Questionable Billing for Medicare Outpatient Therapy Services

We found that per-beneficiary spending on outpatient therapy in Miami-Dade County was three times the national average in 2009. We also found that Miami-Dade County had high levels of questionable billing for outpatient therapy. Nineteen additional counties also exhibited questionable billing, but to a lesser extent than Miami-Dade County.

Medicare paid $4.9 billion for outpatient therapy services provided to 4.5 million beneficiaries in 2009. South Florida, and Miami-Dade County in particular, has been the focus of efforts to combat Medicare fraud, waste, and abuse in recent years. We identified 20 high-utilization counties that had in 2009 (1) the highest average Medicare payment per beneficiary and (2) more than $1 million in total Medicare payments for outpatient therapy. Miami-Dade County had the highest average Medicare payment per beneficiary among the 20 high-utilization counties and the highest total Medicare payments for outpatient therapy services in 2009. We analyzed Medicare claims data to compare patterns of billing for outpatient therapy in Miami-Dade County, in the 19 other high-utilization counties, and nationally. We also examined claims for the presence of six questionable characteristics that may indicate fraud.

We found that Medicare per-beneficiary spending on outpatient therapy services in Miami-Dade County was three times the national average in 2009. We also found that Miami-Dade County had at least three times the national levels for five of the six questionable billing characteristics. In the 19 other high-utilization counties, Medicare's per-beneficiary payment on outpatient therapy services was 72 percent greater than the national average. These 19 counties also exhibited questionable billing but to a lesser extent than Miami-Dade County. As a group, these counties had at least twice the national level for five of the six questionable billing characteristics.

We recommend that CMS (1) target outpatient therapy claims in high-utilization areas for further review, (2) target outpatient therapy claims with questionable billing characteristics for further review, (3) review geographic areas and providers with questionable billing and take appropriate action based on results, and (4) revise the current therapy cap exception process. CMS concurred with all four recommendations.