Department of Health and Human Services

OFFICE OF 

INSPECTOR GENERAL 

M P
EDICARE  AYMENTS 

2003 P B M H
FOR  ART  ENTAL  EALTH 

S :

ERVICES
M N , D , 

EDICAL  ECESSITY OCUMENTATION
C
AND  ODING

Daniel R. Levinson

Inspector General 

April 2007

OEI-09-04-00220
 Office of Inspector General 

http://oig.hhs.gov 
The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, 
as amended, is to protect the integrity of the Department of Health and Human Services 
(HHS) programs, as well as the health and welfare of beneficiaries served by those 
programs.  This statutory mission is carried out through a nationwide network of audits, 
investigations, and inspections conducted by the following operating components: 
Office of Audit Services 
The Office of Audit Services (OAS) provides all auditing services for HHS, either by 
conducting audits with its own audit resources or by overseeing audit work done by others. 
Audits examine the performance of HHS programs and/or its grantees and contractors 
in carrying out their respective responsibilities and are intended to provide independent 
assessments of HHS programs and operations.  These assessments help reduce waste, 
abuse, and mismanagement and promote economy and efficiency throughout HHS. 
Office of Evaluation and Inspections 
The Office of Evaluation and Inspections (OEI) conducts national evaluations to provide 
HHS, Congress, and the public with timely, useful, and reliable information on 
significant issues.  Specifically, these evaluations focus on preventing fraud, waste, or 
abuse and promoting economy, efficiency, and effectiveness in departmental programs.  
To promote impact, the reports also present practical recommendations for improving 
program operations. 
Office of Investigations 
The Office of Investigations (OI) conducts criminal, civil, and administrative 
investigations of allegations of wrongdoing in HHS programs or to HHS beneficiaries 
and of unjust enrichment by providers.  The investigative efforts of OI lead to criminal 
convictions, administrative sanctions, or civil monetary penalties. 
Office of Counsel to the Inspector General 
The Office of Counsel to the Inspector General (OCIG) provides general legal services to 
OIG, rendering advice and opinions on HHS programs and operations and providing all 
legal support in OIG's internal operations. OCIG imposes program exclusions and civil 
monetary penalties on health care providers and litigates those actions within HHS. 
OCIG also represents OIG in the global settlement of cases arising under the Civil False 
Claims Act, develops and monitors corporate integrity agreements, develops compliance 
program guidances, renders advisory opinions on OIG sanctions to the health care 
community, and issues fraud alerts and other industry guidance.    E X E C U T I V E   S U M M A R Y  

OBJECTIVE 
To determine the extent to which Medicare Part B mental health 
services met Medicares coverage criteria and were coded correctly  
in 2003. 
BACKGROUND 
Medicare Coverage of and Reimbursement for Mental Health Services 
Medicares Supplementary Medical Insurance (Part B) covers 
physicians services, outpatient care which also includes mental health 
services, and other services not covered by Medicares Hospital 
Insurance (Part A).  General provisions of the Social Security Act (the 
Act) govern Medicare reimbursement of all services, including mental 
health services.  In general, beneficiaries are responsible for 
coinsurance of 20 percent of the approved amount for most Part B 
services; however, section 1833(c) of the Act limits payments to  
62.5 percent of the expenses (Medicare-approved amount) for mental 
health services. Section 1862(a)(1)(A) of the Act states that no 
payment may be made under Part A or Part B for any expenses 
incurred for items or services which are not reasonable and necessary 
for the diagnosis or treatment of illness or injury or to improve the 
functioning of a malformed body member. . . . Section 1833(e) requires 
that providers furnish such information as may be necessary in order 
to determine the amounts due to receive Medicare payment. 
Mental health services covered by Medicare include psychotherapy, 
psychiatric pharmacologic management, and evaluation and 
management.  Mental disorders that occur most frequently for 
Medicare beneficiaries include affective psychoses, senile psychotic 
conditions, schizophrenic disorders, and neurotic disorders.  
Psychiatrists, clinical psychologists, licensed clinical social workers, 
nurse practitioners, clinical nurse specialists, and physician 
assistants typically render mental health services.  In addition, 
licensed and unlicensed staff can furnish mental health services 
incident to the billing practitioners professional services. In these 
cases, the services must be furnished to noninstitutionalized patients 
under the direct supervision of the billing practitioner (or another 
physician). 
In 2003, the Centers for Medicare & Medicaid Services (CMS) issued 
a Program Memorandum (Transmittal AB-03-037) that focused on 
  OEI-09-04-00220  MEDICARE PAYMENTS FOR 2003 PART B MENTAL HEALTH SERVICES  i  E X E C U T I V E   S U M M A R Y  
Part B mental health services.  The memorandum explained 
Medicares guidelines for payment for Part B mental health services. 
CMS instructed its contractors to disseminate the information to 
Medicare providers. 
The Office of Inspector General (OIG) has issued several reports that 
identified vulnerabilities in Medicare payments for mental health 
services.  In 2001, OIG issued Medicare Part B Payments for Mental 
Health Services (OEI-03-99-00130), which found that Medicare allowed  
$185 million for inappropriate outpatient mental health services.  In 
response, CMS issued the aforementioned Program Memorandum. 
Methodology 
In 2005, we conducted a medical record review of a random sample of  
452 Part B mental health services rendered by 422 billing 
practitioners in 2003, the most recent year for which we had Medicare 
claims data. Licensed psychiatrists reviewed the practitioners 
medical records we received to determine the medical necessity of the 
sampled services.  Certified professional coders reviewed the medical 
records to determine proper coding. In addition, we interviewed 372 
of the 422 billing practitioners for the sampled services. 
FINDING 
Forty-seven percent of the mental health services allowed by 
Medicare in 2003 did not meet program requirements, resulting in 
approximately $718 million in improper payments. Medicare allowed 
approximately $2.14 billion in 2003 for Part B mental health services;  
47 percent of these services did not meet Medicare requirements. 
Miscoded and undocumented services accounted for 26 and  
19 percent of all mental health services in 2003, respectively.  Medically 
unnecessary services and services that violated the incident to rule each 
accounted for 4 percent of all mental health services in 2003.  Some 
services had more than one error, resulting in overlapping errors in our 
error rate calculation.  
RECOMMENDATION 
We recommend that CMS revise, expand, and reissue its 2003 Program 
Memorandum on Part B mental health services with an increased 
emphasis on proper documentation and coding.  In addition, the 
memorandum should emphasize the requirements for mental health 
services billed incident to.  
  OEI-09-04-00220  MEDICARE PAYMENTS FOR 2003 PART B MENTAL HEALTH SERVICES  ii  In addition to this recommendation, we have forwarded information 
on the miscoded, undocumented, and medically unnecessary services 
identified in our sample to CMS for appropriate action. 
 AGENCY COMMENTS 
In its comments on the draft report, CMS concurred with our 
recommendation.  CMS noted that significant information on medical 
documentation requirements and incident to requirements is available 
on the CMS Web site and from its contractors. Nevertheless, CMS will 
consolidate this information for providers of mental health services. 
  OEI-09-04-00220  MEDICARE PAYMENTS FOR 2003 PART B MENTAL HEALTH SERVICES  iii    T A B L E   O F   C O N T E N T S  

EXECUTIVE SUMMARY ........................................  i

INTRODUCTION ................................................ 1 

FINDING ......................................................... 8 

Improperly paid services...................................... 8 

RECOMMENDATION ........................................... 13 

APPENDIXES .................................................. 15 

A: CPT codes............................................... 15 

B: Previous OIG reports..................................... 19 

C:  Methodology ............................................ 20 

D: Sampling plan........................................... 24 

E: Confidence intervals ..................................... 25 

F: Agency comments ........................................ 26 

ACKNOWLEDGMENTS ......................................... 28 
 I N T R O D U C T I O N
  I N T R O D U C T I O N  

OBJECTIVE 
To determine the extent to which Medicare Part B mental health 
services met Medicares coverage criteria and were coded correctly  
in 2003. 
BACKGROUND 
Medicare Part B Mental Health Services:  Profile of 2003 Claims  
Medicare and its beneficiaries paid approximately $2.14 billion for  
Medicares Supplementary Medical Insurance (Part B) mental health 
services in 2003.1 Allowed amounts2 for mental health services have 
increased steadily since 1998; the median annual increase was  
4.6 percent.  Approximately 4 million Medicare beneficiaries received 
Part B mental health services in 2003.  The number of beneficiaries who 
received mental health services increased modestly from 1998 to 2003; 
the median annual increase was 1 percent.  In 2003, beneficiaries were 
allowed an average of $538 for mental health services.3 
In 2003, approximately 38 percent of the mental health services 
consisted of individual psychotherapy.  Another 38 percent of the 
services consisted of psychiatric diagnostic interview examinations, 
central nervous system testing, and evaluation and management (E&M) 
services; and 17 percent of the services consisted of medication 
management.4  The remaining services, approximately 7 percent, 
consisted of other mental health services, including group and 
electroconvulsive therapy. 
1 This total includes all claims with psychiatric codes (Current Procedural Terminology 
(CPT) codes 9080190899) in addition to claims for E&M and central nervous system tests 
that are supported by a mental disorder diagnosis.  All estimates are based on Office of 
Inspector General (OIG) analysis of a 1-percent sample of Medicare National Claims 
History. 
2  Allowed amount is the total Medicare-approved amount for a service, which includes 
the amount reimbursed to the provider and the beneficiary copayment. 
3  At the time of our review, 2003 was the most recent full year of Medicare claims data   
available. 
4  Medication management may be billed under one of two CPT codes:  90862 (psychiatric   
pharmacologic management) or M0064 (brief office visit for the sole purpose of 
monitoring or changing drug prescriptions used in the treatment of mental, 
psychoneurotic, and personality disorders). 
  OEI-09-04-00220  MEDICARE PAYMENTS FOR 2003 PART B MENTAL HEALTH SERVICES  1  I N T R O D U C T I O N  
Overall, psychiatrists billed for 50 percent of the services, clinical 
psychologists billed for 17 percent, and licensed clinical social workers 
billed for 11 percent.  Nurses, multispecialty group practices, and 
various physician specialties billed for the remaining 22 percent. 
Psychiatrists typically billed for procedures involving E&M services, 
while psychologists and clinical social workers were more likely to bill 
for individual and group psychotherapy. 
Medicare Coverage for Part B Mental Health Services  
General provisions of the Social Security Act (the Act) govern Medicare 
reimbursement of all services, including mental health services.  Section 
1862(a)(1)(A) of the Act states that no payment may be made for 
services that are not reasonable and necessary for the diagnosis or 
treatment of illness or injury or to improve the functioning of a 
malformed body member.  Section 1833(e) requires that providers 
furnish such information as may be necessary to determine the 
amounts due to receive Medicare payment. Related regulations at 
42 CFR  411.15(k)(1) and 424.5(a)(6) implement these provisions of 
the Medicare law. 
Medicare Part B covers physicians services, outpatient care, and other 
services not covered by Medicares Hospital Insurance (Part A).  In 
general, beneficiaries are responsible for coinsurance of 20 percent of 
the approved amount for most Part B services; however, the Act limits 
payments to 62.5 percent of the expenses (Medicare-approved amount) 
for mental health services.5  Specifically, the law limits payments for 
services in connection with the treatment of mental, psychoneurotic, 
and personality disorders. 
Section 1848(a)(1) of the Act established the physician fee schedule as 
the basis for Medicare reimbursement for all physician services 
beginning in January 1992. Section 1848(c)(5) of the Act required the 
Secretary of the Department of Health and Human Services to develop a 
uniform coding system for all physician services. The American Medical 
Associations (AMA) Current Procedural Terminology (CPT) maintains 
a numeric coding system for physicians services, including mental 
health services. In 1983, the Centers for Medicare & Medicaid Services 
5  Section 1833(c) of the Act.  This is the Outpatient Mental Health Treatment Limitation, 
which typically results in a beneficiary copayment of 50 percent of the Medicare-approved 
amount. See the companion report, Carrier Determination of Copayments for Medicare 
Mental Health Services (OEI-09-04-00221). 
  OEI-09-04-00220  MEDICARE PAYMENTS FOR 2003 PART B MENTAL HEALTH SERVICES  2  II NN TT RR OO DD UU CC TT II OO NN
(CMS) adopted CPT as part of Medicares Healthcare Common 
Procedure Coding System (HCPCS) and mandated that providers use 
HCPCS to report physicians services to Medicare. 
CMS issues binding guidance to its carriers6 in the form of 
claims-processing manuals and memoranda. In 2003, CMS issued a 
Program Memorandum7 to its carriers concerning Part B mental health 
services. The memorandum includes: 
Medicares guidelines for payment of Part B mental health 
services including qualification requirements for mental health 
providers; incident to services; reasonable and necessary services; 
reasonable expectation of improvement; general principles of 
medical record documentation; documentation guidelines for 
evaluation and management (E/M) services involving a general 
psychiatric examination or the single system psychiatric 
examination; and documentation guidelines for psychiatric 
diagnostic or evaluative interview procedures, psychiatric 
therapeutic procedures, central nervous system assessment, and 
health and behavior assessment.8 
CMS instructed carriers to include the memorandum in their next 
bulletin to providers and to post it on their Web sites or bulletin boards. 
To bill Medicare for mental health services, practitioners must be 
qualified to perform the services in the States in which they render 
services. Medicare permits the following practitioners to bill Medicare 
independently for mental health services, as long as the services are 
included in their States scopes of practice: 
o physicians (including psychiatrists),9 
o psychologists,10 
o licensed clinical social workers,11 
6 Section 1842 of the Act authorizes CMS to contract with private companies, called 
carriers, to process and pay physician and nonphysician practitioner Part B claims within 
a given service area, which usually follows State lines. 
7 CMS, Transmittal AB-03-037, Change Request 2520, Provider Education Article: 
Medicare Payments for Part B Mental Health Services, March 28, 2003. 
8 Ibid. 
9 42 CFR  410.20. 
10 42 CFR  410.71. 
11 42 CFR  410.73. 
OEI-09-04-00220  MEDICARE PAYMENTS FOR 2003 PART B MENTAL HEALTH SERVICES  3  II NN TT RR OO DD UU CC TT II OO NN
o	 nurse practitioners,12 
o	 clinical nurse specialists,13 and 
o	 physician assistants.14 
Incident to Rule 
Medicare allows physicians to bill for mental health services performed 
by their staffs and furnished to patients if the services are rendered 
incident to the physicians professional services.15 These services may 
be performed by auxiliary personnel if the services are: 
o	 furnished in a noninstitutional setting to noninstitiutional patients; 
o	 an integral, though incidental, part of the service of a physician (or 
other practitioner) in the course of diagnosis or treatment of an 
injury or illness; 
o	 commonly furnished without charge or included in the bill of a 
physician (or other practitioner); 
o	 of a type that are commonly furnished in the office or clinic of a 
physician (or other practitioner); and 
o	 furnished under the direct supervision of the physician (or other 
practitioner). The physician (or other practitioner) directly 
supervising the auxiliary personnel need not be the same physician 
(or other practitioner) upon whose professional service the incident 
to service is based. 
Outpatient Mental Health Services and Psychiatric Disorders 
Outpatient mental health services commonly rendered16 to Medicare 
beneficiaries include: 
o	 psychotherapy:  treatment for mental illness and behavioral 
disturbances in which the clinician establishes a professional 
contract with the patient and, through definitive therapeutic 
communication, attempts to alleviate emotional disturbances, 
12 42 CFR  410.75. 

13 42 CFR  410.76. 

14 42 CFR  410.74. 

15 Section 1861(s)(2)(A) of the Act; 42 CFR  410.26. 

16 Based on OIG analysis of a 1-percent sample of Medicare claims for 2003. 

OEI-09-04-00220  MEDICARE PAYMENTS FOR 2003 PART B MENTAL HEALTH SERVICES  4  IIII NNNN TTTT RRRR OOOO DDDD UUUU CCCC TTTT IIII OOOO NNNN
reverse or change maladaptive patterns of behavior, and encourage 
personality growth and development;17 
o	 psychiatric pharmacologic management: including prescription, 
use, and review of medication with no more than minimal medical 
psychotherapy;18 and 
o	 E&M services: office visits, hospital visits, and consultations that 
typically involve at least one of three key componentshistory, 
physical examination, and medical decisionmaking. E&M services 
can vary based on these three key components, and reimbursement 
is based on one of five levels.19 (See Appendix A for median 
reimbursements for the various E&M services and all other services 
that we reviewed.) 
Psychiatric disorders that occur most frequently for Medicare 
beneficiaries20 include: 
o	 affective psychoses (e.g., major depressive disorder and bipolar 
affective disorder), 
o	 senile psychotic conditions, 
o	 schizophrenic disorders, and 
o	 neurotic disorders (e.g., neurotic depression and adjustment 
reaction). 
These disorders are described in more detail in AMAs International 
Classification of Diseases, 9th Revision (ICD-9) and the American 
Psychiatric Associations Diagnostic Statistical Manual, Third 
Edition  Revised (DSM-III-R). 
Previous Office of Inspector General Work 
Since 1996, the Office of Inspector General (OIG) has issued several 
audits and evaluation reports concerning Medicare mental health 
services. Most recently, in 2001, OIG issued Medicare Part B 
Payments for Mental Health Services (OEI-03-99-00130). Based on a 
medical review of mental health services rendered in 1998, OIG 
reported that approximately 31 percent of the claims were paid 
17 AMA, Current Procedural Terminology, Professional Edition, 2003, p. 353. 

18 Ibid, p. 355. 

19 Ibid, p. 5. 

20 Based on OIG analysis of a 1-percent sample of Medicare claims for 2003. 

OEI-09-04-00220  MEDICARE PAYMENTS FOR 2003 PART B MENTAL HEALTH SERVICES 	 5  III NNN TTT RRR OOO DDD UUU CCC TTT III OOO NNN
inappropriately, including 23 percent that were not medically necessary. 
Medicare allowed $185 million for these inappropriate outpatient 
mental health services. OIG recommended that CMS target certain 
mental health services for prepayment and postpayment review, 
promote provider awareness of requirements for Part B mental health 
services, and work with carriers and mental health professionals to 
develop a list of psychological assessments that can be billed correctly 
under CPT code 96100. 
In response to the 2001 report, CMS issued a Program Memorandum 
(mentioned previously on page 3 of this report) in 2003 to assist carriers 
in informing the provider community about requirements for payment 
of Part B mental health services.21 
Other reports have focused on mental health services rendered in 
institutions. (See Appendix B for a listing and summary of other OIG 
reports.) 
Companion Report 
This is the second of two reports on Medicare Part B mental health 
services rendered in 2003. The first report, issued in October 2006, 
determined the extent to which Medicare carriers consistently calculate 
beneficiary copayments for mental health services and correctly 
calculate copayments for services rendered to beneficiaries diagnosed 
with Alzheimers disease or related disorders (Carrier Determination of 
Copayments for Medicare Mental Health Services (OEI-09-04-00221)). 
METHODOLOGY 
Our methodology consisted of a medical necessity and coding review 
of a random sample of Part B mental health services rendered in 
2003 and structured interviews of the billing practitioners for the 
sampled services. 
We conducted a medical review of a stratified random sample of 
452 mental health services for 422 billing practitioners rendered 
during calendar year 2003, the most recent full year of Medicare 
claims data available at the time of our review. We requested by mail 
complete medical records from each billing practitioner of the sampled 
21 CMS, Transmittal AB-03-037, Change Request 2520, Provider Education Article: 
Medicare Payments for Part B Mental Health Services, March 28, 2003, p. 1. 
OEI-09-04-00220  MEDICARE PAYMENTS FOR 2003 PART B MENTAL HEALTH SERVICES  6  I N T R O D U C T I O N  
mental health services.  We contacted each billing practitioner in our 
sample either by mail or by telephone.  The response rate was  
99 percent. 
We contracted with three licensed psychiatrists and two certified 
professional coders to conduct a medical record review using a 
protocol OIG developed in collaboration with the reviewers. The 
psychiatrists reviewed the medical records to determine whether the 
services were medically necessary.  Certified professional coders 
determined the appropriate CPT codes for the sampled services based 
on the medical record documentation. 
We attempted to interview by telephone each of the 422 billing 
practitioners in our sample.  We used a standardized interview 
instrument to determine whether the billing practitioners (1) rendered 
the sampled services personally or (2) billed for the services incident to 
their professional services.  We interviewed 372 of the 422 billing 
practitioners for an 88-percent response rate. 
See Appendix C for a more detailed explanation of the methodology and 
Appendix D for details on the sampling plan. 
Standards 
This study was conducted in accordance with the Quality Standards for 
Inspections issued by the Presidents Council on Integrity and Efficiency 
and the Executive Council on Integrity and Efficiency. 
  OEI-09-04-00220  MEDICARE PAYMENTS FOR 2003 PART B MENTAL HEALTH SERVICES  7    F I N D I N G  

Medicare allowed approximately 
Forty-seven percent of the mental health services 
$2.14 billion in 2003 for Part B mental 
allowed by Medicare in 2003 did not meet 
health services.  Forty-seven percent of 
program requirements, resulting in  these services did not meet Medicare 
approximately $718 million in improper payments    requirements. (Confidence intervals 
for all statistics are in Appendix E.) 
As a result, Medicare allowed approximately $718 million in improper 
payments in 2003 for mental health services.  Table 1 groups the 
improperly paid services in our sample by type of error and gives 
statistical projections of these errors to the population. 
Table 1:  Improperly Paid Medicare Part B Mental Health Services2003 
Sample  Projected 
Allowed  Allowed 
Type of Error  Services  Services 
Amount  Amount 
Miscoded  140  $4,998.38  26%  $245 million 
Undocumented  83  $5,813.00  19%  $356 million 
Medically Unnecessary  24  $2,037.24  4%  $106 million 
Incident to Violations 16  $1,350.23  4%  $72 million* 
(Overlapping Errors)  (29)  ($1,175.68)  (5%)  ($62 million*) 
Total  234  $13,023.17  47%**  $718 million** 
* The confidence intervals for these estimates have at least 50-percent relative precision. 

**Numbers do not add due to rounding. 

Source:  OIG analysis of medical review results, 2006.

Miscoded.  In 2003, Medicare allowed approximately $701 million for 
Part B mental health services that were billed with codes that did not 
accurately reflect the services provided.  If these services had been 
coded properly, Medicare would have allowed only $456 million, yielding 
an overpayment of $245 million for miscoded services. 
Of the 140 miscoded services within our sample, 133 were upcoded, 
6 were downcoded, and 1 was miscoded with no effect on payment.  
(See Table 2 on the next page.)  Upcoded services are billed at a level 
higher than the actual level of the service performed. For example, a 
20- to 30-minute individual psychotherapy service billed as a  
45- to 50-minute service is an upcoded service. Conversely, a 
downcoded service is billed at a lower level than the actual level of the 
service performed. 
  OEI-09-04-00220  MEDICARE PAYMENTS FOR 2003 PART B MENTAL HEALTH SERVICES  8  F I N D I N G

Table 2: Miscoded Services in the Sample 
Miscoded 
Service Type (as billed)  Upcoded  Downcoded  Total 
(No effect on payment) 
Individual Psychotherapy  73  2  0  75 
E&M Services  58  1  0  59 
Psychiatric Diagnostic Interview 
2  0  1  3 
Examinations 
Medication Management  0  3  0  3 
    Total  133  6  1  140 
Source:  OIG medical review results, 2006. 
Almost all miscoded individual psychotherapy claims lacked 
documentation to justify the time billed.  Individual psychotherapy can 
be billed as one of three time periods:  20 to 30 minutes, 45 to 50 
minutes, or 75 to 80 minutes.  Because reimbursement of psychotherapy 
services is based on face-to-face time spent with the patient, 
practitioners are required to document in the medical record the time 
spent with the patient.22  However, in the majority of the records for 
miscoded services, no time was documented.  As a result, our reviewers 
determined that the services should have been billed at the lowest 
possible time period.  For some practitioners who claimed to have 
furnished E&M services in conjunction with psychotherapy, our 
reviewers found no evidence for those E&M services on the same dates 
of service. Therefore, the practitioners should have used codes for 
services consisting solely of psychotherapy.  For other miscoded 
psychotherapy services, reviewers found that the actual services were 
not psychotherapy but totally different services, such as E&M services, 
medication management,23 psychological evaluation, and group 
psychotherapy.  
22 Section 1833(e) requires that providers furnish such information as may be necessary to 
determine the amounts due to receive Medicare payment.   
23 Medication management may be billed under one of two codes:  90862 (psychiatric 
pharmacologic management) or M0064 (brief office visit for the sole purpose of 
monitoring or changing drug prescriptions used in the treatment of mental, 
psychoneurotic, and personality disorders). 
  OEI-09-04-00220  MEDICARE PAYMENTS FOR 2003 PART B MENTAL HEALTH SERVICES  9  F I N D I N G

Table 3: Miscoded E&M Services in the Sample 
Percentage 
Number of Miscoded 
of Miscoded 
Type of Error  Services Billed as 
Services Billed 
E&M in Sample 
as E&M Services 
Downcoded  1  2% 
Not an E&M Service  1  2% 
Upcoded  58  98% 
By 1 level  26  44% 
By 2 levels  19  32% 
By 3 levels  1  2% 
Established patient, not new patient  
or 
       Subsequent visit, not initial visit   5  8% 
Not an E&M Service  5  8% 
Wrong place of service  2  3% 
    Total miscoded E&M services  59  100% 
Source:  OIG medical review results, 2006. 
Most of the miscoded E&M services in our sample were billed at a 
higher level than the medical record documentation supported.24 (See 
Table 3.) For example, a practitioner billed for an E&M service that 
indicated that the decisionmaking was of moderate complexity; 
however, reviewers found the documentation supported decisionmaking 
that was straightforward or of low complexity.25  Reviewers found that 
some services were billed incorrectly because the services were rendered 
during a subsequent visit rather than an initial visit.  Reimbursement 
rates for subsequent E&M visits are less than those for initial visits.  
Other miscoded E&M services should have been billed as psychiatric 
diagnostic interview examinations, consultations, or psychotherapy, 
24 E&M services levels vary based on (1) the extent of the patient history obtained,  
(2) the extent of the examination performed, and (3) the complexity of the medical 
decisionmaking.  (AMA, Current Procedural Terminology, Professional Edition, 2003,  
pp. 57.) 
25 The complexity of medical decisionmaking for E&Ms can be billed at one of four levels: 
straightforward, low, moderate, or high.  (AMA, Current Procedural Terminology, 
Professional Edition, 2003, p. 7.) 
  OEI-09-04-00220  MEDICARE PAYMENTS FOR 2003 PART B MENTAL HEALTH SERVICES  10  FFF III NNN DDD III NNN GGG
which are reimbursed at a lower rate. In addition, some E&M services 
were miscoded because the place of service (e.g., inpatient) did not 
match the place of service indicated in the medical record (e.g., 
outpatient). 
Three psychiatric diagnostic interview examinations in our sample were 
miscoded. These examinations are history, mental status, and a 
disposition, and may include communication with family or other 
sources, ordering and medical interpretation of laboratory or other 
medical diagnostic studies.26 Documentation for these miscoded 
services supported a brief medication management visit, indicated that 
the practitioner rendered psychotherapy in the home, or did not show 
evidence that the provider used interactive psychiatric diagnostic 
interview techniques (although the practitioner coded the interview as 
interactive). Two of these services should have been reimbursed at a 
lower rate, and the rate for the third would not have changed. 
Three medication management services in our sample were downcoded. 
Documentation for two of these services supported an E&M code, and 
documentation for the third indicated that the practitioner furnished 
more than minimal psychotherapy during the visit and should have 
billed under a psychotherapy code. These services should have been 
reimbursed at a higher rate. 
Undocumented. Medicare allowed approximately $356 million for 
undocumented services. For more than half of these services, we 
received no documentation for the sampled dates of service. This 
includes services for which we received no medical records whatsoever 
from the billing practitioner. For the other undocumented services, we 
received inadequate documentation to determine the medical necessity 
of the services, or the medical records indicated that a practitioner saw 
the patient on the date of service billed; however, the documentation 
was insufficient to determine a billable code. 
Although some cases of missing documentation may be attributable to 
billing errors (e.g., putting the wrong date on the claim form), others 
may represent services not rendered. Claims for services that lack 
sufficient documentation to show that care was provided do not meet 
the requirements of section 1833(e) of the Act. 
26 AMA, Current Procedural Terminology, Professional Edition, 2003, p. 353. 
OEI-09-04-00220  MEDICARE PAYMENTS FOR 2003 PART B MENTAL HEALTH SERVICES  11  F I N D I N G  
Medically unnecessary. Medical reviewers determined that these 
services, which represent $106 million allowed by Medicare, were not 
medically necessary because: 
o	 The psychotherapy session was too long. 
o	 The patient could not benefit from the psychotherapy. 
o	 The sessions, such as number of sessions per week, were too 
frequent. 
o	 No clinical problem was documented in the record. 
o	 The patient cancelled the session. 
Incident to violations.  Ten of the sixteen incident to services that were 
billed in error were furnished in a skilled nursing facility or a hospital 
and therefore violated Federal regulations.27  The remaining six services 
were furnished without the level of supervision required by 
regulations,28 which require that incident to services be furnished 
under direct supervision.29  The billing practitioners reported to us that 
these services were furnished under general supervision.30  The 
personnel who rendered these services included: 
o	 physician assistant, 
o	 nurse practitioner, 
o	 licensed clinical social worker, 
o	 licensed professional counselor,  
o	 licensed psychiatric assistant, or  
o	 psychology intern. 
27 Pursuant to 42 CFR  410.26(b)(1), incident to services must be furnished in a 
noninstitutional setting to noninstitutional patients.  Pursuant to 42 CFR  410.26(a)(5), 
noninstitutional settings include all settings other than a hospital or skilled nursing 
facility. 
28 42 CFR  410.26(b)(5). 
29 Pursuant to 42 CFR  410.26(a)(2), direct supervision means the level of supervision 
defined in 42 CFR  410.32(b)(3)(ii), which provides that [d]irect supervision in the office 
setting means the physician must be present in the office suite and immediately available 
to furnish assistance and direction throughout the performance of the procedure.  It does 
not mean that the physician must be present in the room when the procedure is 
performed.   
30 General supervision means the procedure is furnished under the physicians overall 
direction and control, but the physicians presence is not required during the performance 
of the procedure (42 CFR  410.32(b)(3)(i)). 
  OEI-09-04-00220  MEDICARE PAYMENTS FOR 2003 PART B MENTAL HEALTH SERVICES  12   RRR EEE CCC OOO MMM MMM EEE NNN DDD AAA TTT III OOO NNN SS    
 
Almost half of the Medicare Part B mental health services allowed in 
2003 did not meet program requirements, resulting in an estimated 
$718 million in improper payments.  Incorrect coding and poor 
documentation make Medicare and its beneficiaries vulnerable to 
overpayments for Part B mental health services, accounting for more 
than $600 million of the $718 million paid improperly in 2003.  The 
remainder of improper payments was for services that were not 
medically necessary or violated the incident to rule. 
The 2003 CMS Program Memorandum31 on Part B mental health 
services referenced other CMS guidance documents on requirements for 
medical record documentation and incident to services.  However, it 
did not provide specific guidelines for documentation of face-to-face time 
with patients or the requirement that incident to services be provided 
under direct supervision of a physician and only billed for patients in 
noninstitutional settings.32  Therefore, we recommend that CMS revise, 
expand, and reissue its 2003 Program Memorandum on mental health 
services to include: 
1.  an increased emphasis that CPT and ICD-9-CM codes reported 
on health insurance claim forms should be supported by 
documentation in the medical record,33 including the requirement 
that documentation must be adequate to determine the Medicare 
amounts due (e.g., documentation for psychotherapy services 
should include the amount of face-to-face time spent with the 
patient); 
2.  an emphasis that adequate documentation in the medical record 
must be present when billing for psychotherapy services furnished 
with E&M services; 
3.  an increased emphasis that medical record documentation must 
support the level of E&M code billed; and 
4.  an increased emphasis on the requirements for incident to 
services, especially the (1) supervision requirements and  
 
31 CMS, Transmittal AB-03-037, Change Request 2520, Provider Education Article:  
Medicare Payments for Part B Mental Health Services, March 28, 2003. 
32 Section 1861(s)(2)(A) of the Act. 
33 CMS, Transmittal AB-03-037, Change Request 2520, Provider Education Article:  
Medicare Payments for Part B Mental Health Services, March 28, 2003. 
  OEI-09-04-00220  MEDICARE PAYMENTS FOR 2003 PART B MENTAL HEALTH SERVICES   13  R E C O M M E N D A T I O N  
(2) the requirement that incident to can be billed only for 
patients in noninstitutional settings.34 
In addition to this recommendation, we have forwarded information 
on the miscoded, undocumented, and medically unnecessary services 
identified in our sample to CMS for appropriate action. 
AGENCY COMMENTS 
In its comments on the draft report, CMS concurred with our 
recommendation.  CMS noted that significant information on medical 
documentation requirements and incident to requirements is available 
on the CMS Web site and from its contractors.  Nevertheless, CMS will 
consolidate this information for providers of mental health services. 
For the full text of CMSs comments, see Appendix F. 
34 Section 1861(s)(2)(A) of the Act. 
  OEI-09-04-00220  MEDICARE PAYMENTS FOR 2003 PART B MENTAL HEALTH SERVICES  14     A P P E N D I X ~ A  
CPT Codes Included in the Medical Review 
Includes Codes for the Sampled Claims and Codes Used to Correct the Miscoded Claims 
2003 Median 
Medicare 
CPT Code  Procedure 
Allowed 
Amount 
Psychiatry 
90801  Psychiatric diagnostic interview exam  $140.13 
Interactive psychiatric diagnostic exam, using play equipment/play 
90802  devices/language interpreter/other  $88.36 
90804  Individual psychotherapy; office, 2030 minutes  $54.86 
Individual psychotherapy; office, 2030 minutes with Evaluation & 
90805  Management (E&M)  $68.25 
90806  Individual psychotherapy; office, 4550 minutes  $89.69 
90807  Individual psychotherapy; office, 4550 minutes with E&M  $105.04 
90808  Individual psychotherapy; office, 7580 minutes  $120.00 
90809  Individual psychotherapy; office, 7580 minutes with E&M  $141.79 
90816  Individual psychotherapy; hospital, 2030 minutes  $62.93 
90817  Individual psychotherapy; hospital, 2030 minutes with E&M  $70.00 
90818  Individual psychotherapy; hospital, 4550 minutes  $95.17 
90819  Individual psychotherapy; hospital, 4550 minutes with E&M  $103.65 
Family psychotherapy (conjoint psychotherapy) (with patient 
90847  present)  $108.48 
90853  Group psychotherapy (other than multiple-family group)  $29.14 
90862  Psychiatric medication management with minimal psychotherapy  $48.38 
90870  Electroconvulsive therapy (with monitoring); single seizure  $97.86 
90899  Unlisted psychiatric service/procedure  $67.10 
  OEI-09-04-00220  MEDICARE PAYMENTS FOR 2003 PART B MENTAL HEALTH SERVICES  15  A P P E N D I X   ~   A  

Central Nervous System Assessments/Tests 
96100  Psychological testing, with interpretation and report, per hour  $81.52 
Neurobehavioral status exam, with interpretation and report,  
96115  per hour  $74.04 
Evaluation and Management Services 
Office/outpatient visit, new patient, three key components:  
detailed history, detailed exam, medical decisionmaking of low 
99203  complexity  $88.97 
Office/outpatient visit, new patient, three key components:  
comprehensive history, comprehensive exam, medical 
99205  decisionmaking of high complexity  $163.64 
Office/outpatient visit, established patient, not requiring physician 
99211  presence, typically 5 minutes  $19.72 
Office/outpatient visit, established patient, which requires at least 
two of these three key components:  problem-focused history, 
99212  problem-focused exam, straightforward medical decisionmaking  $34.60 
Office/outpatient visit, established patient, which requires at least 
two of these three key components:  expanded problem history, 
99213  expanded problem exam, medical decisionmaking of low complexity  $48.81 
Office/outpatient visit, established patient, which requires at least 
two of these three key components:  detailed history, detailed
99214  exam, medical decisionmaking of moderate complexity  $77.16 
Office/outpatient visit, established patient, which requires at least 
two of these three key components:  comprehensive history, 
99215  comprehensive exam, medical decisionmaking of high complexity  $113.37 
Initial hospital care, which requires these three key components:  
detailed or comprehensive history, detailed or comprehensive 
exam, medical decisionmaking that is straightforward or of low 
99221  complexity  $63.12 
Initial hospital care, which requires these three key components:  
comprehensive history, comprehensive exam, medical 
99222  decisionmaking of moderate complexity  $105.62 
Initial hospital care, which requires these three key components:  
comprehensive history, comprehensive exam, medical 
99223  decisionmaking of high complexity  $148.08 
  OEI-09-04-00220  MEDICARE PAYMENTS FOR 2003 PART B MENTAL HEALTH SERVICES  16  A P P E  N  D   I X    ~   A  
99231 
Subsequent hospital care, which requires at least two of these 
three key components:  problem-focused interval history,
problem-focused exam, medical decisionmaking that is 
straightforward or of low complexity  $31.95 
Subsequent hospital care, which requires at least two of these 
three key components:  expanded problem-focused interval history, 
expanded problem exam, medical decisionmaking of moderate 
99232  complexity  $53.21 
Subsequent hospital care, which requires at least two of these 
three key components:  detailed interval history, detailed exam, 
99233  medical decisionmaking of high complexity  $77.47 
99238  Hospital discharge day management; up to 30 minutes  $66.71 
99239  Hospital discharge day management; longer than 30 minutes  $91.19 
Office consultation, which requires these three key components:  
detailed history, detailed exam, medical decisionmaking of low 
99243  complexity  $112.59 
Office consultation, which requires these three key components:  
comprehensive history, comprehensive exam, medical 
99244  decisionmaking of moderate complexity  $160.85 
Office consultation, which requires these three key components:  
comprehensive history, comprehensive exam, medical 
99245  decisionmaking of high complexity  $209.11 
Initial inpatient consultation, which requires these three key 
components: expanded problem-focused history, expanded 
99252  problem-focused exam, straightforward medical decisionmaking  $ 68.29 
Initial inpatient consultation, which requires these three key 
components:  detailed history, detailed exam, medical 
99253  decisionmaking of low complexity  $ 93.65 
Initial inpatient consultation, which requires these three key 
components: comprehensive history, comprehensive exam, medical 
99254  decisionmaking of moderate complexity  $134.74 
Initial inpatient consultation, which requires these three key 
components: comprehensive history, comprehensive exam, medical 
99255  decisionmaking of high complexity  $188.52 
Follow-up inpatient consultation, which requires at least two of 
these three key components:  problem-focused interval history, 
problem-focused exam, medical decisionmaking that is 
99261  straightforward or of low complexity  $21.49 
  OEI-09-04-00220  MEDICARE PAYMENTS FOR 2003 PART B MENTAL HEALTH SERVICES  17  A P P E N D I X   ~   A  

Follow-up inpatient consultation, which requires at least two of 
these three key components:  expanded problem-focused interval 
history, expanded problem-focused exam, medical decisionmaking 
99262  of moderate complexity  $44.10 
Follow-up inpatient consultation, which requires at least two of 
these three key components:  detailed interval history, detailed 
99263  exam, medical decisionmaking of high complexity  $66.29 
Emergency department visit, which requires these three key 
components: expanded problem-focused history, expanded 
problem-focused exam, medical decisionmaking of moderate 
99283  complexity  $57.84 
Emergency department visit, which requires these three key 
components:  detailed history, detailed exam, medical 
99284  decisionmaking of moderate complexity  $91.10 
Emergency department visit, which requires these three key 
components: comprehensive history, comprehensive exam, medical 
99285  decisionmaking of high complexity  $143.60 
Nursing facility care, which requires these three key components:  
detailed interval history, comprehensive exam, medical 
99302  decisionmaking of moderate to high complexity  $83.97 
Nursing facility care, which requires these three key components:  
comprehensive history, comprehensive exam, medical 
99303  decisionmaking of moderate to high complexity  $103.80 
Subsequent nursing facility care, which requires at least two of 
these three key components:  problem-focused interval history, 
problem-focused exam, medical decisionmaking that is 
99311  straightforward or of low complexity  $32.67 
Subsequent nursing facility care, which requires at least two of 
these three key components:  expanded problem-focused interval 
history, expanded problem-focused exam, medical decisionmaking 
99312  of moderate complexity  $52.22 
Subsequent nursing facility care, which requires two of these three 
key components:  detailed interval history, detailed exam, medical 
99313  decisionmaking of moderate to high complexity  $73.77 
Rest home visit, established patient, which requires at least two of 
these three key components:  expanded problem-focused interval 
history; expanded problem-focused exam; medical decisionmaking 
99332  of moderate complexity  $50.27 
Brief Medication Management 
M0064  Visit for drug monitoring  $23.12 
Source:  OIG analysis of 2003 Medicare claims, 2006. 
  OEI-09-04-00220  MEDICARE PAYMENTS FOR 2003 PART B MENTAL HEALTH SERVICES  18     A P P E N D I X ~ B  

Office of Inspector General Reports 
on Mental Health Services 
o	 In 1996, the Office of Inspector General (OIG) issued Mental 
Health Services in Nursing Facilities (OEI-02-91-00860), which 
reviewed Part B mental health services in nursing homes.  OIG 
found that approximately 32 percent of services were unnecessary, 
and another 16 percent were questionable.   
o	 As a followup to the 1996 report, OIG issued Medicare Payments 
for Psychiatric Services in Nursing Homes: A Follow-up 
(OEI-02-99-00140) in January 2001.  As stated in the follow-up 
report, approximately 27 percent of the services were not medically 
necessary, 9 percent were not documented, and 3 percent were 
medically questionable. 
o	 In 1998, OIG issued Five-State Review of Partial Hospitalization 
Programs at Community Mental Health Centers (A-04-98-02145).  
Based on this audit, approximately 92 percent of reviewed claims 
were not allowable or were questionable.  Furthermore, many 
beneficiaries who received services had no history of mental illness. 
Other beneficiaries suffered from mental conditions, such as 
dementia, that would have prevented them from benefiting from 
the intensive program. Additionally, some of the treatment 
sessions involved only recreational activities. 
o	 In 2000, OIG issued Ten-State Review of Outpatient Psychiatric 
Services at Acute Care Hospitals (A-01-99-00507).  Based on this 
audit, approximately 58 percent of the Medicare payments for 
psychiatric services rendered in acute care hospitals in the  
10 States were not allowable or were unsupported.  The hospitals 
claims were documented inadequately, and services were not 
reasonable or necessary.  In addition, unlicensed personnel 
rendered some services. 
o	 Also in 2000, OIG issued Review of Outpatient Psychiatric Services 
at Psychiatric Hospitals for Calendar Year 1998 (A-01-99-00530).  
This audit identified that approximately 42 percent of the 
outpatient and partial hospitalization services in specialty 
psychiatric hospitals in 10 States were paid inappropriately.  
  OEI-09-04-00220  MEDICARE PAYMENTS FOR 2003 PART B MENTAL HEALTH SERVICES  19     A P P E N D I X ~ C  

Methodology 
Sample Selection 
We conducted a medical review of a stratified random sample of mental 
health services rendered during calendar year 2003, the most recent full 
year of Medicare claims data available to us at the time of our review. 
We selected our sample from the Part B Medicare National Claims 
History.  (See Appendix D for details.)  To compile this sample, we 
selected individual line item services that appeared in the National 
Claims History.  We limited our universe to mental health services, 
which we defined as: 
o	 psychiatric procedures (according to the American Medical 
Associations (AMA) Current Procedural Terminology, 2003); 
o	 central nervous system test procedures supported by a psychiatric 
disorder diagnosis; or 
o	 evaluation and management (E&M) services supported by a 
psychiatric disorder diagnosis. 
For sampling purposes, we defined service as the unique combination 
of: 
o	 Medicare beneficiary health identification claim number, 
o	 unique provider identification number, 
o	 date of service, and 
o	 procedure code.  
Some of these services contained multiple units.  In these cases, we 
reviewed each individual unit.  Therefore, our unit of analysis for this 
medical review is service-unit, which we defined as the individual unit 
associated with a single line-item claim.  For example, a single line-item 
claim for psychotherapy may consist of two units.  For purposes of our 
medical review, this line-item claim would result in two service-units in 
our sampling frame. 
The sampling frame consisted of approximately 29.2 million 
service-units rendered in 2003, representing approximately $2.1 billion 
allowed by Medicare.  To improve our estimations of improper 
payments, we stratified the population by allowed amount and then 
selected 425 services. These services represented 455 service-units.   
In our sample, 3 of the 425 providers were under investigation and were 
  OEI-09-04-00220  MEDICARE PAYMENTS FOR 2003 PART B MENTAL HEALTH SERVICES  20  A P P E N D I X ~ C  
excluded from this review.  Therefore, our final sample consisted of  
422 services, 422 practitioners, and 452 service-units. To simplify the 
presentation of our findings, we refer to service-units as services.  The 
table below defines the strata and corresponding data for the sample 
design. 
Basic Sample Design* 
Population  Sample 
Stratum  Medicare Allowed Amount 
(Line-Item Services)  (Line-Item Services) 
1  Less than or equal to $65.00  14,265,228  125 
2  $65.01$125.00  12,768,731  225 
3  More than $125.00  2,202,167  75 
    Total  29,236,126  425 
Source:  Office of Inspector General, 2006. 
*See Appendix D for more details. 
Medical Record Request  
We requested by mail complete medical records from each billing 
practitioner of the sampled mental health services.  To ensure that we 
obtained adequate records to determine the medical necessity of the 
services, we requested records that included services rendered 
6 months prior to the sampled date of service through the date of the 
request.35  We allowed the billing practitioners 2 weeks from the date of 
the initial request to send us the records.  We made as many as two 
additional written attempts followed by two telephone calls to obtain 
the records.  For some billing practitioners, we requested the records 
three times by mail and twice by telephone. 
Despite our repeated attempts to obtain medical records, 6 of the 422 
billing practitioners did not produce the requested documents.  We 
categorized the sample units associated with these six billing 
practitioners as undocumented because we were able to contact the 
billing practitioner, but the practitioner did not supply the medical 
records. 
35 The record request occurred from December 2004 through May 2005.   
  OEI-09-04-00220  MEDICARE PAYMENTS FOR 2003 PART B MENTAL HEALTH SERVICES  21  A P P E N D I X ~ C  
Medical Review 
We contracted with three licensed psychiatrists and two certified 
professional coders to conduct a medical record review using a protocol 
developed in collaboration with the reviewers. The psychiatrists 
reviewed the medical records to determine whether the service-units 
were medically necessary. The psychiatrists criteria included, but were 
not limited to, Medicares coverage criteria (e.g., section 1862(a)(1)(A) of 
the Act), the American Psychiatric Associations Practice Guidelines, 
and their own professional judgment.  Certified professional coders 
determined the appropriate Common Procedural Terminology (CPT) 
codes for the sampled services based on the medical record 
documentation provided.  The professional coders criteria included the 
definitions in AMAs CPT for 2003.  The reviewers recorded their 
determinations on standardized medical review instruments. 
Test sample review. To ensure uniformity among the reviewers and to 
test our medical review instrument, we conducted a preliminary review 
of 117 service-units, which we randomly selected using the same criteria 
we used for the final sample.  (See Sample Selection on page 20.)  We 
received records for 48 service-units.  Both coders and psychiatrists 
reviewed all 48 service-units. We analyzed the results of the test review 
and presented them to the reviewers.  Reviewers discussed and resolved 
any inconsistencies in the results and offered suggestions for revisions 
of the medical review instrument. The 117 test sample units were not 
included in the review results and are not included in this report. 
Final sample review.  Reviewers used a standardized medical review 
instrument to analyze the medical records.  One psychiatrist and one 
coder reviewed each medical record.  The medical records for the final 
sample were assigned randomly to the reviewers, and we analyzed the 
completed medical review instruments to determine uniformity among 
the reviewers. 
Structured Interviews 
We attempted to interview by telephone each of the 422 billing 
practitioners in our sample.  We used a standardized interview 
instrument to determine whether the billing practitioners (1) rendered 
the sampled services personally or (2) billed for the services incident to 
their professional services.  We asked practitioners who personally 
furnished the services they billed incident to and what level of 
  OEI-09-04-00220  MEDICARE PAYMENTS FOR 2003 PART B MENTAL HEALTH SERVICES  22  A P P E N D I X ~ C  
supervision they provided to the ancillary staff (e.g., general, direct,  
or personal).36 
We interviewed by telephone 372 of the 422 practitioners in our 
sample, resulting in an 88-percent response rate.  Two practitioners 
refused to be interviewed, 1 was deceased at the time we requested an 
interview, and the remaining 47 could not be reached for interviews 
after a minimum of three attempts. For purposes of reporting an 
error rate related to incident to services, we assumed that the 
practitioners we did not interview rendered the sampled services 
personally or complied with the incident to rules regarding the 
direct supervision requirement. 
36 See 42 CFR  410.32(b)(3) for definitions of the three levels of supervision. 
  OEI-09-04-00220  MEDICARE PAYMENTS FOR 2003 PART B MENTAL HEALTH SERVICES  23     A P P E N D I X ~ D  
Medical Review Sample Flowchart 
The sampling plan OIG used to select a stratified random sample of Medicare Part B mental health services in 2003 
Sample frame 
Services = 29.2 million 
Allowed = $2.1 billion 
Stratified random sample: 
Psychiatric procedures  Minus 3 providers 
CPT codes = 90801-90899  425 total services  under investigation 
& M0064  Total sampled 
Services = 19.2 million  Allowed Amt.     Sampled  services =  
Allowed = $1.4 billion  422 
66.7% of services  <=$65.00 ................125 
$65.01-$125.00.........225 
All 2003 Part B  >$125.00..................75 
Services* =  Central nervous system 
Total number of 
1.25 billion  tests & assessments 
service-units 
with psychiatric diagnosis 
represented by the 
CPT codes = 96100-96117 
Allowed = 
sampled services 
ICD-9 = 290.xx-319.xx 
$81.8 billion  Total service-units = 
Services = 198,765 
452 
0.7% of services 
*For sampling purposes, we 
defined a service as the unique 
E&M services 
combination of: 
with psychiatric diagnosis 
  patient identification 
CPT codes = 99201-99499 &  
number, 
ICD-9 = 290.xx-319.xx 
  physician identification 
Services = 9.8 million 
number, 
Allowed = $642 million 
  date of service, and 
33.6% of services 
Source: OIG analysis of 2003 
  procedure code. 
Medicare claims data, 2 006.  OEI-09-04-00220  MEDICARE PAYMENTS FOR 2003 PART B MENTAL HEALTH SERVICES  24     A P P E N D I X ~ E  
Statistical Confidence Intervals 
Sample Units 
Estimate of 
Sample  Found Not To  95% Confidence 
Statistic  Projection to 
Size  Meet Medicare  Interval 
Universe 
Requirements 
Percentage of services that were 
452  24  4%  2% to 6% 
medically unnecessary 
Amount allowed for medically 
452  24  $106 million  $61.7 to $150 million 
unnecessary services 
Percentage of services that were 
452  140  26%  22% to 30% 
miscoded (net) 
Allowed amount for miscoded 
452  140  $245 million  $205 to $287 million 
services 
Percentage of services that were 
452  83  19%  15% to 23% 
undocumented 
Allowed amount for  
452  83  $356 million  $281 to $431 million 
undocumented services 
Percentage of services that were 
452  234  47%  42% to 53% 
paid improperly 
Allowed amount for all  
452  234  $718 million  $635 to $801 million 
improperly paid services 
Source:  OIG medical review results, 2006. 
  OEI-09-04-00220  MEDICARE PAYMENTS FOR 2003 PART B MENTAL HEALTH SERVICES  25 
    A P P E N D I X ~ F  

Agency Comments 
  OEI-09-04-00220  MEDICARE PAYMENTS FOR 2003 PART B MENTAL HEALTH SERVICES  26 
 A P P E N D I X   ~   F  

  OEI-09-04-00220  MEDICARE PAYMENTS FOR 2003 PART B MENTAL HEALTH SERVICES  27 
   A C K N O W L E D G M E N T S  

This report was prepared under the direction of Paul A. Gottlober, 
Regional Inspector General for Evaluation and Inspections in the San 
Francisco regional office, and Deborah W. Harvey, Assistant Regional 
Inspector General. 
Steven Zerebecki served as the team leader for this study.  Other 
principal Office of Evaluation and Inspections staff from the San 
Francisco office who contributed include Silvia Chin, Robert Gibbons, 
Scott Hutchison, Thomas Purvis, and China Tantameng; and central 
office staff who contributed include Doris Jackson and Tricia Davis. 
We would like to thank our medical review contractor and the 
individual psychiatrists and coders who performed the review, as well 
as the carrier staff who assisted us in obtaining contact information for 
the physicians whose claims were selected for review. 
  OEI-09-04-00220  MEDICARE PAYMENTS FOR 2003 PART B MENTAL HEALTH SERVICES  28