Medicare Paid Millions More for Physician Services at Higher Non-Facility Rates Rather Than at Lower Facility Rates While Enrollees Were Inpatients of Facilities

Posted in INDUSTRY NEWS, Long-Term Care

Mary Madison, RN, RAC-CT, CDP
Clinical Consultant – Briggs Healthcare

The OIG posted the results of this physician services audit – same title as this blog – on May 30, 2023.

  • The 32-page complete report is found here.
  • The Report in Brief is found here.

Medicare pays practitioners for physician services separately from the payments it makes to inpatient facilities, such as skilled nursing facilities (SNFs) and hospitals. Practitioners report a two-digit place-of-service code on a Medicare claim line that generally reflects where the practitioner furnished the service. Medicare uses the place-of-service code to determine the payment to the practitioner. (OIG) conducted this audit because analysis of claims indicated that practitioners may not always follow the Centers for Medicare & Medicaid (CMS) regulations and guidance when reporting the place-of-service code on a claim line, thereby increasing the risk of Medicare making an overpayment for physician services furnished to inpatients of a SNF or hospital.

(OIG’s) objective was to determine whether Medicare paid the proper rate for physician services furnished to enrollees while they were inpatients of a SNF or hospital.

Medicare sometimes paid higher non-facility rates rather than lower facility rates for physician services while enrollees were Part A SNF or hospital inpatients. During the 2-year audit period, Medicare made overpayments totaling $22,463,193 for 1,130,182 claim lines by paying the non-facility rate for services coded as furnished in a nursing facility or SNF setting without Part A coverage while enrollees were a Part A SNF inpatients. CMS did not have Common Working File (CWF) system edits to detect these coding errors. Similarly, while enrollees were Part A SNF or hospital inpatients, Medicare paid an additional $22,142,489 for 1,012,203 physician service claim lines coded as furnished in a non-facility setting. CMS has expressed reluctance to take enforcement action for these claim lines because neither statute nor CMS’s regulation specifically addresses situations in which a SNF or hospital inpatient leaves to receive a physician service in a non-facility setting.

(OIG) recommends that CMS 1) direct its Medicare contractors to recover the $22.5 million in overpayments identified in our audit; 2) notify the appropriate practitioners so that they can exercise reasonable diligence to identify, report, and return any overpayments in accordance with the 60-day rule and identify any of those returned overpayments as having been made in accordance with this recommendation; 3) establish and apply CWF edits to detect instances in which practitioners incorrectly use the non-facility place-of-service code for a SNF while an enrollee is a Part A SNF inpatient; 4) take the necessary steps, including seeking legislative authority, if necessary, to revise its regulations, to ensure that Medicare appropriately pays for the physician services, which could have resulted in the Medicare program paying up to $22.1 million less; 5) consider developing a mechanism for facilities to indicate when an inpatient leaves a facility and returns the same day; and 6) provide additional education to practitioners on the appropriate use of place-of-service codes.

CMS concurred with recommendations one, two, three, and six and described actions that it plans to take to address those recommendations. For recommendations four and five, CMS stated it will consider OIG’s findings and recommendations, along with other available information, to determine if it should take action.