OIG: CMS paid $367 million for noncompliant outpatient physical therapy

Sixty-one percent of 300 randomly selected Medicare claims for outpatient physical therapy services submitted over a period of six months did not comply with Medicare medical necessity, coding, and/or documentation requirements, according to a March 2018 audit from the Office of Inspector General (OIG).

The OIG reviewed outpatient claims for physical therapy services, totaling $635.8 million, submitted by therapists between July 1, 2013, and December 31, 2013. A stratified random sample of 300 claims were analyzed.

According to the report, 91 of the 300 submitted claims were not medically necessary, 145 contained coding deficiencies, and 112 did not meet Medicare documentation requirements. Medicare paid an estimated $367 million for outpatient physical therapy services that did not comply with Medicare requirements. Several of the claims contained more than one error.

CMS controls were not effective in preventing improper payments for outpatient physical therapy services, according to the report. Additionally, the report stated that CMS education of therapists on Medicare requirements for these services may not have been effective in preventing overpayments.

The OIG recommended that Medicare Administrative Contractors (MAC) notify providers of potential overpayments so that those providers can investigate and return any identified overpayments. It also recommends that CMS establish strategies to better monitor the appropriateness of outpatient physical therapy claims. Additionally, the OIG recommended that CMS educate providers about Medicare requirements for submitting outpatient physical therapy claims for reimbursement.

CMS generally disagreed with these findings and believes further analysis of the sampled claims is warranted to determine whether the claims met Medicare requirements, according to the report.