OIG Campaigns Against 'Improper' Physician Billing

The American Psychiatric Association is trying to head off future damaging reports by the Office of the Inspector General (OIG) at the U.S. Department of Health and Human Services (HHS). After publishing two negative reports in 2001, the OIG lists a study on the Medicare mental health care national error rate in its 2002 work plan.

In a meeting with OIG officials on Dec. 14, 2001, APA staff and Kenneth M. Sakauye, M.D., chair of the APA Council on Aging, pointed out methodological weaknesses in the way the OIG conducted its two reports on Medicare payments to psychiatrists for outpatient and nursing home services. While the OIG reported high rates of improper billing in both settings, the reports were based on very small samples, and no attempt was made to determine whether inadmissible claims were made by psychiatrists bewildered by Medicare rules or by psychiatrists trying to cheat the program.

Asked by Psychiatric Times why the OIG singled out psychiatrists and mental health care services, Ben St. John, spokesperson for the office, did not know why the particular reports were done. He told PT that the OIG typically does reports after a request is made by the HHS secretary or a member of the U.S. Congress or when it observes a spike in Medicare payments for certain services. The only other specialty service he could cite that has been the subject of an OIG review is cataract surgery. George Grob, the deputy inspector general for evaluation and inspections, was at the December meeting, and St. John declined to ask Grob whether the OIG is singling out psychiatrists for investigations.

The OIG's preoccupation with psychiatrists could have a number of unhappy results. "It is not helpful to have injudicious and inaccurate reports coming out from the OIG at a time when Congress may consider expanding the Medicare benefit," Nick Meyers, deputy director of congressional relations for the APA, told PT.

Legislation eliminating the 50% Medicare co-pay for outpatient psychiatric services could come into play if Congress decides to enact some form of Medicare benefit reform this year. In addition, the OIG reports could persuade Medicare to instruct insurance carriers to step up audits of psychiatrists.

Of particular concern was the OIG report on improper Medicare Part B payments to psychiatrists working in outpatient settings. Those were defined as the psychiatrist's office, a community mental health center, a beneficiary's home or a custodial care facility. Those outpatient settings accounted for $718 million of the $1.2 billion Medicare paid for mental health care services in 1998. In contrast, Medicare payments for psychiatric services in nursing homes totaled $211 million in 1998 and dropped to $194 million in 1999.

In the outpatient report, the OIG analyzed a random sample of claims from psychiatrists for individual psychotherapy, group psychotherapy, psychological testing and pharmacological management. One-third of those claims were medically unnecessary, billed incorrectly, rendered by unqualified providers, and undocumented or poorly documented.

Psychotherapy services had the biggest discrepancies: 50% of the claims for group therapy and 34% of those for individual therapy should not have been paid by Medicare because the services were unnecessary. The Medicare standard for payment is "reasonable and necessary for the diagnosis or treatment of an illness or injury or to improve the functioning of a malformed body member." Medicare insurance carriers, to whom psychiatrists send their claims, authorize payments of the psychotherapy claims. There is no national payment policy for mental health care services, and payment for the same CPT codes may differ geographically depending on the local policy established by the carrier.

The APA pointed out that of the four CPT codes at issue, only group psychotherapy was among the top 10 codes billed by psychiatrists to Medicare; it was ranked seventh. The sample of group psychotherapy claims was less than 0.0001% of all claims for the service. The APA argued that the fourth service covered in the report, psychological testing, is rarely claimed by physician psychiatrists. However, it is the number one code billed by clinical psychologists. "We are deeply troubled by a report whose sweeping conclusions are based on an extremely limited sampling of data subjected to a review standard that is in essence the creation of the IG," the APA stated in a letter to Inspector General Janet Rehnquist dated Aug. 15, 2001. The report was formally released in November 2001.

The OIG suggested that the Medicare program "target problematic mental health services for pre-payment edits or post-payment medical review." However, these are exactly the kinds of Medicare audits that have drawn congressional ire.

On Dec. 4, 2001, the House passed the Medicare Regulatory and Contracting Reform Act by a vote of 408 to 0. Physicians would be protected under the bill from sanctions or repayment if, in good faith, they followed written guidance that later was shown to be erroneous. The measure also would establish limits on prepayment reviews that are not purely random, such as those based on voluntary disclosure by doctors. Recovery of overpayments would be prohibited until the contractor level of appeal was completed. The legislation would prevent the use of extrapolation -- when a small sample is used to determine overpayments for a larger number of claims -- unless a sustained or high level of payment error was identified or documented intervention failed to correct the problem.

The Senate version of the bill, which has not been acted on, is less comprehensive than the House bill.