Recent OIG Report Spotlights Millions in Overpayments Caused by Physician Place-of-Service Coding Errors

By and on June 18, 2015
Posted In Uncategorized

On May 6, 2015, the Office of Inspector General (OIG) for the U.S. Department of Health & Human Services (HHS) released a report on overpayments attributed to incorrect physician place-of-service coding. The report determined that Medicare potentially overpaid physicians approximately $33.4 million for incorrectly coded services that were provided from January 2010 through September 2012.

As part of their claims submissions, physicians and other Medicare suppliers are required to report the setting in which they furnish services. This setting designation (either “facility” or “non-facility”) is a decisive reimbursement factor as Medicare only reimburses physicians for overhead expenses if their services are provided in a non-facility setting (e.g., physician offices and independent clinics). The OIG report compared same-day physician and facility claims to determine how often physicians performed services in facility locations but incorrectly coded the services as performed in non-facility locations. Of $33.4 million in estimated overpayments, approximately 75 percent were made for services provided in a hospital outpatient setting but coded as a non-facility claim. The other roughly 25 percent of the overpayments were made for miscoded services provided in ambulatory surgery centers.

The OIG attributed the overpayments to physician-level internal control weaknesses as well as insufficient Medicare contractor post-payment reviews. The OIG recommended that the Centers for Medicare & Medicaid Services (CMS) direct its Medicare contractors to initiate and monitor recoveries of the overpayments identified by the report (as of December 2014, $1.75 million of the 2010 overpayments had already been recovered). Other recommendations included more comprehensive education efforts and directives for Medicare contractors to perform similar place-of-service audits on high-risk physician services and recover any resulting overpayments.

Given the report’s recommendations, physician practices and employers should ensure they are proactively managing compliance to include periodic internal audits of place-of-service coding. By doing so, providers can better protect themselves from potential overpayment liability and can make more timely decisions about corrective actions and government disclosures.

Read the full report: “Incorrect Place-of-Service Claims Resulted in Potential Medicare Overpayments Costing Millions”

Tony MaidaTony Maida
Tony Maida counsels health care and life sciences clients on government investigations, regulatory compliance and compliance program development. Having served as a government official, Tony has extensive experience in health care fraud and abuse and compliance issues, including the federal and state Anti-Kickback and Stark Laws and Medicare and Medicaid coverage and payment rules. He represents clients in False Claims Act (FCA) qui tam matters, government audits, civil monetary penalty and exclusion investigations, and Centers for Medicare and Medicaid Services (CMS) suspension, and revocation actions, negotiating and implementing corporate integrity agreements, and making government self-disclosures. Read Tony Maida's full bio.


Chelsea M. RutherfordChelsea M. Rutherford
Chelsea M. Rutherford focuses her practice on corporate, transactional and regulatory matters affecting a wide range of clients in the health care and life sciences industries. Read Chelsea M. Rutherford's full bio.

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