OIG Publishes Audit of Outpatient Therapy Services Seeking Return of $3.1 Million in Reimbursements

by Saul Ewing Arnstein & Lehr LLP


In June 2013, the Department of Health and Human Services, Office of Investigator General (OIG) published a review of its audit of an outpatient therapy services provider. The OIG concluded that the outpatient therapy services provider should refund the Medicare program approximately $3.1 million in reimbursements. The audit emphasizes the federal government’s continued scrutiny of Medicare payments to providers.

In June 2013, the U.S. Department of Health and Human Services, Office of Inspector General (“OIG”) issued a review regarding its audit of Medicare claims by Spectrum Rehabilitation, LLC (“Spectrum”) for outpatient occupational and physical therapy services. The OIG concluded that Spectrum improperly claimed more than $3.1 million in Medicare reimbursements. The OIG report is available online here.

In its Executive Summary, the OIG noted that Medicare payments for outpatient therapy services have increased annually, and that the rate of growth in payments exceeds the rate of growth in the number of beneficiaries treated under the Medicare program.

Medicare has detailed billing requirements for outpatient therapy services. Generally, outpatient therapy services are reimbursed by Medicare if the services are medically reasonable and necessary, provided in accordance with a plan of care established by a physician or qualified therapist and periodically reviewed by a physician, and a physician certifies the need for the services.

Spectrum is a provider of outpatient therapy services with locations throughout southern New Jersey. Spectrum provided 40,129 Medicare outpatient occupational and physical therapy services from January 1, 2009 through December 31, 2010. For this period, the OIG reviewed a sample size of 100 claims. Of the 100 claims, the OIG found numerous billing deficiencies, including an absence of the physician certification requirement in 45 claims; deficiencies in the treatment notes for 36 claims; for 35 claims, the OIG determined that the therapist who billed Medicare did not perform or supervise the service; in 21 claims, the OIG concluded that the services were not medically necessary; and for four claims, the OIG found that the therapist’s plan of care did not meet Medicare requirements.

Spectrum disputed the OIG’s findings. After reviewing Spectrum’s comments, the OIG revised its findings for 13 of the 100 claims. The OIG specifically stated it was no longer questioning nine claims containing services billed under the incorrect provider number, two claims for which there was no plan of care, one claim for which the treatment note was deficient and one claim for which the date the plan of care was established was not recorded. The OIG noted, however, that this did not affect the recommended refund amount for 10 of the 13 claims because they remained unallowable for other reasons.

The OIG recommended that Spectrum: 1) refund $3,112,501 to the federal government; 2) strengthen its policies and procedures for Medicare billing compliance; and 3) take measures to acquire a better understanding of Medicare requirements for reimbursement of outpatient therapy services.

Some audits cannot be avoided. The federal government, state governments, and commercial payors are constantly scrutinizing the payments made to providers. In recent years, the federal government has instituted a number of mandatory audit programs. Other audits are initiated based on “red flags” to the government. Audits of any sort raise the potential for repayment of revenues by providers. As the Spectrum review demonstrates, some repayments may occur when there are paperwork deficiencies — even where the provider demonstrates that medically necessary services were provided. Careful adherence to proper billing standards is essential.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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