Answers to the Questionable PSG Billing Report Released by the OIG

Sleep testing is clearly on the Office of Inspector General’s radar. A recently released report by the agency identified nearly $17 million in questionable billing for PSG services. A lawyer analyzes the OIG’s report and provides recommendations you can implement today.

In a report issued last week, the Office of Inspector General of the US Department of Health and Human Services (OIG) found approximately $16.8 million in improper Medicare billing for in-lab polysomnography (PSG) during an 11-month period in 2011. The report identified three categories of billing errors that gave rise to the alleged overpayments: inappropriate designation of the patient’s primary diagnosis on the test claim, same-day duplicate claims, and designation of an invalid National Provider Identifier (NPI) on the test claim (the NPI was deemed “invalid” if the provider’s number didn’t appear in the National Plan & Provider Enumeration System [NPPES] or if the NPPES showed the status of the number to be “inactive”).

While the total amount of the erroneous billing is a large number, the results don’t reveal widespread fraud, abuse, or intentional billing errors in the sleep testing industry. Rather the results show that only a handful of providers–about 180–displayed a pattern of questionable billing practices.

In 2011, Medicare paid almost $565 million for PSG services on just over 1 million claims. However, the report considered about 400,000 fewer claims in its review. First, the OIG excluded all claims for service filed in December 2011. These claims were unavailable at the time of the analysis. Second, the OIG excluded all claims made for the professional component of PSGs. Only the technical components and global services made it into the claim audit pool. So the audit pool consisted of 626,212 claims representing 461,363 unique Medicare beneficiaries.

Although Medicare identified a total of 7,232 unique providers who billed PSG during the 11-month review period, the OIG threw out 893 because these providers billed fewer than three claims. This left a total of 6,339 providers in the audit pool. This means that in 2011 there existed a total of 6,339 sleep labs of all types in the United States (physician-owned, hospital based, and stand-alone) that billed more than three claims to Medicare for PSG.

The OIG next identified 11 categories of “questionable” billing measures. The OIG designated three of the 11 categories as measures that address “Medicare Requirements.” The three Medicare Requirement categories are the ones referenced above (improper diagnosis code, duplicate claims, and invalid NPI). All of the $16.8 million identified as erroneously paid claims are attributable to these three categories of Medicare Requirements.

The remaining eight measures of questionable PSG billing identified in the report didn’t trigger instances of erroneous billing. Rather, these were included as instances when PSG services might be medically unnecessary, not performed, or otherwise inappropriate.

The OIG recommended that the Centers for Medicare & Medicaid Services (CMS) use all 11 measures of questionable billing to ferret out billing errors in future studies. CMS has agreed to adopt this suggestion. In correspondence to the OIG, CMS says it will use these measures to develop algorithms to detect inappropriate billing practices and to analyze the billing practices of such providers in the future.

REPORT FINDINGS The report found that of the total 626,212 claims reviewed, 21,348 contained a billing error. This represents only 3.41% of the total claims reviewed. Of these 21,348 tainted claims, almost all– 20,110 or about 96%–came from the single category of “inappropriate diagnosis coding.” By comparison, only 1,178 erroneous claims (or 0.19%) arose from same-day duplicate claims and only 109 claims (or 0.02%) came from claims with an invalid NPI.

In other words, of the total $16.8 million in improper billing found, a full $16,050,155 arose from the single category of “inappropriate diagnosis code.” As stated in the report, CMS requires an appropriate diagnosis code for payment of PSG services. Providers billing on CMS Form 1500, the appropriate outpatient hospital billing form, or the electronic equivalents should list the condition that justifies the service as the primary diagnosis code. The primary diagnosis should be the one most relevant to the service. Providers should use the ICD-9 diagnosis code until such time as ICD-10 is in effect.

Just as surprising, about 85% of the diagnosis code offenders were hospitals, even though only 53% of all PSG claims in 2011 came from hospital outpatient departments. The report remarked that these results presented a disproportionately high share of billing errors by hospital outpatient departments.

On the other hand, the report noted that only 15% of claims paid with erroneous diagnostic coding billing came from physicians and non-hospital providers, but the claims submitted by these providers represented 47% of all PSG claims in 2011. This finding prompted the report to remark that diagnostic code billing errors by non-hospital providers represented a disproportionately low share of the total erroneous billing.

PROBLEM BREADTH Although the report reviewed claims submitted by 6,339 providers, the OIG found only 180 providers–or about 3%–engaged in a pattern of improper activity. These providers were found to have submitted multiple instances of questionable billing, such as double billing, unbundling split-night services, or multiple titration studies. It can’t be said, then, that the number of providers engaging in a pattern of questionable billing for PSG is widespread.

While the number of tainted claims represented only 3.41% of all of the PSG claims examined during the review period, a full 35% of providers who billed PSGs during the period submitted at least one claim that did not meet one or more of the three Medicare Requirements listed above. This means that more than one-third of all sleep test providers who billed Medicare for PSG in 2011 engaged in at least one instance of billing an improper diagnosis code, duplicate claims, or an invalid NPI. This result does show that scattered incidents of billing errors are widespread and should be addressed by the community of sleep providers.

RECOMMENDATIONS The report’s recommendations are modest. In addition to offering the 11 questionable billing measures for use in CMS’ future audits, the OIG recommended that CMS do the following:
> implement claims processing edits to detect and deny double billing and same-day services > recover the wrong payments identified in the report, as appropriate > take action against the 180 providers identified as engaging in a pattern of questionable billing.
CMS agreed to all of these recommendations. CMS further stated it will review the list of 180 providers, determine how many to audit further, and instruct the local contractor or Zone Program Integrity Contractor to take appropriate action.

LESSONS LEARNED Sleep testing is clearly on the OIG’s radar. The rise in Medicare reimbursement for PSGs–up 39% from 2005 to 2011–has grabbed the attention of CMS. No less than four projects in the OIG’s 2014 Work Plan focus directly on sleep testing, CPAP, and CPAP resupply. The report here arose out of the OIG’s Work Plan Project examining PSG payments first announced in 2006.

Sleep test providers should check their billings for diagnosis coding and NPI numbers, along with how many tests appear on each claim for each beneficiary. But cautionary steps shouldn’t end there. For example, the report doesn’t even address the more prevalent and unforgiving audits currently being conducted by Medicare Administrative Contractors (MACs), Recovery Audit Contractors (RACs), and the Zone Program Integrity Contractors (ZPICs) on sleep test providers of all types. These audits typically focus on broad technical failures, such as a lack of specified patient information (such as body mass index) in the physician’s examination notes, failure to have a registered technician attend the test, or failure to have a boarded sleep physician interpret the test (even though the physician might be a staff member of the accredited lab where the test took place).

Likely due to cost, the OIG’s audit expressly ignored the fundamental focus of these more frequent contractor audits. For example, the report says that the OIG did not review any medical documentation to determine the medical necessity of the PSGs it reviewed. Nor did the OIG review any specific billing or documentation requirements set forth in the various Local Coverage Determinations governing Medicare sleep testing. Finally, the report states the OIG “did not analyze ownership information or other indications of physician self-referral, which may affect questionable billing for polysomnography services.” Perhaps this omission is just as well, because Medicare sleep tests referred to non-hospital sleep labs are not subject to the self-referral prohibitions under the federal Stark law.

In light of the more prevalent MAC, RAC, and ZPIC audits, providers of Medicare sleep testing should frequently audit their compliance with the medical necessity, licensure, certification, accreditation, and documentation requirements set forth in the Local Coverage Determinations applicable to such labs. Medicare providers should also prepare for additional electronic surveys of their future billings under each of the 11 measures of questionable billing published by the OIG in the Report.

For more information, please contact Dan Brown, Esq. at (770) 804-4700, or visit The HLP website.

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