Medicare expands prepayment audits to include office visits

A few Medicare administrative contractors are targeting E&M codes and holding back payment for those claims until physicians send medical records supporting the services.

By Charles Fiegl amednews staff — Posted Feb. 4, 2013

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Concern over increased billing of higher-level evaluation and management services has led Medicare payers to start scrutinizing physician claims for patient office visits more closely.

Medicare administrative contractors have instituted reviews of claims for the services by requiring physicians to submit supporting documentation before payment is issued. Prepayment audits are targeting primary care physicians and specialists whom the Medicare payers have singled out for aberrant billing and coding practices. The contractors seek to ensure that proper payment is issued for the services provided — and not to burden the physicians who are billing the program correctly, officials said.

“We are going after the same goal: The physician gets paid in a timely manner for the services rendered,” said Harry Feliciano, MD, MPH, the senior medical director for Palmetto GBA.

Palmetto oversees the Medicare hospital and physician benefits in seven states on the West Coast and along the mid-Atlantic coast. On Jan. 10, the contractor announced the launch of prepayment reviews of high-intensity new patient office visits billed by certain specialties in California, Hawaii and Nevada. Physicians in North Carolina, South Carolina, Virginia and West Virginia also had subsequent hospital care E&M services reviewed on a prepayment basis beginning in September 2012.

The Palmetto probes are limited to 100 claims for specific billing issues, Dr. Feliciano said. The reviews will determine for the contractor the frequency of claims billed in error and give it the opportunity to offer guidance based on review findings. “The educational part is important to us,” he said.

Reviews of evaluation and management services have been a high priority for Medicare, including recovery audit contractors that are tasked with reviewing past claims to discover overpayments, said Larry Matheis, executive director of the Nevada State Medical Assn. “We haven’t had any negative feedback from Nevada physicians on these prepayment audits, but we will be monitoring to make certain that the process doesn’t become abusive or disruptive to service availability.”

Similar reviews by other Medicare payers also target office visits. First Coast Service Options, the contractor for Florida, has instituted a 100% prepayment edit for billing the established patient E&M visit (CPT code 99215) by general, optometry, osteopathic manipulative medicine, pediatric and podiatry practices beginning Jan. 18. Every claim must have documentation to support the medical necessity for that level of service, the contractor stated on its website.

Documentation review takes time

Prepayment review programs are a relatively new phenomenon as auditing by the Medicare agency has intensified, said Reid B. Blackwelder, MD, president-elect of the American Academy of Family Physicians. The increasing number of auditing activities has had a negative impact on practices, as it has created an administrative burden for them to track and fulfill requests so payments are not lost.

Organized medicine is concerned about multiple auditing programs that at times appear to overlap. For instance, the American Medical Association opposes giving RACs the authority to review E&M services. Office visits contain several components, including a patient’s history, review of medications and a medical decision — a complex process that auditing firms cannot judge adequately after the fact.

However, program integrity divisions in Medicare have identified trends showing that the proportion of higher-level E&M codes billed by physicians has grown. Some federal officials suspect that physicians and health professionals intentionally are increasing the numbers of high-level codes that they bill to be paid more.

Several education and training resources are available to help physicians bill E&M services properly, Dr. Blackwelder said. The adoption of electronic health records has helped document patient services more efficiently and, in some cases, may strengthen support for billing higher levels of service.

“The key is to be aware of appropriate documentation and coding practices whether you are doing electronic records or not,” he said. “You have to understand coding, and you have to do it properly. If you are doing it right, you don’t have to worry about anything except the annoyance” of an audit.

The prepayment review of claims might have unintended consequences, Dr. Blackwelder said. Some physicians purposely undercode services to avoid raising red flags, a practice that could become more prevalent. More complex cases also might be sent to emergency departments instead of physician offices because doctors want to avoid having to submit claims for high-level services that will be subject to audits, he said.

Palmetto’s prepayment audits are not a new practice, but part of a progressive corrective action process that is ongoing, Dr. Feliciano said. He recommends that physicians respond to any review request from a contractor promptly. Failure to return records for a prepayment review not only will prevent payment for that service but also will trigger postpayment audits of previous claims by that physician for Medicare services.

“It’s advantageous to submit the record the first time on the prepayment audit,” he said.

Documentation required for prepayment audits include the patient’s medical record, consultation reports, progress notes, diagnostic test results and any other materials needed to support the claim.

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Breaking down Medicare office visit claim denials

Palmetto GBA has posted results of a prepayment review of the CPT code 99214, for established patient office visits, on physician claims from July to September 2012. Denial rates from the reviews of thousands of family physicians’ claims ranged from 43.8% to 64.6% in the jurisdiction that includes California, Hawaii and Nevada. Documentation inadequacy and coding too high an intensity were the most frequent reasons for denials, while other reasons included illegible or missing signatures.

Location Denials Missing/incomplete documentation Level not supported Other
Hawaii 1,702 41% 41% 9%
Nevada 1,834 46% 42% 6%
Northern California 1,313 63% 18% 12%
Southern California 1,634 61% 18% 12%

Source: “Completion of Prepayment Service Specific Complex Review for CPT Code 99214,” Palmetto GBA (link)

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