OIG Releases Report on Questionable Billing for Sleep Studies; CMS to Take Action

24 October 2013 Publication
Author(s): Donald H. Romano

Legal News Alert: Health Care

The Office of the Inspector General (OIG) released a report earlier this month on Medicare spending on polysomnography (sleep studies to diagnose and guide treatment for conditions such as sleep apnea), which indicated that of the roughly $565 million spent on over 1 million sleep studies in 2011, nearly $17 million in claims appeared not to meet Medicare requirements. As a result, OIG recommended that CMS tighten its claims processing for sleep studies and that the agency takes appropriate actions against offending providers and suppliers that may have received improper Medicare payments.

Providers and suppliers billing Medicare for sleep studies should take steps to ensure that claims are compliant with Medicare requirements and implement compliance policies and procedures to address the questionable billing practices discussed in the OIG report.

The report, titled “Questionable Billing for Polysomnography Services,” comes as no surprise, because the OIG’s 2013 work plan signaled that it intended to review and identify questionable billing patterns for Medicare-covered sleep studies as a result of a marked increase in Medicare spending on sleep studies. The OIG noted that from 2005 to 2011 Medicare spending on sleep studies increased 39 percent from $407 million in 2005 to $565 million in 2011. Furthermore, the report was released on the heels of a March 2013 $15 million settlement paid by Florida-based American Sleep Medicine LLC to resolve allegations that it submitted false claims to Medicare and other federal payors.

The report reviewed provider and supplier billing for sleep study services with the aim of understanding the particular risks of fraud associated with billing for these services. Medicare payments for sleep study services from 2011 were analyzed under 11 measures of questionable billing: three Medicare requirements for reimbursement, and eight measures independently designed through collaboration between sleep medicine professionals and fraud investigators within and outside the OIG. The OIG found that $17 million of the payments made to providers in 2011 did not meet one or more the three Medicare requirements and that 180 providers and suppliers exhibited patterns of “questionable billing” practices, based on the report’s other criteria.

The OIG found that a majority of the facially inappropriate claims were the result of (1) wrong diagnosis codes, (2) duplicate services for the same beneficiaries, and/or (3) invalid NPI numbers. Interestingly, the OIG noted that most (85%) of the facially invalid claims originated from hospital outpatient departments, which was disproportionately high considering that hospital outpatient department sleep study claims represented just 53 percent of all such claims in 2011. Furthermore, the OIG noted that the 180 providers and suppliers exhibiting various patterns of questionable sleep study billing practices exhibited one or more of the following patterns:

  • Same-day or duplicate claims;
  • Double-billing for the professional component of sleep studies;
  • Repeated procedures;
  • Missing professional component;
  • Multiple sleep studies performed for the same beneficiaries;
  • Unbundled claims (services performed over two consecutive nights usually must be bundled together and billed on the same claim); and
  • Missing visits from ordering provider.

Based on its finding, the OIG made the following four recommendations to CMS:

  • Implement and improve claims processing edits and controls to prevent inappropriate payments;
  • Recover payments for claims that were found not to meet Medicare requirements;
  • Leverage measures of questionable billing practices identified in the study to identify providers and suppliers for further investigation; and
  • Take appropriate action regarding the 180 providers and suppliers that OIG found to exhibit questionable billing patterns.

CMS concurred with all of OIG’s recommendations, and plans to implement the suggested enhancements to its controls, adopt new measures of questionable billing, take action to recoup inappropriate payments and initiate investigations of the providers and suppliers exhibiting questionable billing practices.

Legal News Alert is part of our ongoing commitment to providing up-to-the-minute information about pressing concerns or industry issues affecting our clients and colleagues. If you have any questions about this Alert or would like to discuss the topic further, please contact your Foley attorney or the following:

Donald H. Romano
Washington, D.C.

Benjamin M. Daniels
Boston, Massachusetts


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