Inspector General Releases Outpatient Physical Therapy Claims Error Report

Dan Ciolek

On March 14, the U.S. Department of Health and Human Services, Office of Inspector General (OIG) issued a report, “Many Medicare Claims for Outpatient Physical Therapy Services Did Not Comply With Medicare Requirements” that has been reported in various print and web publications.

The OIG reports that 61 percent of Medicare claims for outpatient physical therapy services that they reviewed did not comply with Medicare medical necessity, coding, or documentation requirements.

The OIG recommended that the Centers for Medicare & Medicaid Services (CMS): 

1) Recover overpayments, 

2) Establish better oversight of outpatient therapy claims, and 

3) Improve provider education.

CMS responded that they believed the OIG misinterpreted Medicare coverage policy, particularly related to the definition of skilled services as clarified subsequent to the January 2013 Jimmo settlement, and disagreed that the error rate was as high as reported. CMS also indicated that a significant portion of the errors were likely more related to coding errors. However, CMS agreed that improvements can be made in monitoring and provider education.     

AHCA notes that this report is specific to Medicare outpatient physical therapy (PT) services only, and more specifically, outpatient PT services of 300 claims performed in office-based private practices from July-December 2013. Outpatient PT services furnished in skilled nursing facilities (SNFs) WERE NOT part of this audit. 

For context, the official CMS CERT error rate report for 2017 indicates that the error rate for SNF outpatient services was 4.1 percent (p.45 - PT/OT/SLP combined) and PT private practice was 16.9 percent (p.53).

While the OIG report is not specific to SNF outpatient therapy services, the same coverage and coding requirements apply to all outpatient therapy providers. AHCA recommends that providers share this report and the CMS response with therapy and billing personnel so they are aware of the coverage, documentation, and coding policies where the OIG and CMS  are focusing their audit efforts.