AAOS Bulletin - February, 2005

OIG puts fraud and abuse under watch

Work Plan defines areas that will be scrutinized

By Margie Scalley Vaught, CPC, CPC-H, CCS-P, ASC-OR and M. Bradford Henley, MD

The new CPT, ICD-9 and HCPCS codes for 2005 aren’t the only ‘new’ areas that orthopaedic practices need to be aware of. The Office of Inspector General (OIG) annually issues a Work Plan that defines the areas that will be scrutinized for fraud and abuse or overutilization. This articles highlights several of the areas related to orthopaedic practices that will be under review in 2005.

Full details of the workplan can be accessed at: http://oig.hhs.gov/publications/workplan.html - 1

Billing service companies

A new area of review for the OIG will be billing service companies that serve Medicare physicians and other health professionals. The Work Plan states that the OIG will “identify and review the relationships among billing companies and the physicians and other Medicare providers who use their services.” As part of this review, the OIG will also identify various types of arrangements between billing services and physicians and other Medicare providers. OIG also will determine the impact of these arrangements on the physicians’ billings.

Care plan oversight

Under the Medicare home health and hospice benefits, care plan oversight is “physician supervision of beneficiaries who need complex or multidisciplinary care requiring ongoing physician involvement.” From 2000 to 2001, reimbursement for care plan oversight nearly tripled, from $15 million to $41 million. As a result, this area will be watched closely. The OIG plans to assess whether services were provided in accordance with Medicare regulations and evaluate the effectiveness of controls.

Physician services at skilled nursing facilities

This is an area of considerable concern for orthopaedic practices, especially those that provide diagnostic or follow-up radiologic services for nursing home residents. As the OIG Work Plan notes, “Physicians may bill Medicare only for the professional component of a service on behalf of skilled nursing facility patients. The technical component of physicians’ services is covered under the patient’s Medicare Part B stay in the skilled nursing facilities and should not be billed separately by the nursing home.”

There is one exception to this rule. Nursing homes may establish agreements with physicians that allow the facility to receive Part B payments for both the professional and technical components of physicians’ services. In this case, the physician would then bill the nursing home rather than Medicare for reimbursement.

The OIG plans to review Medicare Part A and Part B claims with overlapping services and determine whether duplicate payments were made to either the physician or the nursing home for the same patient service.

Physical and occupational therapy services

An ongoing area of concern is physical and occupational therapy services. The OIG will review Medicare claims for therapy services provided by physical and occupational therapists to determine whether the services were reasonable and medically necessary, adequately documented and certified by physician certification statements. As defined in the Work Plan, “Physical and occupational therapies are medically prescribed treatments concerned with improving or restoring functions, preventing further disability and relieving symptoms.”

Wound care services

Medicare payments for certain wound care services increased from approximately $98 million in 1998 to $147 million in 2002. This has generated concern about the adequacy of controls to prevent inappropriate payments. The OIG plans to review claims to determine whether they were medically necessary and billed in accordance with Medicare requirements.

E/M coding

Another area of concern is patterns of physician coding of evaluation and management (E/M) services. In 2003, Medicare paid more than $29 billion for E/M services. The OIG is concerned about whether these services were accurately coded. A previous investigation found a significant number of billing errors, resulting in large overpayments. The OIG plans to assess the adequacy of controls to identify physicians with aberrant coding patterns.

Modifier –25

Expect continued scrutiny of claims submitted with modifer –25. In general, E/M codes should not be billed on the same day as a procedure or other service unless the E/M service is significant and separately identifiable from the procedure or service. However, the use of modifer –25 allows the additional reimbursement of the E/M code.

In 2001, Medicare paid more than $23 billion for E/M services. Of that amount, approximately $1.7 billion was for E/M services billed with modifier –25.

Use of modifiers with NCCI edits

One of the OIG’s ongoing projects is determining whether claims that used modifiers to bypass National Correct Coding Initiative (NCCI) edits were appropriately paid. In 2001, Medicare paid $565 million to providers who included the modifier with code pairs within the NCCI.

The NCCI is a tool used by the Centers for Medicare and Medicaid Services for detecting and correcting improper billing. It is designed to provide Medicare Part B carriers with code pair edits for use in reviewing claims. A provider may include a modifier to allow payment for both services within the code pair under certain circumstances.

Medical necessity of DME

A new initiative of the OIG will be to review and determine the appropriateness of Medicare payments for certain items of durable medical equipment (DME), such as power wheelchairs and therapeutic footwear. In 2003, the CMS’ campaign “Operation Wheeler Dealer” cracked down on fraud and abuse in the power wheelchair market and recovered more than $84 million in fraudulent claims nationwide.

The OIG will assess whether (a) the suppliers’ documentation supports the claim, (b) the item was medically necessary, and (c) the beneficiary actually received the item.

Imaging and laboratory services in nursing homes

According to the Medicare Payment Advisory Commission, the use of diagnostic scans for Medicare beneficiaries is rising at three times the rate of overall physician services. Medicare pays more than $200 million a year for imaging and laboratory services provided to nursing home residents.

The OIG will review a sample of imaging and laboratory services and examine utilization patterns in nursing facilities to determine the extent and nature of any medically unnecessary or excessive billing.

Although this list is not all-inclusive, orthopaedic practices will want to make sure that all documentation guidelines and/or arrangements in these areas are clearly followed. Be sure to check with your local Medicare and private carriers to find out what their policies are on “medical necessity” for these issues.

Margie Scalley Vaught, CPC, CCS-P, CPC-H, ACS-OR, is an independent coding specialist in Ellensburg, Wash. A BONES member, she has served as a member of the National Advisory Board for the American Academy of Professional Coders. She can be reached at vaught@kvalley.com

M. Bradford Henley, MD, is professor of orthopaedic surgery at the University of Washington and chairman of the AAOS CPT-ICD Coding Committee. He can be reached at bhenley@u.washington.edu

Coding Hotline answers your questions

By Dan Sung

Have you or your staff ever had difficulty coding a complex operation? Do you want to find out how much Medicare will reimburse you for a new covered procedure? If so, call the Coding Hotline, an exclusive AAOS member benefit.

The AAOS Coding Hotline provides a range of coding assistance services, including current year information for CPT procedure codes, HCPCS service and supply codes, and ICD diagnosis codes. You can get answers to many of your Medicare coding and reimbursement questions, up-to-date information on Medicare global periods, national or locally adjusted Medicare relative value units, exact dollar amount payment rates for procedures covered by Medicare and guidance to ensure that you meet Documentation Guideline requirements when reporting evaluation and management codes.

CCI edits

As AAOS members know, the Medicare Correct Coding Initiative (CCI) limits reimbursement when certain procedures are reported together. The AAOS Coding Hotline will help you maximize payments by providing you with the most current CCI edits. That way, you’ll know when you can report and receive payment from Medicare for performing two or more procedures during the same operative session. Because it updates its CCI database whenever changes occur, the Hotline can provide you with the most current edits and help you identify those that affect your Medicare claims.

AAOS edits

The Hotline can also give you information on the Academy’s CPT-ICD Coding Committee’s coding edits, published annually in the Complete Global Service Data for Orthopaedic Surgery. These edits can help you determine when certain procedures may be appropriately reported in conjunction with each other. Many commercial insurance payers use these AAOS coding edits for claims processing.

The Hotline can evaluate pre-coded operative notes and provide recommendations on possible procedure and diagnosis codes that may be used. Simply fax your operative report to the hotline staff and they will review your procedure and provide you with a list of allowable CPT codes.

To ensure the Hotline provides coding advice that is consistent with AAOS coding policies, Hotline representatives attend orthopaedic coding workshops and coding committee meetings. They also review all relevant AAOS coding policies when developing responses to coding questions.


The AAOS Coding Hotline is a fee-for-service program. When you call, you need to provide your AAOS Member ID and a credit card number (MasterCard, Visa, American Express or Discover). The fee is $20 per consultation unit (CU), which covers up to 10 minutes of research and response time. The fee for coding an operative report is 10 CUs or $200, payable in advance.

To access the AAOS Coding Hotline, call toll-free (877) 893-5668. You can also e-mail your questions to aaos@prscoding.com or fax them to (303) 534-0577. The Coding Hotline is available Monday-Friday, 8 a.m.– 5 p.m., Central Time.

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