WASHINGTON — Medicare paid out $6.7 billion in 2010 for health care visits that were improperly coded or lacked documentation, a report released Thursday found.
That's 21% of Medicare's total budget for diagnostic and assessment visits, according to the Department of Health and Human Services inspector general.
They found that 42% of diagnostic and assessment claims were improperly coded and 19% were improperly documented.
This comes after a 2010 report found that 1,669 physicians consistently billed for the two highest-paying codes. In the new report, 56% of claims for those high-coding physicians physicians were incorrect, with 99% being up-coded in the provider's favor, and with 1% of the "errors" being down-coded. Those providers cost $26 million in 2010 in incorrect coding.
The codes are based on how much depth a provider must go into patient's medical history, how intense a physical examination is, and the how complex a diagnosis is.
"We have to do a better job of curbing improper payments and protecting taxpayer dollars," said Sen. Bill Nelson, D-Fla, chair of the Senate Special Committee on Aging, adding that he looks forward to working with the new HHS secretary to fix the problem.
While many of the coding issues may be due to legitimate errors, they tended to be in the provider's favor: 17% of claims were up-coded one level, while 4% were down-coded one level. And .8% were up-coded three levels, and .004% were up-coded by four levels, but no claims in the inspector general's sample were down-coded three or four levels.
All together, 26% of the claims were up-coded in favor of the provider, while 15% were down-coded.
Earlier this month, Gloria Jarmon, HHS' deputy inspector general, told Congress that improper Medicare payments cost about $50 billion last year. The traditional fee-for-service program lost $36 billion, and Medicare Advantage lost $11.8 billion, Jarmon told the House Ways and Means Subcommittee on Health.
The latest data shows Medicare spending was $554.3 billion total in 2011.
During confirmation hearings earlier this month to replace Kathleen Sebelius as HHS secretary, Sylvia Mathews Burwell said she would work toward making sure errors and fraud are caught before payments are made to providers, adding that, in her role at the Office of Management and Budget, she's spent a lot of time going after improper payments.
"As we all know, the numbers are very large in Medicare, so it is a place that we need to focus deeply," Burwell said.
The inspector general recommended better training for physicians about coding, that contractors review billing for physicians known for up-coding their claims, and that CMS follow up on services that were paid in error.
But CMS responded that reviewing physicians' billing in the past "resulted in a negative return on investment." They also said they would follow up on errors if the money lost meets CMS's "recovery threshold."
In 2013, the government recovered $4.3 billion from people trying to defraud the government, and has recovered $19.2 billion over the past five years — about $10 billion more than the previous five years, Agrawal said.