OIG Report: Finds Questionable Billing of Nearly $17 Million for Sleep Study Services

On October 9, 2013, the US Department of Health and Human Services Office of the Inspector General’s (OIG) Office of Evaluation and Inspections (OEI) issued a report (OEI-05-12-00340) entitled “Questionable Billing for Polysomnography Services.”  The report found that Medicare paid nearly $17 million for sleep study (polysomnography) services that did not meet one or more of the three Medicare requirements and that 180 providers demonstrated patterns of questionable billing for these services.  The OIG chose to study this issue because Medicare spending for sleep study services rose from $407 million to $565 million from 2005 to 2011, and fraud investigators and sleep medicine professionals have identified specific vulnerabilities regarding polysomnography services.  The findings of the OIG’s report are significant because just as we accurately predicted that the OIG’s December 2010 Report: “Questionable Billing by Skilled Nursing Facilities” would generate increased investigations of therapy services for skilled nursing facilities (“SNFs”), the findings in this Report represents an area in which sleep study service providers can also expect increased enforcement.

The OIG analyzed Medicare payments for sleep study service claims for 2011 from hospital outpatient departments and nonhospital providers , such as physician-owned sleep laboratories and independent diagnostic testing facilities.  The OIG then identified claims that were submitted with one of three Medicare requirements: inappropriate diagnosis codes, duplicate claims for the same day (an impossibility since the procedures require an overnight stay) or claims that were submitted with an invalid national provider identifier (“NPI”).  The OIG also analyzed eight additional measures of questionable billing that were developed in consultation with fraud investigators and sleep medicine professionals within and outside of OIG based on Medicare coverage and billing requirements for polysomnography services.  Notably, the eleven measures of questionable billing used in the OIG study do not provide conclusive evidence of fraudulent billing, but rather were measures used to identify questionable scenarios on the basis of claims data.

Ultimately, the OIG determined that Medicare inappropriately paid $16.8 million for polysomnography claims that did not meet one or more of the three Medicare requirements.  Specifically 35% of the providers with paid polysomnography claims in 2011  (2,534 providers) submitted at least one claim that did not meet one or more of the three Medicare requirements described above.  A majority of the claims did not meet Medicare requirements because they had inappropriate diagnosis codes.  Moreover, $14 million of the $16 million paid for claims with inappropriate diagnosis codes, or  85%, were from hospital outpatient departments.  The OIG found this to be a disproportionately high share as only 53% of all polysomnography claims in 2011 came from hospital outpatient departments altogether.  The Medicare Administrative Contractors (“MACs”) that processed polysomnography claims from nonhospital providers may have approved fewer inappropriate claims because they had effective claims processing edits or perhaps these providers may have submitted fewer inappropriate claims.

The OIG concluded that Centers for Medicare & Medicaid Services (“CMS”) and MACs could likely have prevented nearly all of the nearly $17 million inappropriate payments through more effective claims processing edits such as prepayment edits to deny claims with inappropriate diagnosis codes.  Accordingly, the OIG recommended that CMS implement claims processing edits or improve upon existing edits to prevent inappropriate payments for polysomnography services.  Instructively, the OIG noted that CMS could prioritize working with MACs that process claims from hospital outpatient departments since payment for claims with inappropriate diagnosis codes were largely from those providers.  Further, the OIG advised that CMS should investigate and recover payments for claims that did not meet Medicare requirements.  The OIG also explained that CMS should consider using measures of questionable billing from the OIG’s study to identify providers for further investigation.  In addition, the OIG recommended that CMS refer providers with patterns of questionable billing to contractors for further investigation.  CMS agreed with all four of the OIG’s recommendations.

Lastly, while the OIG Report noted that its study did not look or find conclusive evidence of fraud, the Report  explained that the 180 providers that exhibited patterns of questionable billing for sleep study services warrant further scrutiny and also that further investigation of these specific providers may help CMS prevent future inappropriate payments.

You can find a copy of the OIG report here —> OEI-05-12-00340

For more information on the OIG Report, provider fraud and abuse issues, or related issues, please feel free to contact Daniel Meier or any member of our health care practice group for a further discussion.

Comments are closed.