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OIG Audit Finds 61% Of Medicare Claims For Outpatient PT Noncompliant

What would we do without the Centers For Medicare & Medicaid Services? More commonly known as CMS, the collection of the health insurance programs (which are Medicaid, Medicare, and the Health Insurance Exchanges) pledges to put patients first. “We must empower patients to work with their doctors and make health care decisions that are best for them,” reads the CMS website, “This means giving them meaningful information about quality and costs to be active health care consumers.”

According a report published by Revenue Cycle Advisor earlier this week, CMS is being taken advantage of at an alarming rate. The report reveals that an Office of Inspector General (OIG) audit, from earlier this month, discovered that a whopping 61 percent of Medicare claims for outpatient physical therapy did not comply with Medicare medical necessity, coding and/or documentation requirements.

CMS has paid out $367 million for noncompliant outpatient physical therapy.

The audit analyzed 300 randomly selected Medicare claims for outpatient physical therapy services submitted over a period of six months. “The OIG reviewed outpatient claims for physical therapy services, totaling $635.8 million, submitted by therapists between July 1, 2013, and December 31, 2013,” informs Revenue Cycle Advisor.

The audit found that 91 of the 300 submitted claims were not medically necessary. In addition, 145 contained coding deficiencies and 112 did not meet Medicare documentation requirements. Several of the claims, in fact, contained more than one error. Interestingly, the report also lists CMS as a culprit for the mishandled health insurance payouts.

CMS partly to blame for mishandling payments.

“CMS controls were not effective in preventing improper payments for outpatient physical therapy services, according to the report,” reports Revenue Cycle Advisor, “Additionally, the report stated that CMS education of therapists on Medicare requirements for these services may not have been effective in preventing overpayments.”

It seems that CMS disagrees with the findings of the audit, however. They believe that further analysis is necessary to truly determine whether or not the claims met Medicare requirements. In the meantime, the OIG has recommended that Medicare Administrative Contractors (MAC) notify the providers of overpayments so that they can investigate and return any identified overpayments.

“It also recommends that CMS establish strategies to better monitor the appropriateness of outpatient physical therapy claims,” informs Revenue Cycle Advisor, “Additionally, the OIG recommended that CMS educate providers about Medicare requirements for submitting outpatient physical therapy claims for reimbursement.”

The Allegiant Experts team finds this entire story very interesting.

We have a lot of experience performing physical therapy audits for both providers and payers of healthcare services. We’ve found that documentation issues are among the top reasons for denials. Many providers insufficiently document time and other requirements that are needed to capture correct coding assignment.

Our experts are skilled in the art of audit and compliance and can assist you with developing a comprehensive program to ensure your organization is identifying individuals who are involved in misconduct. We also provide assistance with audits and corrective action plans. Whether your concerns are related to coding, billing, level of care or clinical issues, we have a clinical expert that can help.

For more information, please don’t hesitate to call Allegiant Experts at 407-217-5831 or email us at

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