

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Rachel Bessette

Improper Payments for Evaluation and Management Services Cost Medicare Billions in 2010

Rachel Bessette, Program Analyst for the Office of Evaluation and Inspections is interviewed by Dwayne Grant, Regional Inspector General in Atlanta.


Evaluation and management (E/M) services are visits performed by physicians and nonphysician practitioners to assess and manage a beneficiary's health. Medicare paid $32.3 billion for E/M services in 2010, representing nearly 30 percent of Part B payments that year. In 2012, 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. CMS found that E/M services are 50 percent more likely to be paid for in error than other Part B services; most improper payments result from errors in coding and from insufficient documentation.


We conducted a medical record review of a random sample of Part B claims for E/M services from 2010, stratifying claims from physicians who consistently billed higher level codes for E/M services (i.e., "high-coding" physicians) and claims from other physicians. Certified professional coders determined whether the E/M service documented in the medical record for each sampled claim was correctly coded and/or sufficiently documented.


In total, Medicare inappropriately paid $6.7 billion for claims for E/M services in 2010 that were incorrectly coded and/or lacking documentation, representing 21 percent of Medicare payments for E/M services that year. We 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. Additionally, we found that claims from high-coding physicians were more likely to be incorrectly coded or insufficiently documented than claims from other physicians.


We recommend that CMS (1) educate physicians on coding and documentation requirements for E/M services, (2) continue to encourage contractors to review E/M services billed for by high-coding physicians, and (3) follow up on claims for E/M services that were paid for in error. CMS concurred with our first recommendation, did not concur with our second recommendation, and partially concurred with our third recommendation.