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HHS OIG 2010 Medicare Audit: $6.7 Billion Misspent for Evaluation and Management Services

The United States Department of Health and Human Services Office of the Inspector General (“OIG) has completed its audit of 2010 Medicare payments for Evaluation and Management (“E/M) services. The audit report, available at, states that the Medicare program overpaid providers $6.7 billion for E/M services that were incorrectly coded or lacked documentation in 2010. The claims error rate was 55% and the dollar value of the overpayments represented 21% of Medicare payments for E/M services that year.  The OIG audit found that 42% of claims for E/M services were incorrectly coded (upcoded, billed at a higher level than appropriate, and downcoded, billed at a lower level than appropriate) and 19% were lacking documentation. This equates to 61% of E/M services being incorrectly billed and/or documented in 2010. 

E/M services are visits covered under Medicare Part B and performed by physicians and nonphysician practitioners to assess and manage a Medicare beneficiary’s health.Medicare paid $32.3 billion for E/M services in 2010, or nearly 30 percent of all Part B payments that year.E/M services are divided into categories (visit types) that reflect the type of service, place of service, and the patient’s status. Most visit types are further divided into three to five levels which reflect the complexity of a visit and correspond to Current Procedural Terminology (“CPT) codes for billing purposes.Higher level codes within a visit type correspond to increased complexity of the E/M service and higher rates of payment.

 The level of an E/M service is determined by seven components: patient history, physical examination, medical decisionmaking, counseling, coordination of care, the nature of the presenting patient’s problem, and time. The first three components are key in determining the correct code for E/M services. The physician’s documentation must support the medical necessity and appropriateness as well as the level, of the E/M service.

The OIG audit also found that claims for E/M services billed for by high-coding physicians were more likely to be incorrectly coded or insufficiently documented than those billed for by other physicians.

OIG recommended that the federal Centers for Medicare and Medicaid Services (“CMS) (1) educate physicians on coding and documentation requirements for E/M services, (2) continue to encourage contractors to review E/M services billed for by high-coding physicians, and (3) follow up on claims for E/M services that were paid for in error.

For more information, please contact the author, David R. Ross, who served as Acting New York State Medicaid Inspector General under governors Pataki and Spitzer, as well as General Counsel, Deputy Medicaid Inspector General, and Director of Audits and Investigations for the Office of the Medicaid Inspector General (OMIG). He can be reached at (518) 462-5601 or via e-mail at

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