20 Counties Targeted for Medicare Overbilling The Office of the Inspector General (OIG) in the U.S. Department of Health and Human Services has targeted 20 counties in seven states as having the nation’s highest average Medicare outpatient therapy payment per beneficiary and receiving more than $1 million in Medicare payments for outpatient therapy. The OIG issued ... Bottom Line
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Bottom Line  |   March 01, 2011
20 Counties Targeted for Medicare Overbilling
Author Notes
  • Steven White, PhD, CCC-A, director of health care economics and advocacy, can be reached at swhite@asha.org.
    Steven White, PhD, CCC-A, director of health care economics and advocacy, can be reached at swhite@asha.org.×
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Practice Management / Bottom Line
Bottom Line   |   March 01, 2011
20 Counties Targeted for Medicare Overbilling
The ASHA Leader, March 2011, Vol. 16, 4. doi:10.1044/leader.BML2.16032011.4
The ASHA Leader, March 2011, Vol. 16, 4. doi:10.1044/leader.BML2.16032011.4
The Office of the Inspector General (OIG) in the U.S. Department of Health and Human Services has targeted 20 counties in seven states as having the nation’s highest average Medicare outpatient therapy payment per beneficiary and receiving more than $1 million in Medicare payments for outpatient therapy. The OIG issued a report based upon a review of Medicare utilization rates, average Medicare payments per beneficiary, and total Medicare payments for outpatient therapy services (including speech-language treatment).
The OIG targeted outpatient therapy because Medicare expenditures for the services (physical therapy, occupational therapy, and speech-language treatment) rose 133%—from $2.1 to $4.9 billion—from 2000 to 2009, while the number of Medicare beneficiaries grew only 26% (from 3.6 to 4.5 million).
In Florida’s Miami-Dade County, per-beneficiary Medicare spending on outpatient therapy was three times the national average in 2009. Miami-Dade had the highest average Medicare payments per beneficiary among the high-utilization counties and the highest total Medicare outpatient therapy payments in 2009. Providers who served Miami-Dade beneficiaries:
  • Received an average of $83,867 in Medicare payments, eight times the average amount paid to providers in other counties nationally ($10,131).

  • Supplied an average of 3,828 outpatient therapy services, eight times the average number in other counties nationally (458).

The other 19 targeted counties—all in Florida, Georgia, Louisiana, Mississippi, New York, Texas, or Indiana—had Medicare average per-beneficiary spending ($1,852) that was 72% greater than the national average ($1,078) in 2009. The OIG examined six questionable Medicare billing characteristics:
  • Average number of outpatient therapy services per beneficiary that providers indicated would exceed an annual cap.

  • Percentage of outpatient therapy beneficiaries whose providers indicated that an annual cap would be exceeded on the beneficiaries’ first date of service in 2009.

  • Average Medicare payment per beneficiary receiving outpatient therapy from multiple providers.

  • Percentage of outpatient therapy beneficiaries whose providers were paid for services throughout the year.

  • Percentage of outpatient therapy beneficiaries whose providers were paid for services that exceeded one of the annual caps.

  • Percentage of outpatient therapy beneficiaries whose providers received payment for more than eight hours of outpatient therapy provided in a single day.

The report includes four recommendations, all of which have been accepted by the Centers for Medicare and Medicaid Services (CMS):
  • Further review outpatient therapy claims in high-utilization areas. CMS should monitor utilization trends and use the data to target providers in geographic areas that may be susceptible to fraud.

  • Further review outpatient therapy claims with questionable billing characteristics. CMS should use the questionable billing characteristics identified by OIG to analyze and monitor claims data to detect and deter fraud and abuse.

  • Review geographic areas and providers with questionable billing and take appropriate action. Prior to payment, CMS should review claims submitted by providers with high levels of questionable billing and in geographic areas with high utilization to ensure that they are legitimate. If fraudulent claims have been submitted, CMS should suspend payments to these providers and recover overpayments to them.

  • Revise the current therapy cap exception process. Providers in high-utilization counties used the KX modifier and exceeded annual therapy caps at levels much higher than the national average. The current exceptions process does not ensure appropriate utilization of Medicare outpatient therapy services. CMS should consider developing per-beneficiary edits and maximum payment amounts to control overutilization of outpatient therapy services.

The OIG report, Questionable Billing for Medicare Outpatient Therapy Services (December 2010, OEI-04-09-00540) is available at The Office of the Inspector General’s website [PDF].
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March 2011
Volume 16, Issue 3