By STEPHEN SHAVER, Wachler & Associates, P.C.
The US Department of Health and Human Services (HHS) Office of Inspector General (OIG) recently released a report outlining the results of a review it conducted of claims for physician and other practitioner services provided to Medicare patients during Medicare Part A covered skilled nursing facility (SNF) and hospital stays. OIG asserted that physicians were miscoding the location where these services were provided, leading Medicare to make tens of millions of dollars in overpayments. This report is likely to lead to overpayment demands, further audits of providers, and increased scrutiny of place of service (POS) codes.
Each time a physician or other fee-for-service (FFS) healthcare practitioner submits a claim for reimbursement, the provider includes a two-digit POS code indicating where the services were provided. For example, POS code 11 means “office.” Although the codes themselves are a claims submission standard under the Health Insurance Portability and Accountability Act (HIPAA), the code list and rules are maintained by the Centers for Medicare & Medicaid Services (CMS). Regarding Medicare Part B reimbursement for physician and other practitioner services, CMS reimburses some (such as those with POS codes for hospitals and SNFs) at the “facility” rate, and others (such as those with the POS code for the physician’s office) at the “nonfacility” rate. The “nonfacility” rate is generally higher than the “facility” rate because CMS expects that physicians will have lower expenses when treating patients in a facility because some expenses will be covered by the facility and included in the payment made to the facility under Medicare Part A.
OIG asserted two primary issues in its reports. First, OIG asserted that physician services provided to patients under Medicare Part A SNF stays were incorrectly coded as having no Part A coverage. Specifically, that physicians coded the services using POS code 32 (nursing facility or SNF with no Part A coverage), which is paid at the higher “nonfacility” rate, when in fact the patients still had Part A coverage remaining and the claims should have been coded using POS code 31 (SNF with Part A coverage), which is paid under the lower “facility” rate. Medicare therefore paid these claims at the higher “nonfacility” rate, rather than the lower “facility” rate that it would have paid for services provided to patients with Part A coverage remaining.
While physicians and other practitioners are responsible for correctly coding their claims, this places them in an unenviable position. Medicare Part A SNF coverage is generally limited by days spent at the SNF, rather than factors related to patient need, and is subject to significant regulatory complexity concerning when such coverage starts and stops. A patient’s Part A SNF coverage may run out or restart during the same SNF stay, with the intervening periods being covered by private insurance, Medicaid, or the patient themself. Tracking a patient’s Part A coverage status is further complicated where outside practitioners visit patients at multiple SNFs or provide a variety of services. CMS, on the other hand, has easy access to complete information regarding Part A SNF coverage status. Under these circumstances, one would expect CMS to have an edit in its claims processing system to catch these inadvertent coding errors. However, CMS has no such edit and paid these claims, despite controlling the knowledge that they were coded incorrectly. Accordingly, OIG asserted approximately $22 million in overpayments based on this reason.
Second, OIG asserted that physicians miscoded services where a patient under a Medicare Part A covered hospital or SNF stay was transported to the physician’s office for treatment. OIG asserted that it was improper to code these services under POS 11 (office) or other “nonfacility” codes and that the services should have been coded under POS code 21 (hospital) or other “facility” code, regardless of where the service was actually provided. OIG acknowledged that there is no support for its position in either law or Medicare regulation, but pointed to a provision in the sub-regulatory Medicare Claims Processing Manual that directs this result. OIG asserted an additional $22 million in overpayments based on this reason.
CMS largely agreed with OIG’s report. CMS agreed to direct its contractors to recover the $22 million from the issue OIG identified regarding POS codes 31 and 32, agreed to consider placing an edit in its claims system to catch such claims in the future, and agreed to identify other providers who may have received alleged overpayments related to the same issue. Importantly, OIG opined that its report constituted credible information of an overpayment which would trigger the “60-day rule” for a provider to conduct reasonable diligence and return overpayments or risk liability under the False Claims Act. CMS indicated that it would notify providers who may have received such an overpayment and track whether they report and return any overpayments.
Regarding the second issue asserted by OIG, the coding of services provided to Part A patients in physician offices, it worth noting that the United States Supreme Court case Azar v. Allina and its progeny generally prohibit HHS from taking enforcement actions based solely on requirements found in sub-regulatory guidance, such as the Medicare Manuals. Such “substantive legal standards” must be found in law or in regulation that has undergone the notice-and-comment rule making process. For this reason, CMS was hesitant to take any enforcement action based on the second issue asserted in OIG’s report, but agreed to consider expanding its regulations to cover this set of circumstances.
Billing and coding have long been growing administrative burdens for physicians and other practitioners. HHS’ tendency to jump to overpayment demands, False Claims Act liability, and increased regulation over inadvertent, minor, and often innocent coding errors only increases that burden. Physicians and healthcare providers should be prepared for additional scrutiny regarding the POS codes attached to their claims submitted to Medicare.