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Medicare paid out $6.7 billion in overpayments for coding errors

USA Today reports waste is rampant within the Medicare system. According to the Department of Health and Human Services inspector general, “Medicare paid out $6.7 billion in 2010 for health care visits that were improperly coded or lacked documentation.” Information concerning the misreporting was released in a report today and found that a whopping 42% of diagnostic and assessment claims were improperly coded and 19% were improperly documented.

Medicare Physicians consistently bill for highest paying codes


Much of the money wasted can be attributed to physician’s tendency to bill using the highest-paying codes. In fact, the study reports that 1,669 physicians “consistently billed for the two highest-paying codes.” Unfortunately, the coding was done in error on 56% of the claims. Mistakes were seldom made against the physician by down-coding. In fact, the study reports that only 1% of the physicians make a mistake by coding “down.” Guess how much this cost you and me, the American taxpayer- $26 million in 2010.

How did the coding errors occur?


Doctors have some flexibility for determining which codes should be applied for what examinations and services. Higher paying codes may be used when a doctor has to perform more in-depth physical examinations, review the patient’s medical history in greater detail, or provide complicated patient diagnosis.

At issue, however, is why doctors were so willing to up-code and whether the billing errors were legitimate mistakes or if they were done to generate higher profits for the doctor. If they were simply mistakes you’d expect the level of up-coding and down-coding to have a similar error rate. According to reports, however, “26% of the claims were up-coded in favor of the provider, while 15% were down-coded.”

Medicare lost billions last year


Unfortunately, Medicare costs have sky-rocketed over the last few years. It’s not just new patients which are costing billions of dollars; it’s also improper Medicare payments. According to Gloria Jarmon, HHS' deputy inspector general, improper Medicare payments cost about $50 billion last year.

Gloria Jarmon, who has just recently been appointed as deputy inspector general, will have a lot of work on her hands managing a U.S. program which spent $554.3 billion total in 2011. She has acknowledged that she has a lot of work to do but one of her main goals is to make sure errors and fraud are eliminated before payments are made to providers.

"As we all know, the numbers are very large in Medicare, so it is a place that we need to focus deeply," Burwell said.

Suggestions from Jarmon for solving Medicare issues


The new HHS secretary will work in conjunction with the Senate Special Committee on Aging to address the issue of improper payments. Oversight seems to be critical to ensure taxpayer’s money is protected.

First, Gloria Jarmon will work to provide better training to doctors about the codes they should use for their claims. CMS will also do a better job of reviewing claims they believe may have been charged in error. Fraud investigation will also be increased. So far they have recovered $19.2 billion over the past five years, which is $10 billion more than the previous five years.

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