Physicians billed Medicare for at least $22 million in services that should have been included under a skilled nursing stay, a new report from the Health and Human Services Office of Inspector General found.

Those overpayments came from 1.1 million claims during 2019 and 2020. They reflect inappropriate Medicare payments to physicians whose patients were in the middle of a Part A Medicare stay, during which most costs are covered through per-diem rates.

Part B physician services can be billed but must be delivered outside the scope of the skilled nursing facility to receive the higher payment rates questioned by the audit. When Part B was billed incorrectly, both the Medicare system and its beneficiaries were affected.

“Medicare paid twice for the practice expenses for these services in its payments to the SNFs and the practitioners,” OIG reported. “In addition, the enrollees incurred additional cost sharing for deductibles and coinsurances of as much as $5,706,079.”

OIG faulted physicians for not always following Centers for Medicare & Medicaid Services rules that require physicians to use distinct codes indicating where they provide services. But the watchdog also said CMS needed to take enforcement action to address such behaviors.

“CMS has expressed reluctance to take enforcement action for these claim lines because neither statute nor CMS’s regulation specifically addresses situations in which a SNF or hospital inpatient leaves to receive a physician service in a non-facility setting,” the OIG report found.

OIG said that CMS should consider developing a way for facilities to indicate when an inpatient leaves a facility and returns the same day, which would allow for higher payments in some specific events; 

CMS agreed with OIG recommendations to direct Medicare contractors to recover the the identified overpayments; notify practitioners who used improper coding so they can identify, report, and return any overpayments within 60 days and establish; and set up a system that detects incorrect use of non-facility place-of-service codes for patients in a Part A SNF stay. The agency will also provide additional education to practitioners on the appropriate use of place-of-service codes, the OIG said.

OIG also recommended that CMS should seek legislative authority, “if necessary,” to revise regulations that ensure appropriate payments for physician services.