That there are lots of mistakes in evaluation and management (E/M) coding and poor documentation will come as no surprise to healthcare organization leaders that strive to get their physicians to do more to be properly compensated for the E/M services they provide. But the U.S. Department of Health and Human Services’ Office of Inspector General (OIG) comes to a different conclusion that healthcare systems and hospitals have come to on this problem. Rather than leading to underpayment, poor E/M coding and documentation is leading to Medicare overpayments, not underpayments, the OIG says.

According to the OIG’s review of a random sample of 657 E/M Medicare claims from 2010, more than half (55 percent) had coding and/or documentation errors. Of these, vastly more were upcoded rather than downcoded. If the sample’s findings hold true for all Medicare E/M claims, it means the government is probably overpaying for E/M services by around $6.7 billion, the OIG concluded.

In addition, the OIG found that some physicians were much more likely to upcode than others. Upcoding occurred in 99 percent of miscoded claims for E/M services when the OIG just looked at physicians it classified as high-coding in 2010 because their average code level was in the top 1 percent of their specialty and they billed for the two highest level codes for E/M services at least 95 percent of the time.

The OIG recommended that the Centers for Medicare and Medicaid Services (CMS) do more to educate physicians, encourage its contractors that oversee claims to review E/M services billed for by high-coding physicians, and follow up on claims for E/M services that were paid for in error.

However, CMS responded that because individual E/M claims are fairly small, the work of auditing all of them and chasing down overpayments would easily end up costing more than it could feasibly hope to recover. In its response to the OIG, CMS included the results of its own effort to review high-coding physicians, which ended up having a negative return of $160,000. It also noted that by OIG projections, the average overpayment amount per E/M claim is just $33.

CMS did agree that more physician education about how to code and document E/M services would be useful. However it balked at consolidating its two manuals for E/M services, saying that there is not strong evidence that consolidating the manuals would do much to reduce bad coding and documentation.