Another new year, and another round of Medicare documentation regulations, therapy minutes, therapy caps, exceptions process and yet another opportunity to be put under the microscope of Medicare’s medical review by its various contracted entities. We are now at the 10 year point of implementation of fraud and compliance provisions initiated as a result of HIPAA in 1996 and the BBA in 1997. While two large rehab providers, HealthSouth and Physiotherapy Associates, have entered into Corporate Integrity Agreements with the Office of the Inspector General of the Department of Health and Human Services (OIG), most rehab providers, whether based in hospitals, clinics, or private practices, still perceive themselves in the comfort zone: claims are paid, little or no medical reviews, so all must be good, right? For outpatient rehab providers the probability of medical review is exponentially increasing, but it seems to be a well kept secret. The best predictor of how these Medicare reviews are structured, their findings and subsequent provider consequences can be gleaned from those that cases that have been published. Join me as we review tales from the crypt.

The OIG publishes an annual work plan which details the projects that it will be undertaking for the coming year. The 2009 OIG Work Plan does not disappoint with respect to outpatient rehab. While therapy has often been mentioned in past work plans the focus typically was on rehab agencies, CORFs, skilled nursing facilities, home health. Over the past 7 to 8 years the number of published cases, while relatively small, has been revealing in both the methodology, the scope of the review, the extremely high error rate, and the money impact to the providers under scrutiny.

The 2009 OIG Work Plan includes a focus on physical therapists in private practice. The Office of Audit Services “will review outpatient physical therapy services provided by independent therapists to determine if they are in compliance with Medicare reimbursement regulations. Previous OIG work has identified claims for therapy services provided by independent physical therapists that were not reasonable, medically necessary, or properly documented. Focusing on independent therapists who have a high utilization rate for outpatient physical therapy services, we will determine whether the services that they billed to Medicare were in accordance with Federal requirements.”

The time is right to review rehab cases published by the OIG, as well as to glean some lessons from the Recovery Audit Contractor demonstration (RAC) project and the Comprehensive Error Rate Testing program (CERT).

The OIG offers at its Web site ([removed][/removed]) several rehab tales in its “crypt” of published reports as well as in news releases. In the GEM Physical Therapy Case the OIG found that a patient’s occupational therapy medical record documentation indicated services were a duplication of physical therapy treatment. Since the physical therapy had been claimed the occupational therapy has been questioned as medically necessary. OT Services were found to be medically unnecessary because service was provided by PT. Risk Factor: PT and OT both treating patients and documentation does not support the differentiation of the therapies.

In the Americare PT Case the OIG found that a patient had no potential for improvement. The risk factor is in the therapist not documenting potential for improvement in initial plan of care and documenting progress as related to the potential that was identified

The OIG found in the Life Care case that a beneficiary received an evaluation and 8 treatment visits of occupational therapy only 1 week after a medical assessment stated, “…is in a semi-comatose state, is unable to communicate and is not aware of needs.” It was noted that the beneficiary previously received therapy for the same condition and should have been on a maintenance program. The medical records also noted there was no improvement in the beneficiary’s condition. The risk factor here is that a review of previous therapy records to determine prior history with respect to current diagnosis.

Treatment plans not individualized to the beneficiaries specific needs nor were the corresponding rehabilitative goals measured was a finding by the OIG in the World Gym PT Case. Therapies often continued after the patient reached their rehab goals and beneficiaries had no specific illnesses for which the therapies were rendered. Documentation was not specific regarding the medical history pertinent to the beneficiaries’ condition or the specific episode requiring outpatient rehabilitation therapy. The risk factor is not developing the case for rehab through the patient’s history, goals, and using documentation templates, rather than individualized therapy plans and goals.

In the Rehabilitiy Case it was noted that a patient, who had been experiencing pain in the thumb, wrist, and forearm wanted to return to a pain-free level of functioning using both hands in lifting and playing golf 10 hours a week. The medical reviewer noted that the patient had received treatment to a point where he/she could lift 20 pounds pain free as of after 3 months of therapy and was at a level where the services of a skilled therapist were not needed. The risk factors: goals documenting leisure activities, and treating a patient after goals achievement was documented.

The OIG reported that a CMS program safeguard contractor (PSC) review of 100 claims of 10 physical and occupational therapists in Texas, determined that 2,709, over 99 percent, of the 2,734 services contained in 100 sampled claims submitted by the 10 therapists did not meet one or more of Medicare’s reimbursement requirements because the therapists did not maintain adequate documentation, the therapists did not meet the plan of care requirements, or, someone other than the billing therapists performed the services. According to the PSC, the 99% error rate may indicate that the therapists did not have procedures in place to ensure that the billed services met Medicare requirements. (yes, you did read that right, the error rate was 99%). The PSC instructed the Medicare carrier to recoup the excess reimbursements.

In cases published by the OIG within the past several years, we begin to notice some new trends, most notably that had providers followed their own established policies and procedures errors that were identified could have been prevented; the introduction of coding/minutes errors; successful appeal by providers in rebutting the findings; and the improper use of Medicare provider numbers.

In the Ultimate case (2008) the OIG sampled 100 claims with 2,576 services, and medical reviewers identified 98 claims for 1,400 services that did not meet Medicare reimbursement requirements, including: services that did not meet requirements for reporting service units, documentation requirements, and/or not medically necessary. 98% of claims had an error and 54% of billed services were found to be in error. The OIG noted that this provider did not always follow Medicare requirements or its own policies and procedures, and the provider’s policies and procedures did not address Medicare requirements for reporting service units. According to the OIG “had this provider followed its policies and procedures for ensuring that therapy services were adequately documented and that Medicare coverage was terminated when patients reached their rehabilitation goals, it would have prevented some of the errors identified.”

Medical reviewers in the ABC Total Rehabilitation case determined that 88 of the 100 sampled claims for therapy services were not appropriately paid. Services that did not meet Medicare reimbursement requirements because they were rendered outside of the approved plan of care, did not meet Medicare duration of therapy requirements, did not meet Medicare standards to support that services were actually provided, and were not medically necessary. The OIG found that “ABC did not always follow Medicare requirements or fiscal intermediary (FI) guidance. ABC had written policies and procedures that, if followed, would have precluded some of the errors the medical reviewers identified.”

In 2007 the OIG reported on a private practice PT case (Bovarnik). Of the 100 sampled claims, 96 did not meet Medicare’s reimbursement requirements. 494 of the 702 physical therapy services contained in the 100 sampled claims did not meet one or more of the Medicare reimbursement requirements because the PT’s provider number was inappropriately used to bill for services performed or supervised by someone else, the documentation did not meet Medicare requirements, therapy services were miscoded, and a plan of care that did not meet Medicare requirements. In this case the OIG noted that the physical therapist did not have a thorough understanding of Medicare requirements and did not have effective policies and procedures in place to ensure that Medicare was billed only for services that met Medicare reimbursement requirements. 70% of services billed to Medicare services were disallowed. The therapist indicated he would address the finding through the Medicare appeals process.

Medical reviewers determined in the 2006 Absolute case that the provider did not always follow Medicare requirements or guidance from the FI. This provider “had written policies and procedures that, if followed, would have precluded the errors the medical reviewers identified.” However, Absolute did not always follow its policies and procedures for ensuring that plans of care contained all required elements, for documenting that plans of care were reviewed at least every 60 days, or for documenting that services were actually provided. This provider was able to provide further documentation to the FI and subsequently reduced their payback amount significantly.

The Action case by the OIG is the most recent (November) A sampling of 100 claims containing 4,786 CORF therapy services revealed that 94 claims for 1,789 services that did not meet Medicare reimbursement requirements because of unapproved or incomplete plans of care; documentation standards not being meet; duration of therapy requirements not being met; medically unnecessary services. Once again the OIG noted that “Although Action had written policies and procedures that, if followed, would have precluded some of the errors the medical reviewers identified, it did not always follow its own policies and procedures for ensuring that therapy services were provided in accordance with Medicare reimbursement requirements.” The OIG also noted deficiencies in the policies and procedures as not addressing “Medicare requirements for duration of therapy services and termination of Medicare coverage when patients reached their rehabilitation goals.” Action protested the findings and the OIG requested that the medical reviewers consider the additional documents Action included with its comments. Based on this subsequent review of Action’s comments and additional documentation, the medical reviewers concluded that they would partially reverse their original determinations on some of the services originally found to be in error. The OIG then adjusted their findings and recommendations.

Recent rehab headlines have been in the reports of the RAC and CERT programs. While the Recovery Audit Contractor (RAC) program in a demonstration phase highlighted findings in inpatient rehab facilities in California, flying under the radar also in California RAC project was the automated claims review that revealed that speech language pathology errors. Outpatient hospitals billed for each 15 minutes of therapy for codes where the definition specifies that the code service based, rather than time based. Units billed exceeded the approved number of sessions per day, and were determined to be medically unnecessary to the tune of $1.4 million. The corrective actions clarifies billing for untimed codes and the hospitals were instructed to be more careful when submitting claims for therapy services and the Medicare claims processing contractors were instructed to remind hospitals about the importance of listing the accurate number of “units of service” on a claim. Interesting to note was that the edits of the hospitals’ billing system did not catch their error, nor did the edits in the Medicare contractor’s claims processing software.

In a 2008 Comprehensive Error Rate Testing (CERT) quarterly report manual therapy (CPT 97140©) was listed as one of the top 20 services without sufficient documentation to support the claim, resulting in a 9.9% paid claims error rate valued at $20,941,788. The CERT program reviews paid claims by the Medicare contractor. The same report identified the highest paid claims error rate of 21.2% for OT in private practice, resulting in a projected $18 in improper payments, with 88.9% resulting from inadequate documentation, and 10.8% resulting from improper coding.

You have now heard the tales from the crypt, and the secrets are revealed. This first quarter of 2009 is time to complete and/or update your compliance plan, conduct a risk assessment, establish a calendar of monitoring and auditing activities, review and update policies and procedures, verify employees against the Excluded/Sanctioned Provider data bases and conduct annual training. This rehab cases provide a point of departure.

Stay tuned this year future compliance columns will address compliance programs, developing a Code of Conduct, whistleblowers that may be lurking in your company, settlement agreements and corporate integrity agreements.

Nancy J. Beckley, MS, MBA, CHC, is certified in Healthcare Compliance and is president of Bloomingdale Consulting Group Inc. Comments and questions are encouraged, please go to, or call (888) 999-0275.