Health Law Daily Las Vegas psychiatric clinic was overpaid on 93 percent of its Medicare claims
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Wednesday, April 29, 2020

Las Vegas psychiatric clinic was overpaid on 93 percent of its Medicare claims

By Jeffrey H. Brochin, J.D.

Audit samples disclosed that substance abuse psychotherapy clinic was paid at least $421,272 in unallowable Medicare reimbursements, or 93 percent of the $450,663 paid. The clinic fully complied with requirements for only 1 service out of 100 examined in the audit period.

The Office of Inspector General (OIG) issued their report on an audit of Grand Desert Psychiatric Services (Grand Desert) covering the period January 2017 through December 2018, and found that for the 100 sample cases audited, the clinic received $5,173 in unallowable Medicare payments. When extrapolated out to their total Medicare billings, the auditors estimated that at least $421,272 was unallowable for Medicare reimbursement, or 93 percent of the $450,663 paid to Grand Desert for psychotherapy services (OIG Report, A-09-19-03018, April 20,2020).

Medicare E & M services. Medicare Part B covers mental health services, such as individual and group psychotherapy, provided by qualified professionals. To provide such services, a provider must be licensed or legally authorized to perform the services by the state in which the services are provided. Medicare also pays for services billed incident to the service of a physician or certain other practitioners including psychotherapy services that are billed in conjunction with evaluation and management (E&M) services.

Why the OIG conducted the study. Medicare paid approximately $2 billion for psychotherapy services provided to Medicare beneficiaries nation-wide from January 1, 2017, through December 31, 2018 (the audit period). Prior OIG reviews found that Medicare had made millions in improper payments for mental health services, including psychotherapy services, that were billed incorrectly, provided by unqualified providers, undocumented, inadequately documented, or medically unnecessary. A report issued in 2001 stated that psychotherapy services were particularly problematic. In addition, prior reviews identified problems with psychotherapy services that were billed in conjunction with E&M services.

After analyzing Medicare claim data, the OIG selected several providers for audit, including Grand Desert, a psychiatric clinic in Las Vegas, Nevada, that provides a wide range of treatment options for mental health patients and those with substance abuse issues. It was established in 2011 and provides a variety of services, such as psychotherapy services, psychiatric diagnostic evaluations, and E&M services. According to the OIG’s analysis during the audit period, 80 percent of Grand Desert’s psychotherapy services were paid in conjunction with E&M services.

How the study was conducted. The OIG audit covered Grand Desert’s Medicare Part B claims for psychotherapy services provided during the audit period, utilizing a sampling frame consisting of 8,542 beneficiary days, with payments totaling $450,663. The OIG reviewed a random sample of 100 beneficiary days, consisting of 100 psychotherapy services, broken down as follows:

  • 89 services for 30 minutes of psychotherapy with an E&M service,
  • 9 services for 60 minutes of psychotherapy, and
  • 2 services for group psychotherapy.

The OIG examined beneficiary medical records requested from Grand Desert, which provided supporting documentation for 98 of the 100 psychotherapy services in the sample, and those documents were reviewed to determine whether Grand Desert complied with Medicare requirements for billing psychotherapy services. The OIG believed that the evidence obtained provided a reasonable basis for their findings and conclusions based on our audit objectives.

The sampling frame consisted of 8,542 beneficiary days, totaling $450,663. (A beneficiary day consisted of all psychotherapy services provided on a specific date of service for a specific beneficiary for which Grand Desert received a Medicare payment.) Although the OIG reviewed a random sample of 100 beneficiary days, consisting of 100 psychotherapy services, they did not make a determination as to whether the services were medically necessary.

What the study found. The study found that Grand Desert did not comply with Medicare requirements when billing for psychotherapy services. Specifically, of the 100 psychotherapy services in the 100 sampled beneficiary days, only 1 service complied with the requirements. However, the remaining 99 services did not comply with the requirements. As a result, Grand Desert received $5,173 in unallowable Medicare payments, and on the basis of the sample results, the OIG estimated that at least $421,272 was unallowable for Medicare reimbursement, or 93 percent of the $450,663 paid to Grand Desert for psychotherapy services.

What the OIG Recommended and How the Provider Responded. As a result of the audit, the OIG recommended that Grand Desert (1) refund to the Medicare contractor $421,272 in estimated overpayments for psychotherapy services; (2) implement policies and procedures to ensure that psychotherapy services billed to Medicare are adequately documented, including the time spent on those services; (3) strengthen management oversight and review Medicare claims to ensure that psychotherapy services billed to Medicare meet incident-to requirements; (4) improve its billing system to ensure that Medicare claims identify the correct provider of psychotherapy services; and (5) strengthen management oversight to ensure that psychotherapy services billed to Medicare were actually provided and have supporting documentation.

The draft report was issued to Grand Desert with the request that it provide the OIG with written comments, however, Grand Desert informed them that it would not provide written comments.

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