OIG: Medicare paid $600 Million on bad claims

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Medicare allowed improper payments for nearly 2 out of every 5 claims, according to the Department of Health and Human Services Office of Inspector General.

That amounts to nearly $600 million in improper payments in 2002 and 2003 for services that were either not distinct from each other or not properly documented, a pair of OIG reports issued Monday said.

The reports detailed providers' use of two modifiers to recover payments for dual services delivered. The OIG indicated that most of the improper payments were the result of inaccurate or incomplete documentation.

In addition, many Medicare carriers failed to conduct proper reviews or carry out education outreach efforts on the use of the modifiers, the report said.

At least 35% of approximately 29 million claims using a certain modifier did not meet program requirements. The modifier allows a separate payment for significant and separately identifiable evaluation and management (E/M) services performed by the provider on the same day as a medical procedure in calendar year 2002. Improper payments for claims involving this particular modifier totaled approximately one-fourth of the $2 billion of the Medicaid payments 2002.

The OIG recommended that CMS encourage carriers to stress the importance of appropriate documentation to support payment claims to Medicare and to encourage carriers to re-examine their modifier reviews and outreach activities.