The Department of Health and Human Services, Office of the Inspector General is recommending that the federal government crack down on physicians who have incorrectly coded their Medicare claims for the wrong place of service.

A new OIG HSS audit has found that Medicare contractors nationwide overpaid physicians $13.8 million for incorrectly coded services provided during calendar year 2007.

According to <a href="/directory/department-health-human-services-hhs" target="_blank" class="directory-item-link">HHS, physicians are required to identify the place of service when they bill Medicare. Medicare reimburses physicians more for performing services in certain locations, such as physicians' offices, to account for overhead expenses. Medicare reimburses physicians at a lower rate for services performed in other settings, such as hospital outpatient departments or ambulatory surgical centers.

According to the new OIG report, in a sampling of 100 Medicare Part B physician claims, 90 used non-facility (physician office) place-of-service codes for services that were performed in hospital outpatient departments or ambulatory surgical centers.

OIG recommended that the Centers for Medicare and Medicaid Services instruct its Medicare contractors to:

• Recover the $4,700 in overpayments for the sampled services;

• Immediately reopen the claims associated with the non-sampled services, review the information on these claims (which had estimated overpayments of $13.8 million), and work with the physicians who provided the services to recover any overpayments;

• Continue to strengthen the education process and re-emphasize to physicians and their billing agents the importance of correctly coding the place of service;

• Continue to work with program safeguard contractors and other Medicare contractors to develop a data match that will identify physician services at high risk for place-of-service miscoding and recover any identified overpayments.

OIG officials said CMS agreed with its recommendations.