Department of Health and Human Services 

OFFICE OF 

INSPECTOR GENERAL 

IMPROPER PAYMENTS FOR 

EVALUATION AND 

MANAGEMENT SERVICES 

COST MEDICARE BILLIONS 

IN 2010 

Daniel R. Levinson 

Inspector General 

May 2014 

OEI-04-10-00181 
 

EXECUTIVE SUMMARY: IMPROPER PAYMENTS FOR EVALUATION AND 

MANAGEMENT SERVICES COST MEDICARE BILLIONS IN 2010 

OEI-04-10-00181 

WHY WE DID THIS STUDY 

Evaluation and management (E/M) services are visits performed by physicians and nonphysician 

practitioners to assess and manage a beneficiary’s health. Medicare paid $32.3 billion for E/M 

services in 2010, representing nearly 30 percent of Part B payments that year. In 2012, the Office 

of Inspector General (OIG) reported that physicians increased their billing of higher level codes, 

which yield higher payment amounts, for E/M services in all visit types from 2001 to 2010. The 

Centers for Medicare & Medicaid Services (CMS) found that E/M services are 50 percent more 

likely to be paid for in error than other Part B services; most improper payments result from errors 

in coding and from insufficient documentation. 

HOW WE DID THIS STUDY 

We conducted a medical record review of a random sample of Part B claims for E/M services from 

2010, stratifying claims from physicians who consistently billed higher level codes for E/M services 

(i.e., “high-coding” physicians) and claims from other physicians. Certified professional coders 

determined whether the E/M service documented in the medical record for each sampled claim was 

correctly coded and/or sufficiently documented. 

WHAT WE FOUND 

In total, Medicare inappropriately paid $6.7 billion for claims for E/M services in 2010 that were 

incorrectly coded and/or lacking documentation, representing 21 percent of Medicare payments for 

E/M services that year. We found that 42 percent of claims for E/M services in 2010 were 

incorrectly coded, which included both upcoding and downcoding (i.e., billing at levels higher and 

lower than warranted, respectively), and 19 percent were lacking documentation. Additionally, we 

found that claims from high-coding physicians were more likely to be incorrectly coded or 

insufficiently documented than claims from other physicians. 

WHAT WE RECOMMEND 

We recommend that 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 highcoding physicians, and (3) follow up on claims for E/M services that were paid for in error. CMS 

concurred with our first recommendation, did not concur with our second recommendation, and 

partially concurred with our third recommendation 
 

TABLE OF CONTENTS 

Objective......................................................................................................1 

Background..................................................................................................1 

Methodology................................................................................................5 

Findings......................................................................................................11
 

Fifty-five percent of claims for E/M services were incorrectly
 

coded and/or lacking documentation in 2010, resulting in 

$6.7 billion in improper Medicare payments .................................11
 

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 .......................................14 

Conclusion and Recommendations ............................................................16 

Agency Comments and Office of Inspector General Response .....18 

Appendixes ................................................................................................20 

A: Components Used To Determine the Level of an Evaluation 

and Management Service ...............................................................20 

B: Additional Information on Sample Selection and 

Subgrouping...................................................................................23 

C: The Comprehensive Error Rate Testing Program and This
 

Evaluation ......................................................................................27 

D: Sample Sizes, Point Estimates, and Confidence Intervals of 

Claims for Evaluation and Management Services .........................29 

E: Sample Sizes, Point Estimates, Confidence Intervals, and 

Results of Statistical Tests of Claims for Evaluation and 

Management Services, by Stratum ................................................32 

F: Sample Sizes, Point Estimates, Confidence Intervals, and 

Results of Statistical Tests of Claims for Evaluation and 

Management Services, by Subgroups ............................................35 

G: Agency Comments ...................................................................37 

Acknowledgments......................................................................................40 
 

 

 

 

 

 

OBJECTIVE 

To determine the extent to which evaluation and management (E/M) 

services in 2010 were incorrectly coded and/or lacking documentation. 

BACKGROUND 

E/M services are visits covered under Medicare Part B and performed by 

physicians and nonphysician practitioners (hereinafter, collectively 

referred to as physicians) to assess and manage a beneficiary’s health.1 

Medicare paid $32.3 billion for E/M services in 2010, representing nearly 

30 percent of Part B payments that year.2, 3 E/M services are divided into 

broad categories that reflect the type of service, the place of service, and 

the patient’s status. These broad categories of E/M services are known as 

visit types. 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.4, 5 Higher level 

codes within a visit type correspond to increased complexity of the E/M 

service and higher payment rates.6 

In 2012, OIG reported that from 2001 to 2010, physicians increased their 

billing of higher level codes for E/M services in all visit types.7 

Additionally, OIG identified 1,669 physicians who consistently billed for 

the two highest level codes for E/M services in 2010. Moreover, the 

1 Nonphysician practitioners are health care providers (e.g., nurse practitioners, clinical 

nurse specialists, and physician assistants) who practice either in collaboration with a 

physician or under the supervision of a physician. 

2 Office of Inspector General (OIG) analysis of the 2010 National Claims History Part B 

file.
 3 Medicare-allowed amounts are 100 percent of the payment made to a provider (e.g., 

a physician) by both Medicare and the beneficiary. Medicare pays 80 percent of allowed 

charges, and the beneficiary is responsible for the remaining 20 percent.

4 Certain visit types do not have complexity levels. These visit types are hospital 

observation discharge services (99217), standby services (99360), and other E/M services 

(99499).

5 The five character codes and descriptions included in this study are obtained from 

Current Procedural Terminology (CPT®), copyright 2009 by the American Medical 

Association (AMA). CPT is developed by the AMA as a listing of descriptive terms 

and five character identifying codes and modifiers for reporting medical services 

and procedures. Any use of CPT outside of this study should refer to the most 

current version of the Current Procedural Terminology available from AMA. 

Applicable FARS/DFARS apply.

6 Payment rates for E/M services are set forth by the Medicare physician fee schedule. 

Section 1848(a)(1) of the Social Security Act established this fee schedule as the basis for 

Medicare reimbursement for all physician services, including E/M services, beginning in
 

January 1992.

7 OIG, Coding Trends of Medicare Evaluation and Management Services 

(OEI-04-10-00180), May 2012. 

Improper Payments for Evaluation and Management Services Cost Medicare Billions in 2010 (OEI-04-10-00181) 1 
 

 

 

 

 

Centers for Medicare & Medicaid Services (CMS) has reviewed the 

appropriateness of claims for E/M services through the Comprehensive 

Error Rate Testing (CERT) program.8 In its 2011 CERT report, CMS 

found that E/M services made up a large proportion of Part B improper 

payments and were 50 percent more likely to be paid for in error than 

other Part B services.9 Most of these improper payments for E/M services 

were due to incorrect coding and insufficient documentation. 

Coding of E/M Services 

E/M services must be medically reasonable and necessary, in addition to 

meeting the individual requirements of the CPT code that is used on the 

claim.10, 11 According to CMS, “[I]t would not be medically necessary or 

appropriate to bill [for] a higher level of [E/M] service when a lower level 

of service is warranted.”12 Physicians are responsible for ensuring that the 

claims they submit to Medicare accurately reflect the E/M services 

provided and the billing levels corresponding to those services.13 

As defined by CPT, 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 

patient’s presenting problem(s), and time. The first three components are 

key in determining the correct code for the E/M service: 

	 Extent of patient history. Physicians use their clinical judgment and 

the nature of the patient’s presenting problem(s) to determine the depth 

of history needed to complete the service. A patient history can be 

classified into one of four types, ranging from problem focused to 

comprehensive. 

	 Extent of physical examination. Physicians use their clinical judgment 

and the presenting medical problem(s) to determine the type of 

examination needed. There are four types of physical examinations, 

ranging from problem focused to comprehensive. 

	 Complexity of medical decisionmaking. The complexity of medical 

decisionmaking hinges on the number of possible diagnoses or the 

8 As a result of the Improper Payments Information Act (IPIA) of 2002, CMS established 

the CERT program to randomly sample and review claims submitted to Medicare. 

9 CMS, Medicare Fee-for-Services 2011 Improper Payments Report, October 2012, 

pp. 32–33. Accessed at http://www.cms.gov/Research-Statistics-Data-andSystems/Monitoring-Programs/CERT/Downloads/MedicareFFS2011CERTReport.pdf on
 

October 21, 2013.
 10 CMS, Medicare Claims Processing Manual, Pub. 100-04, ch. 12, § 30.6.1.A.
 11 Social Security Act § 1862(a)(1)(A). 

12 CMS, Medicare Claims Processing Manual, Pub. 100-04, ch. 12, § 30.6.1.A.
 13 CMS, Evaluation and Management Services Guide, December 2010, p. 4.
 

Improper Payments for Evaluation and Management Services Cost Medicare Billions in 2010 (OEI-04-10-00181) 2 
 

 

 

 

 

number of options that must be considered; the amount and/or 

complexity of medical records, diagnostic tests, and other information 

that physicians must obtain, review, and analyze; and the risk of 

significant complications, morbidity, and/or mortality. There are four 

types of medical decisionmaking, ranging from straightforward to high 

complexity. 

For visits that consist predominantly of counseling or coordination of care, 

time—rather than the three factors listed above—is the key factor in 

determining the correct code for the E/M services.14 See Appendix A for 

more detail on the components used to determine the level of an E/M 

service. 

Documentation of E/M Services 

Physicians’ documentation must support the medical necessity and 

appropriateness, as well as the level, of the E/M service.15, 16 Clear and 

concise medical record documentation is required in order for physicians 

to receive accurate and timely payment for furnished services.17 In the 

medical record, physicians should document the care a patient received 

and pertinent facts, findings, and observations about the patient’s health 

history.18 The medical record should also be complete and legible and 

include the date and legible identity of the physician who furnished the 

service. Further, Medicare requires that services provided be 

authenticated by the author of the medical record, with either a 

handwritten or electronic signature.19 If the signature in the medical 

record is illegible or missing, CMS asks the physician to “attest” to his/her 

signature.20 If the physician does not provide this attestation statement, 

CMS then considers the claim to be insufficiently documented. 

14 If the level of an E/M service is based on counseling and/or coordination of care, the 

total length of time of the encounter should be documented and the medical record should
 

describe the counseling and/or activities to coordinate care. CMS, Evaluation and 

Management Services Guide, December 2010, pp. 21 and 25.
 15 For Medicare to consider coverage and payment for any item or service, the 

information submitted by the supplier or provider must corroborate the documentation in 

the beneficiary’s medical record and confirm that Medicare coverage criteria have been
 

met. CMS, Medicare Program Integrity Manual, Pub. 100-08, ch. 3, § 3.3.2.1. See also 

Social Security Act § 1156(a).

16 The Social Security Act states that Medicare will not pay for services, including E/M 

services, unless the provider has furnished information necessary to support the claim.
 

Social Security Act § 1833(e).

17 CMS, Evaluation and Management Services Guide, December 2010, p. 3. 

18 Ibid. pp. 3–4.
 19 Stamped signatures are not acceptable. CMS, Medicare Program Integrity Manual, 

Pub. 100-08, ch. 3, § 3.3.2.4.

20 Ibid.
 

Improper Payments for Evaluation and Management Services Cost Medicare Billions in 2010 (OEI-04-10-00181) 3 
 

 

 

 

 

 

The documentation in the medical record must also support the type of 

each key component used to determine the appropriate level of E/M 

service. CMS has issued guidelines for physicians to use when 

determining and documenting the appropriate level of an E/M service. 

These guidelines outline what documentation is necessary to include in the 

medical record to support the level of an E/M service. There are two 

versions of the documentation guidelines, one from 1995 and one from 

1997.21, 22 There are differences between these two versions, the most 

substantial being in the section regarding physical examinations.23 

Physicians can use either version of the documentation guidelines, but not 

a combination of the two, to determine the appropriate level for an E/M 

service.24 However, to document E/M services provided on or after 

September 2013, physicians may use the 1997 Documentation Guidelines 

for an extended history of present illness along with other elements from 

the 1995 Documentation Guidelines. 

25 

Related OIG Work 

This study is part of a larger body of work about E/M services. The first 

study in this series found that from 2001 to 2010, physicians increased 

their billing of higher level codes for E/M services in all visit types. 26 

Additionally, 1,669 physicians consistently billed for the two highest level 

codes for E/M services in 2010. The second study looked at the adoption 

of electronic health record (EHR) technology, finding that 57 percent of 

physicians who provided E/M services in 2010 used an EHR system at 

their primary practice locations in 2011.27 

In 2006, OIG reported that 75 percent of consultations—which are one 

type of E/M service—did not meet Medicare coverage requirements in 

21 The full names of these publications are the 1995 Documentation Guidelines for 

Evaluation and Management Services and the 1997 Documentation Guidelines for 

Evaluation and Management Services. They can be found online at http://www.cms.gov/
 

Outreach-and-Education/Medicare-Learning-Network-MLN/MLNEdWebGuide/
 

Downloads/95Docguidelines.pdf and http://www.cms.gov/Outreach-and-Education/
 

Medicare-Learning-Network-MLN/MLNEdWebGuide/Downloads/97Docguidelines.pdf, 

respectively.

22 Hereinafter, we refer to these two versions of documentation guidelines as the 

1995 Documentation Guidelines and the 1997 Documentation Guidelines.
 23 CMS, Evaluation and Management Services Guide, December 2010, p. 13.
 24 Ibid., pp. 1 and 13. 25 CMS, FAQ on 1995 & 1997 Documentation Guidelines for Evaluation & Management
 

Services, September 2013. Accessed at http://www.cms.gov/Medicare/Medicare-Fee-forService-Payment/PhysicianFeeSched/Downloads/EM-FAQ-1995-1997.pdf on January 

10, 2014.
 26 OIG, Coding Trends of Medicare Evaluation and Management Services 

(OEI-04-10-00180), May 2012.

27 OIG, Use of Electronic Health Record Systems in 2011 Among Medicare Physicians
 

Providing Evaluation and Management Services (OEI-04-10-00184), June 2012.
 

Improper Payments for Evaluation and Management Services Cost Medicare Billions in 2010 (OEI-04-10-00181) 4 
 

 

 

 

 

 

2001, resulting in $1.1 billion in improper payments.28 OIG also found 

that consultations billed for at the highest level were miscoded 95 percent 

of the time. In 2010, CMS discontinued paying for CPT codes for 

consultations.29 

METHODOLOGY 

We based this study on a medical record review of a random sample of 

Part B claims for E/M services from 2010. 

Selection of Sample for Medical Review 

Using CMS’s National Claims History File, we identified all Part B claims 

for E/M services with a service date in 2010 and a Medicare payment 

amount greater than zero.30 We limited our analysis to E/M services that 

corresponded to visit types with three to five complexity levels.31 We also 

limited our analysis to physicians who had claims for 100 or more E/M 

services in 2010.32 Therefore, our sampling frame consisted of 

369,629,103 claims for E/M services and represented $32.3 billion in 

Medicare payments. 

We grouped claims into two strata defined by physicians’ coding of E/M 

services. 

	 Stratum 1 consisted of 828,646 claims from physicians we categorized 

as “high-coding physicians.” To identify high-coding physicians, we 

(1) identified physicians whose average code level was in the top 

1 percent of their primary specialty; and (2) from that subset of 

physicians, identified those that billed for the two highest level codes 

for E/M services at least 95 percent of the time. 

	 Stratum 2 consisted of 368,800,457 claims for E/M services from 

physicians we categorized as “other physicians.” These physicians did 

not meet the criteria used to identify high-coding physicians. 

28 OIG, Consultations in Medicare: Coding and Reimbursement (OEI-09-02-00030), 

March 2006.
 29 74 Fed. Reg. 61738, 61768–69 (Nov. 25, 2009).
 30 Typically, a set of services is billed for on one Part B claim; each service is listed as a
 

separate line item on that claim. For the purposes of this report, we refer to claim line 

items as claims.
 31 The sampling frame includes claims with CPT codes 99201–99205, 99211–99215, 

99218–99223, 99231–99236, 99241–99245, 99251–99255, 99281–99285, 99304–99310, 

99324–99328, 99334–99337, 99341–99346, and 99347–99350.
 32 Claims submitted by physicians with fewer than 100 E/M services represented less 

than 2 percent of Medicare payments in 2010 and 30 percent of all physicians who billed 

for E/M services.
 

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We then selected a stratified simple random sample of 673 claims 

(309 from stratum 1 and 364 from stratum 2). See Tables B-1 and B-2 in 

Appendix B for further details on this study’s sample selection. 

Medical Record Review 

We used a contractor to collect and review for completeness the medical 

records for each sampled claim. The contractor mailed up to three 

requests to obtain the medical records and telephoned nonresponding 

physicians to ensure they had received the requests. The final request was 

sent by certified mail, which requires a signature. 

We did not receive medical records for 55 claims: 

	 We classified 39 of these claims as undocumented errors, either 

because the physician received our request but did not respond to it or 

because the documentation that the physician sent did not contain any 

information relevant to our sampled claim. 

	 We classified the remaining 16 claims as nonrespondents because we 

did not receive responses and were unable to confirm that the 

physicians had received our requests.33 Three of these claims were 

associated with physicians whose national provider identifiers had 

been deactivated. 

Overall, we received the medical records for, or classified as errors, 657 of 

the 673 sampled claims, for a weighted response rate of 98.6 percent.34 

The response rate for stratum 1 was 96.4 percent,35 and the response rate 

for stratum 2 was 98.6 percent.36 Hereinafter, projections to our 

population and strata are based on these response rates. Table 1 shows the 

number of sampled claims, respondent claims, and response rate by 

stratum and overall. 

33 We will refer a list of nonresponding physicians to CMS. 

34 Overall results are projectable to 98.6 percent of the population of Medicare claims for 

E/M services in 2010, representing $31.5 billion of $32.3 billion.

35 Results for stratum 1 are projectable to 96.4 percent of Medicare claims for E/M 

services billed for by high-coding physicians, representing $104 million of $108 million.

36 Results for stratum 2 are projectable to 98.6 percent of Medicare claims for E/M 

services billed for by other physicians, representing $31.4 billion of $32.2 billion. 

Improper Payments for Evaluation and Management Services Cost Medicare Billions in 2010 (OEI-04-10-00181) 6 
 

 

 

 

 

 

Table 1: Sampled Claims and Response Rate by Stratum, 2010 

Stratum Description 

Number of 

Sampled 

Claims 

Number of 

Respondent 

Claims 

Response 

Rate 

1 Claims for E/M services billed for by high-coding 

physicians 309 298 96.4% 

2 Claims for E/M services billed for by other physicians 364 359 98.6%

 Total 673 657 98.6% 

Source: OIG analysis of 2010 Part B claims for outpatient E/M services, 2013. 

We also contracted with three certified professional coders (hereinafter, 

referred to as reviewers), each of whom had experience reviewing claims 

for E/M services. In addition, we contracted with a registered nurse to 

assist with determinations on whether documentation supported medical 

necessity. The reviewers independently reviewed a set of records and 

consulted with the nurse as needed. The reviewers completed a 

standardized data-collection instrument that was based on Medicare 

coverage and documentation requirements for E/M services and applied 

relevant local coverage determinations, as appropriate.37 Applying both 

the 1995 and 1997 Documentation Guidelines, reviewers determined the 

appropriate level for an E/M service using whichever version of the 

documentation guidelines resulted in the most advantageous code for the 

physician. We developed the instrument in collaboration with the 

reviewers and tested it on a separate sample of claims.38 

The reviewers conducted the medical review between October 2012 and 

May 2013. The reviewers determined whether the E/M service 

documented in the medical record for each sampled claim was correctly 

coded and/or sufficiently documented. 

	 Reviewers classified sampled claims for E/M services as incorrectly 

coded if the medical record supported a lower or higher level code 

(i.e., “miscoded”) or if there were other coding errors, such as 

37 Medicare claims processing contractors develop their own coverage guidelines (i.e., 

local coverage determinations) regarding medical necessity, if no national coverage 

determination exists. Section 522 of the Benefits Improvement and Protection Act of 

2000 defines a local coverage determination as a decision by a Medicare claims 

processing contractor whether to cover a particular service on an intermediary-wide or 

carrier-wide basis in accordance with section 1862(a)(1)(A) of the Social Security Act 

(e.g., a determination as to whether the service or item is reasonable and necessary).

38 We conducted a preliminary review of 10 claims for E/M services to test the 

instrument and to ensure consistency among the reviewers. These 10 claims were not 

included in our sample. 

Improper Payments for Evaluation and Management Services Cost Medicare Billions in 2010 (OEI-04-10-00181) 7 
 

 

 

 

 

 

 

 

 

documentation supporting a code for a non-E/M service (i.e., “wrong 

code”) or if the medical record indicated unbundling.39 

	 Reviewers classified sampled claims for E/M services as insufficiently 

documented if the medical record (1) did not contain pertinent 

information to support the service provided (e.g., the patient’s name 

and status, overall condition and diagnosis, and the extent of services 

performed), (2) did not support the medical necessity of the service 

provided, and/or (3) was illegible.40 Reviewers also identified 

sampled claims for E/M services for which the physicians’ signatures 

were illegible, missing, or unacceptable (e.g., typed name with no 

initials or signature). CMS provides physicians with an opportunity to 

attest to a signature when it is illegible or missing. Because we did not 

request signature attestations from physicians, claims for E/M services 

with only signature issues were not considered to be in error.41 

Our contractor and reviewers also collected information on whether the 

medical record for the sampled claim was (1) paper or electronic 

(i.e., medical record type) and (2) formatted using the 1995 or 1997 

Documentation Guidelines (i.e., medical record format). See Tables B-3 

and B-4 in Appendix B for further details on this study’s subgrouping. 

Analysis 

We analyzed the information from the medical record review to determine 

the percentage of claims for E/M services in 2010 that were incorrectly 

coded and/or lacking documentation overall, by stratum, and by subgroup. 

For miscoded claims, we compared the original code from the sampled 

39 “Unbundling” is the practice of inappropriately reporting each component of a service 

or procedure instead of reporting the single comprehensive code. CMS does not allow 

additional payments for separate E/M services performed by a physician on the same day 

as a procedure, unless the E/M service is significant, is separately identifiable, and is 

above and beyond the usual preoperative and postoperative care associated with the 

procedure, indicated by modifier 25 on the claim. We considered claims to be in error if 

modifier 25 was listed on the claim and the medical record did not support that the E/M 

service was significant, was separately identifiable, and was above and beyond the usual 

preoperative and postoperative care associated with the procedure. 

40 We did not request documentation needed to determine whether guidelines were met 

for “incident to” and “split/shared” billing and resident/teaching physician arrangements. 

As a result, we did not consider these claims to be in error if certain documentation was 

missing. However, we did consider these claims to be in error if the errors were 

discernible. For example, an office visit with a new patient cannot be performed 

“incident to”; it would be considered an error if auxiliary personnel or a nonphysician 

practitioner was documented in the medical record as having provided the service and it 

was then billed for by the physician. CMS, Medicare Benefit Policy Manual, 

Pub. 100-02, ch. 15, § 60.1.B. See also First Coast Service Options, Inc., Billing 

physician assistant services ‘incident to’ a doctor FAQ. Accessed at 

http://medicare.fcso.com/FAQs/Answers/157191.asp on December 18, 2013. 

41 Thirteen percent of claims for E/M services in 2010 had illegible, missing, or 

unacceptable signatures and no other errors. 

Improper Payments for Evaluation and Management Services Cost Medicare Billions in 2010 (OEI-04-10-00181) 8 
 

 

 

 

claim with the correct code. When the correct code was lower than the 

code originally billed for, we considered the claim to be upcoded. 

Conversely, when the correct code was higher than that originally billed 

for, we considered the claim to be downcoded.42 We determined whether 

differences in error rates were statistically significant between strata and 

subgroups.43 For the subgroups of medical record type and format, 

differences for all error rates were not statistically significant at the 

95-percent confidence level.44 

We also calculated the projected amount that Medicare inappropriately 

paid in 2010 for claims for E/M services that were incorrectly coded 

and/or lacking documentation overall and by stratum. For miscoded 

claims (including those with an insufficient-documentation error), we 

considered as inappropriate the net difference between the amount that 

was paid and the amount that should have been paid. For all other errors, 

we considered the entire Medicare payment amount from the sampled 

claim to be inappropriate. 

The CERT Program and This Evaluation 

This evaluation is not designed to reproduce or review the findings 

reported through the CERT program. CMS reported on E/M services 

through its CERT program in 2011 and 2012. Further, our review and the 

results reported through the CERT program should not be directly 

compared because the goals and methodologies of each review are 

different. The goal of the CERT program is to measure the performance of 

CMS’s contractors by calculating a paid-claims error rate, while the 

objective for this OIG study was to determine specifically whether E/M 

services billed to Medicare in 2010 were incorrectly coded and/or lacking 

documentation overall, by stratum, and by subgroup. Our evaluation thus 

provides greater depth of information specific to E/M services than the 

CERT program offers. Additionally, CMS bases error rates on dollars and 

number of services, whereas our review bases the error rate on the number 

42 Reviewers identified eight claims for E/M services for which the medical record 

supported a code for a different visit type than that originally billed by the physician. We 

considered these claims to be miscoded. If the payment rate for the correct code was 

lower than the payment rate for the code originally billed, we considered the claim to be 

upcoded. Similarly, we considered the claim to be downcoded if the payment rate for the 

correct code was higher than the payment rate for the code originally billed by the 

physician.

43 We used an independent group t-test to determine whether differences in error rates 

between strata were statistically significant. We used a Rao-Scott chi-square test to 

determine whether differences in error rates between subgroups were statistically 

significant.

44 See Appendix F for sample sizes, point estimates, confidence intervals, and results of 

statistical tests. 

Improper Payments for Evaluation and Management Services Cost Medicare Billions in 2010 (OEI-04-10-00181) 9 
 

of claims. For more information on the CERT program and how it relates 

to this evaluation, see Appendix C. 

Standards 

This study was conducted in accordance with the Quality Standards for 

Inspection and Evaluation issued by the Council of the Inspectors General 

on Integrity and Efficiency. 

Improper Payments for Evaluation and Management Services Cost Medicare Billions in 2010 (OEI-04-10-00181) 10 
 

 

FINDINGS 

Fifty-five percent of claims for E/M services were 

incorrectly coded and/or lacking documentation in 

2010, resulting in $6.7 billion in improper Medicare 

payments 

According to our medical record review, 55 percent of claims for E/M 

services in 2010 were incorrectly coded and/or lacking documentation. 

Medicare inappropriately paid $6.7 billion for these claims, representing 

21 percent of Medicare payments for E/M services in 2010. In particular, 

26 percent were upcoded and 15 percent were downcoded. Additionally, 

nearly 7 percent of claims for E/M services in 2010 were both incorrectly 

coded and insufficiently documented. Table 2 shows the percentage of 

erroneous claims for E/M services and payments in error. See Appendix D 

for point estimates and confidence intervals. 

Table 2: Percentage of and Medicare Payments for Claims for E/M 

Services in Error, 2010 

Type of Error Percentage of Claims 

for E/M Services 

Medicare Payments 

(in Billions) 

Incorrectly Coded 

-Miscoded 

- Upcoded 

- Downcoded 

- Other Coding Error (e.g., Wrong Code, 

 Unbundling) 

Lacking Documentation 

- Insufficiently Documented 

- Undocumented 

42.4%

40.4% 

26.0% 

14.5% 

2.0% 

19.0%

12.0% 

7.0% 

$3.3 

$2.8 

$4.6 

($1.8) 

$0.5* 

$4.6 

$2.6 

$2.0 

Overall Gross** 

Overlapping 

61.3%

(6.7%) 

$7.9 

($1.1) 

Overall Net** 54.6% $6.7 

*The 95-percent confidence interval for this point estimate was $80,378,029 to $829,370,881. Because few sampled claims for
 

E/M services in 2010 fell into the category of “other coding error,” the confidence interval for this estimate was wide. 

**The column sum of certain percentages and dollar figures does not equal the overall gross or net totals because of rounding. 

Source: OIG analysis of 2010 E/M medical records, 2014. 

Most (79 percent of) miscoded claims were upcoded or downcoded by one 

level; however, 17 percent and 4 percent of claims were upcoded and 

downcoded, respectively, by two levels. A small percentage (0.8 percent) 

of claims were upcoded by three levels, and an even smaller percentage 

(0.004 percent) were upcoded by four levels. No claims in our sample 

were downcoded by three or four levels. 

Improper Payments for Evaluation and Management Services Cost Medicare Billions in 2010 (OEI-04-10-00181) 11 
 

 

 

 

 

 

Twenty-six percent of claims for E/M services were upcoded 

Twenty-six percent of claims for E/M services were upcoded in 2010. 

That is, a lower level code would have been more appropriate for the E/M 

service documented in the medical record than the code billed for by the 

physician. For example, for one claim in our sample, the physician billed 

for code 99215 (the highest level code for the visit type “established 

patient office/outpatient visit”); however, the medical record supported a 

lower level code, 99213.45 For this visit type, at least two of the three key 

components must be documented in order to bill for a specific level of 

E/M service. For 99215 to have been appropriate, the medical record 

should have contained documentation to support at least two of the 

following: a comprehensive patient history, a comprehensive 

examination, and medical decisionmaking of high complexity.46 For this 

sampled claim, the medical record contained documentation that 

supported only an expanded problem-focused examination and medical 

decisionmaking of moderate complexity.47 

Fifteen percent of claims for E/M services were downcoded 

Fifteen percent of claims for E/M services were downcoded in 2010. That 

is, a higher level code would have been more appropriate for the E/M 

service documented in the medical record than the code billed for by the 

physician. For example, for one claim in our sample, the physician billed 

for code 99213 (the middle-level code for the visit type “established 

patient office/outpatient visit”); however, the medical record supported a 

higher level code (99214).48 The documentation in the medical record for 

this sampled claim supported a comprehensive patient history, a detailed 

examination, and medical decisionmaking of moderate complexity. For 

99213 to have been appropriate, the medical record should have contained 

documentation to support at least two of the following: an expanded 

problem-focused patient history, an expanded problem-focused 

examination, and medical decisionmaking of low complexity.49 

45 See footnote 5 for the AMA copyright notice.
 46 Ibid.
 47 No patient history was documented in the medical record for this sampled claim.
 

However, this claim was not considered insufficiently documented for this missing
 

patient history, because the other two key components were sufficiently documented and 

at least two of the three key components must be documented in order to bill for a
 

specific level of E/M service for this visit type.

48 See footnote 5 for the AMA copyright notice.
 49 Ibid.
 

Improper Payments for Evaluation and Management Services Cost Medicare Billions in 2010 (OEI-04-10-00181) 12 
 

Two percent of claims for E/M services had other coding errors 

Two percent of claims for E/M service in 2010 had coding errors other 

than upcoding or downcoding. These errors included wrong codes (i.e., 

when the documentation in the medical record supported codes for 

non-E/M services)—and unbundling (i.e., the practice of inappropriately 

reporting each component of a service or procedure instead of reporting 

the single, comprehensive code). For example, one claim in our sample 

contained documentation that supported a procedure but not a significant, 

separately identifiable E/M service. In another example, the medical 

record for a claim in our sample stated that the beneficiary had received an 

injection; the record did not contain any documentation to support the E/M 

service for which the physician had billed. 

Twelve percent of claims for E/M services were insufficiently 

documented 

The documentation in the medical record must support the medical 

necessity and appropriateness, as well as the level, of the E/M service. 

Twelve percent of claims for E/M services were insufficiently documented 

in 2010. The documentation in the medical record must also support the 

type of each key—and, if applicable, contributory—component used to 

determine the appropriate level of E/M service. For example, the level of 

the E/M service for one insufficiently documented claim in our sample 

was based on counseling and/or coordination of care; however, only the 

length of time of the encounter was documented in the medical record. 

The medical record contained no description of the counseling and/or 

activities to coordinate care, as required by Medicare. 

Seven percent of claims for E/M services were undocumented 

Physicians must provide documentation upon request to support claims for 

Medicare services. Seven percent of claims for E/M services were 

undocumented in 2010. For these undocumented claims, either the 

physician received our request but did not respond to it or the 

documentation that the physician sent did not contain any information 

relevant to our sampled claim. 

Improper Payments for Evaluation and Management Services Cost Medicare Billions in 2010 (OEI-04-10-00181) 13 
 

 

 

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 

High-coding physicians are defined as (1) physicians whose average code 

level was in the top 1 percent of their specialty; and (2) from that subset of 

physicians, those that billed for the two highest level codes for E/M 

services at least 95 percent of the time. 

Claims for E/M services billed for by high-coding physicians were more 

likely to be incorrectly coded than those billed for by other physicians. 

	 Fifty-six percent of claims for E/M services billed for by high-coding 

physicians in 2010 were incorrectly coded. Medicare inappropriately 

paid $26 million for these claims, representing 25 percent of total 

Medicare payments for E/M services billed for by high-coding 

physicians in 2010. Medicare inappropriately paid an average of 

$15,594 per high-coding physician in 2010 for incorrectly coded 

claims for E/M services.50 Ninety-nine percent of miscoded claims for 

E/M services billed for by high-coding physicians in 2010 were 

upcoded, while less than 1 percent were downcoded. 

	 Forty-two percent of claims for E/M services billed for by other 

physicians were incorrectly coded. Medicare inappropriately paid 

$3.2 billion for these claims, representing 10 percent of total Medicare 

payments for E/M services billed for by other physicians in 2010. 

Medicare inappropriately paid an average of $7,348 per other 

physician in 2010 for incorrectly coded claims for E/M services.51 

Sixty-four percent of miscoded claims for E/M services billed for by 

other physicians in 2010 were upcoded, while 36 percent were 

downcoded. 

Figure 1 shows the percentage of upcoded claims, shown as positive, and 

downcoded claims, shown as negative, for E/M services by stratum and 

level. See Appendix E for point estimates, confidence intervals, and 

results of statistical tests. 

50 To determine the average amount Medicare inappropriately paid for incorrectly coded 

claims for E/M services per high-coding physician, we divided $26 million by the total 

number of physicians in stratum 1 (i.e., 1,669).

51 To determine the average amount Medicare inappropriately paid for incorrectly coded 

claims for E/M services per other physician, we divided $3.2 billion by the total number 

of physicians in stratum 2 (i.e., 440,321). 

Improper Payments for Evaluation and Management Services Cost Medicare Billions in 2010 (OEI-04-10-00181) 14 
 

Figure 1: Percentage of Upcoded and Downcoded Claims for E/M Services by Stratum and 

Level, 2010 

Source: OIG analysis of 2010 E/M medical records, 2014. 

Additionally, claims for E/M services billed for by high-coding physicians 

were more likely to be insufficiently documented than those billed for by 

other physicians. Twenty percent of claims for E/M services billed for by 

high-coding physicians were insufficiently documented, compared to 

12 percent of those billed for by other physicians. The difference in error 

rates for undocumented claims by stratum was not statistically significant 

at the 95-percent confidence level. See Table E-3 in Appendix E. 

Improper Payments for Evaluation and Management Services Cost Medicare Billions in 2010 (OEI-04-10-00181) 15 
 

CONCLUSION AND RECOMMENDATIONS 

In 2010, Medicare paid $32.3 billion for E/M services. In 2012, OIG 

reported that from 2001 to 2010, physicians increased their billing of 

higher level codes for E/M services in all visit types. CMS also found 

through its CERT program that E/M services are 50 percent more likely to 

be paid for in error than other Part B services; most improper payments 

result from errors in coding and from insufficient documentation. 

In total, Medicare inappropriately paid $6.7 billion for claims for E/M 

services in 2010 that were incorrectly coded and/or lacking 

documentation, representing 21 percent of Medicare payments for E/M 

services that year. Our medical record review found that 42 percent of 

claims for E/M services in 2010 were incorrectly coded, which included 

both upcoding and downcoding, and 19 percent of claims for E/M services 

were lacking documentation. Additionally, we found that claims from 

high-coding physicians were more likely to be incorrectly coded or 

insufficiently documented than claims from other physicians. 

Collectively, our findings highlight errors associated with E/M services 

that must be addressed to properly safeguard Medicare. Even though 

Medicare payment rates for individual E/M services are small (about 

$100 on average), 370 million E/M services were billed for by physicians 

in 2010 and accounted for nearly 30 percent ($32.3 billion of $110 billion) 

of Part B payments that year. Given the substantial spending on E/M 

services and the prevalence of error, CMS must use all of the tools at its 

disposal to more effectively identify and eliminate improper payments 

associated with E/M services. 

We recommend that CMS: 

Educate physicians on coding and documentation 

requirements for E/M services 

CMS should educate physicians on coding and documentation 

requirements for E/M services, either directly or through its contractors. 

Specifically, CMS should educate physicians on the components used to 

determine the level of an E/M service and emphasize the documentation 

needed in the medical record to support that level. CMS should also 

review its current materials for educating physicians regarding the coding 

and documentation of E/M services and determine whether any revisions 

or updates are needed. 

Continue to encourage contractors to review E/M services 

billed for by high-coding physicians 

As part of its efforts to address recommendations made in the OIG report 

Coding Trends of Medicare Evaluation and Management Services 

Improper Payments for Evaluation and Management Services Cost Medicare Billions in 2010 (OEI-04-10-00181) 16 
 

(OEI-04-10-00180), CMS directed its contractors to consider high-coding 

physicians as they prioritize their medical review strategies. Toward that 

end, CMS should continue to encourage its contractors to focus medical 

record reviews of E/M services on claims from high-coding physicians, 

including those identified in this review and through analysis of 

subsequent years of claims data. We acknowledge that CMS and its 

contractors must weigh the costs and benefits of reviewing claims for E/M 

services against doing so for more costly Part B services. However, by 

applying our criteria and focusing medical record review on high-coding 

physicians, CMS and its contractors would be more likely to identify 

errors and improper payments, thereby making reviews of E/M services 

more cost effective. 

Follow up on claims for E/M services that were paid for in error 

In a separate memorandum, we will refer to CMS for appropriate action 

the sampled claims for E/M services that were incorrectly coded and/or 

lacking documentation. CMS should make payment adjustments, as 

appropriate, to include following up on both overpayments and 

underpayments. 

Improper Payments for Evaluation and Management Services Cost Medicare Billions in 2010 (OEI-04-10-00181) 17 
 

AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 

RESPONSE 

CMS concurred with our first recommendation, did not concur with our 

second recommendation, and partially concurred with our third 

recommendation. 

With regard to our first recommendation, CMS concurred and agrees that 

physician education and outreach are critical parts of an effective 

enforcement strategy. CMS will continue to issue education documents on 

E/M services and will collaborate with contractors to respond to questions 

and clarify policies when inconsistencies in billing practices arise. 

With regard to our second recommendation, CMS did not concur. CMS 

directed a medical review contractor to review claims billed by highcoding physicians that were previously referred by OIG, and the first 

phase of these reviews resulted in a negative return on investment. On the 

basis of the results of additional reviews, CMS will reassess the 

effectiveness of reviewing claims billed by high-coding physicians as 

compared to other efforts, such as Comparative Billing Reports. We 

acknowledge that CMS must weigh the costs and benefits of reviewing 

claims for E/M services against doing so for more costly Part B services; 

however, we continue to believe that CMS should focus its medical review 

efforts on those services billed for by high-coding physicians, as these 

claims are more likely to be in error than claims for E/M services billed 

for by other physicians. We also encourage CMS to use other efforts, such 

as Comparative Billing Reports, that aim to reduce the high error rate 

associated with claims for E/M services billed for by high-coding 

physicians. 

With regard to our third recommendation, CMS partially concurred. CMS 

will analyze each overpayment to determine which claims exceed its 

recovery threshold and can be collected consistent with its policies and 

procedures. For the overpayments identified in this report that will not be 

collected, CMS could send an educational notice to physicians that billed 

for these claims. These notices could describe the type of error identified, 

explain the reason the overpayment is not being recovered, and provide 

information on how to correctly bill for future E/M services. We will send 

information to CMS regarding the improper payments identified in this 

report under separate cover. 

We removed a fourth recommendation listed in our draft report—for CMS 

to consolidate the 1995 and 1997 Documentation Guidelines for 

Evaluation and Management Services—because we did not determine 

whether the errors we identified resulted from having two versions of 

Improper Payments for Evaluation and Management Services Cost Medicare Billions in 2010 (OEI-04-10-00181) 18 
 

documentation guidelines. However, having two versions of 

documentation guidelines may be confusing for physicians and could 

contribute to the high error rate associated with E/M services. 

We support CMS’s efforts to address these issues and encourage continued 

progress. For the full text of CMS’s comments, see Appendix G. 

Improper Payments for Evaluation and Management Services Cost Medicare Billions in 2010 (OEI-04-10-00181) 19 
 

 

 

 

APPENDIX A 

Components Used To Determine the Level of an Evaluation 

and Management Service 

As defined by the Current Procedural Terminology52 manual, the codes for 

E/M services, which correspond to three to five levels within a visit type, 

include seven basic components: patient history, physical examination, 

medical decisionmaking, counseling, coordination of care, the nature of 

the patient’s presenting problem (i.e., the reason for the visit), and time. 

The first three components are key to determining the correct code for the 

E/M service, and the remaining four components are contributory.53 The 

physician must use the following three key components to determine the 

appropriate code: 

	 Extent of patient history—Using their clinical judgment, physicians 

assess the nature of the patient’s presenting problems to determine the 

depth of the history needed to complete the service. A patient history 

can be classified into one of four types: 

o	 problem focused (brief history of present illness or problem); 

o	 expanded problem focused (brief history of present illness with 

problem-pertinent system review); 

o	 detailed (extended history of present illness with pertinent past, 

family, and social history directly related to the presenting 

problem; includes review of a limited number of additional 

systems); and 

o	 comprehensive (extended history of present illness with review 

of body systems directly related to the patient’s problems; 

complete past, family, and social history). 

52 The five character codes and descriptions included in this study are obtained from 

Current Procedural Terminology (CPT®), copyright 2009 by the American Medical 

Association (AMA). CPT is developed by the AMA as a listing of descriptive terms 

and five character identifying codes and modifiers for reporting medical services 

and procedures. Any use of CPT outside of this study should refer to the most 

current version of the Current Procedural Terminology available from AMA. 

Applicable FARS/DFARS apply.

53 Exceptions to this rule are visits that consist predominantly of counseling or 

coordination of care; time is the key factor to determining the correct code for these E/M 

services. If the level of an E/M service is based on counseling and/or coordination of 

care, the total length of time of the encounter should be documented and the medical 

record should describe the counseling and/or activities to coordinate care. CMS, 

Evaluation and Management Services Guide, December 2010, pp. 21 and 25. 

Improper Payments for Evaluation and Management Services Cost Medicare Billions in 2010 (OEI-04-10-00181) 20 
 

 

	 Extent of physical examination—Using their clinical judgment and 

depending on the presenting medical problems, physicians can 

perform one of four types of examination: 

o	 problem focused (limited examination of the affected body area 

or organ system); 

o	 expanded problem focused (limited examination of affected area 

or systems with other symptomatic or related organ systems); 

o	 detailed (extended examination of affected body area and other 

related systems); and 

o	 comprehensive (a general multisystem examination or a 

complete examination of a single organ system). 

	 Complexity of the physician’s medical decisionmaking—The complexity 

of the physician’s medical decisionmaking is based on factors needed to 

establish a diagnosis and/or select a management option: the number of 

possible diagnoses or the number of options that must be considered; the 

amount and/or complexity of medical records, diagnostic tests, and other 

information that physicians must obtain, review, and analyze; and the risk 

of significant complications, morbidity, and/or mortality. Four types of 

medical decisionmaking are recognized: 

o	 straightforward, 

o	 low complexity, 

o	 moderate complexity, and 

o	 high complexity. 

Table A-1 illustrates the key components used to determine the appropriate 

code for a new patient office visit. There are five levels of complexity for 

this office visit. 

Improper Payments for Evaluation and Management Services Cost Medicare Billions in 2010 (OEI-04-10-00181) 21 
 

 

Table A-1: Key Components Used To Determine the Level and CPT Code 

for New Patient Office Visit 

CPT 

Code* Presenting Problem(s) 

Key Components 

Patient History Examination Medical 

Decisionmaking 

99201 Self-limited or minor; the physician typically spends 10 

minutes face-to-face with the patient and/or family Problem focused Problem focused Straightforward 

99202 Low to moderate severity; the physician typically spends 

20 minutes face-to-face with the patient and/or family 

Expanded 

problem focused 

Expanded 

problem focused Straightforward 

99203 Moderate severity; the physician typically spends 30 

minutes face-to-face with the patient and/or family Detailed Detailed Low complexity 

99204 Moderate to high severity; the physician typically spends 

45 minutes face-to-face with the patient and/or family Comprehensive Comprehensive Moderate complexity 

99205 Moderate to high severity; the physician typically spends 

60 minutes face-to-face with the patient and/or family Comprehensive Comprehensive High complexity 

*See footnote 52 for the AMA copyright notice. 

Source: CMS, Evaluation & Management Services Guide 2010, December 2010.
 

Improper Payments for Evaluation and Management Services Cost Medicare Billions in 2010 (OEI-04-10-00181) 22 
APPENDIX B 

Additional Information on Sample Selection and Subgrouping Table B-1: Population and Sample Size of Claims for E/M Services by Stratum, 2010 

Stratum Definition 

Population Sample 

Claims Medicare Payments Physicians Claims Medicare Payments 

1 Claims for E/M services billed for by high-coding physicians 828,646 $107,652,434 1,669 309 $40,039 

2 Claims for E/M services billed for by other physicians 368,800,457 $32,211,029,164 440,321 364 $31,468 

 Total 369,629,103 $32,318,681,598 441,990 673 $71,507 

Source: OIG analysis of 2010 Part B claims for E/M services, 2014. 

Improper Payments for Evaluation and Management Services Cost Medicare Billions in 2010 (OEI-04-10-00181) 23 
 

Table B-2: Sampled Claims for E/M Services by Visit Type and CPT Code, 

2010 

Visit Type CPT Code* Complexity Level 

Number of 

Sampled Claims for 

E/M Services 

Percentage of 

Sampled Claims for 

E/M Services 

99201 Low 1 0.2%

New Patient Office/ 

Outpatient Visit 

99202

99203

99204

 Medium-Low 

 Medium 

 Medium-High 

2 

4 

20 

0.3%

0.6%

3.0%

99205 High 21 3.1%

99211 Low 6 0.9%

Established Patient 

Office/Outpatient Visit 

99212

99213

99214

 Medium-Low 

 Medium 

 Medium-High 

17 

95 

177 

2.5%

14.1%

26.3%

99215 High 127 18.9%

99218 Low 0 0.0% 

Initial Observation Care 99219 Medium 1 0.2% 

99220 High 0 0.0% 

Initial Inpatient Hospital 

Care 

99221

99222

99223

 Low 

Medium 

High 

2 

4 

13 

0.3% 

0.6% 

1.9% 

Subsequent Inpatient 

Hospital Care 

99231

99232

99233

 Low 

Medium 

High 

13 

48 

25 

1.9% 

7.1% 

3.7% 

99281 Low 0 0.0%

Emergency Department 

Visit 

99282

99283

99284

 Medium-Low 

 Medium 

 Medium-High 

0 

7 

14 

0.0%

1.0%

2.1%

99285 High 38 5.7%

Initial Nursing Facility 

Care 

99304

99305

99306

 Low 

Medium 

High 

0 

2 

1 

0.0% 

0.3% 

0.2% 

99307 Low 7 1.0%

Subsequent Nursing 

Facility Care 

99308

99309

 Medium-Low 

 Medium-High 

10 

4 

1.5%

0.6%

99310 High 3 0.5%

Improper Payments for Evaluation and Management Services Cost Medicare Billions in 2010 (OEI-04-10-00181) 24 

continued on next page 
 

 

 

Table B-2 (Continued): Sampled Claims for E/M Services by Visit Type and 

CPT Code, 2010 

Visit Type CPT Code* Complexity Level 

Number of 

Sampled Claims for 

E/M Services 

Percentage of 

Sampled Claims for 

E/M Services 

99324 Low 0 0.0% 

New Patient 99325 Medium-Low 0 0.0% 

Domiciliary/Rest Home 99326 Medium 0 0.0% 

Visit 99327 Medium-High 0 0.0% 

99328 High 0 0.0% 

99334 Low 0 0.0% 

Established 

Domiciliary/Rest Home 

99335 Medium-Low 1 0.2% 

Visit 99336 Medium-High 0 0.0% 

99337 High 2 0.3% 

99341 Low 0 0.0% 

99342 Medium-Low 0 0.0% 

New Patient Home Visit 99343 Medium 0 0.0% 

99344 Medium-High 0 0.0% 

99345 High 0 0.0% 

99347 Low 0 0.0% 

Established Patient 99348 Medium-Low 0 0.0% 

Home Visit 99349 Medium-High 2 0.3% 

99350 High 6 0.9%

 Total 673 100.0%** 

*The five character codes and descriptions included in this study are obtained from Current Procedural 

Terminology (CPT®), copyright 2009 by the American Medical Association (AMA). CPT is developed by 

the AMA as a listing of descriptive terms and five character identifying codes and modifiers for reporting 

medical services and procedures. Any use of CPT outside of this study should refer to the most current 

version of the Current Procedural Terminology available from AMA. Applicable FARS/DFARS apply. 

**Column does not sum to 100 percent because of rounding. 

Source: OIG analysis of 2010 Part B claims for E/M services, 2014. 

Improper Payments for Evaluation and Management Services Cost Medicare Billions in 2010 (OEI-04-10-00181) 25 
 

Table B-3: Subgroup of Claims for E/M Services by Medical Record Type, 

2010 

Subgroup Definition 

Subset 

Claims Medicare 

Payments Physicians 

1 Claims for E/M services documented in 

paper medical records 411 $44,534 377 

2 Claims for E/M services documented in 

electronic medical records 207 $21,448 199 

Total 618 $65,982 572* 

*Column sum exceeds total because some physicians had multiple claims in our sample. 

Source: OIG analysis of 2010 Part B claims for E/M services, 2014. 

Table B-4: Subgroup of Claims for E/M Services by Medical Record 

Format, 2010 

Subgroup Definition 

Claims 

Claims Medicare 

Payments Physicians 

1 

Claims for E/M services formatted with 1995 

Documentation Guidelines for Evaluation and Management 

Services 

400 $40,928 382 

2 

Claims for E/M services formatted with 1997 

Documentation Guidelines for Evaluation and Management 

Services 

131 $16,069 123 

3 Claims for E/M services for which the format of the medical 

record was unable to be determined 87 $8,985 81 

Total 618 $65,982 572* 

*Column sum exceeds total because some physicians had multiple claims in our sample. 

Source: OIG analysis of 2010 Part B claims for E/M services, 2014. 

Improper Payments for Evaluation and Management Services Cost Medicare Billions in 2010 (OEI-04-10-00181) 26 
 

 

APPENDIX C 

The Comprehensive Error Rate Testing Program and This 

Evaluation 

OIG has performed, and continues to perform, work examining E/M 

services. In addition, CMS, as part of its CERT program, measures errors 

in E/M services. The goal of the CERT program is to measure the 

performance of CMS’s contractors by calculating a paid-claims error rate. 

CMS bases the rate on the dollar paid after the contractor makes its 

payment decision on a claim. The paid-claims error rate is a percentage of 

dollars that contractors erroneously allowed to be paid. In addition to 

calculating the paid-claims error rate, CMS calculates a providercompliance error rate and a services-processed error rate. 

On the other hand, OIG’s objective in this evaluation was to estimate a 

national paid-claims error rate for E/M services, as well as to compare 

error rates by stratum and subgroup. This OIG study was not designed to 

reproduce, or to review, the CERT paid-claims error rate. 

Because the goals of our review and the CERT program differ, the 

respective methodologies used to calculate the error rates differ. Our 

review included the following factors, differentiating it from CMS’s CERT 

program: 

	 a stratified sample by physicians’ coding of E/M services and 

	 subgrouping by medical record type (i.e., the medical record for 

the sampled claim was paper or electronic) and by medical record 

format (i.e., the medical record for the sampled claim was 

formatted using the 1995 or 1997 Documentation Guidelines for 

Evaluation and Management Services). 

In addition, there are differences in how the CERT program and OIG 

report the calculated error rates. As mentioned previously, CMS calculates 

three different error rates. For the paid-claims error rate and 

provider-compliance error rate, CMS bases the rate on dollar amounts. 

For the services-processed error rate, CMS bases the error rate on the 

number of services. Our review bases the error rate on the number of 

claims. In addition to calculating the overall fee-for-service error rate, 

CMS calculates error rates for individual contractors. Our review 

calculates error rates for the strata and subgroups and projects the error 

rate nationally, as well as dollars associated with claims paid in error. 

Although the respective goals and methodologies of our review and the 

CERT program differ, the error categories in each review are similar. 

Improper Payments for Evaluation and Management Services Cost Medicare Billions in 2010 (OEI-04-10-00181) 27 
 

CMS groups claims identified as containing improper payments through 

its CERT program into five categories: no documentation, insufficient 

documentation, medical necessity, incorrect coding, and “other” 

(e.g., duplicate payment error, noncovered or unallowable service). 

Similarly, our review groups claims for E/M services into three categories: 

no documentation, insufficient documentation, and incorrect coding. Our 

review did not determine whether E/M services were medically necessary 

in 2010. We also did not have an “other” category because we did not 

determine whether E/M services were duplicative, noncovered, or 

unallowable. 

Improper Payments for Evaluation and Management Services Cost Medicare Billions in 2010 (OEI-04-10-00181) 28 
 

 

APPENDIX D 

Sample Sizes, Point Estimates, and Confidence Intervals of 

Claims for Evaluation and Management Services 

Table D-1: Sample Sizes, Point Estimates, and Confidence Intervals of 

Incorrectly Coded, Insufficiently Documented, and/or Undocumented 

Claims for E/M Services, 2010 

Estimate Description Sample 

Size Point Estimate 95-Percent Confidence Interval 

Gross percentage of incorrectly coded, insufficiently 

documented, and/or undocumented claims for E/M services 

Gross Medicare payments for incorrectly coded, insufficiently 

documented, and/or undocumented claims for E/M services* 

Percentage of claims for E/M services with multiple 

(i.e., overlapping) errors 

Medicare payments for claims for E/M services with 

overlapping errors 

Net percentage of incorrectly coded, insufficiently 

documented, and/or undocumented claims for E/M services 

Net Medicare payments for incorrectly coded, insufficiently 

documented, and/or undocumented claims for E/M services* 

Percentage of Medicare payments for incorrectly coded, 

insufficiently documented, and/or undocumented claims for 

E/M services of total Medicare payments for E/M services in 

2010 

657 

657 

657 

657 

657 

657 

657 

61.3% 

$7,869,264,031 

6.7% 

$1,119,607,546 

54.6% 

$6,749,656,485 

21.4% 

55.0%–67.6% 

$6,095,196,627–$9,643,331,435 

4.1%–9.3% 

$557,880,415–$1,681,334,677 

49.4%–59.7% 

$5,222,278,129–$8,277,034,841 

17.0%–25.8% 

*To calculate the payments for claims for E/M services that were miscoded, we subtracted the payment amount for the correct code from the payment
 

amount for the code on the claim. 

Source: OIG analysis of 2010 E/M medical records, 2014.
 

Improper Payments for Evaluation and Management Services Cost Medicare Billions in 2010 (OEI-04-10-00181) 29 
 

 

Table D-2: Sample Sizes, Point Estimates, and Confidence Intervals of 

Incorrectly Coded Claims for E/M Services, 2010 

Estimate Description Sample 

Size Point Estimate 95-Percent Confidence Interval 

Percentage of incorrectly coded claims for E/M services 

Medicare payments for incorrectly coded claims for E/M 

services* 

Percentage of Medicare payments for incorrectly coded claims 

for E/M services of total Medicare payments for E/M services 

Percentage of miscoded claims for E/M services 

Medicare payments for miscoded claims for E/M 

services* 

Percentage of miscoded claims for E/M services for 

which the physician used both the 1995 and 1997 

Documentation Guidelines** 

657 

657 

657 

657 

657 

301 

42.4% 

$3,261,643,225 

10.3% 

40.4% 

$2,806,768,770 

3.4% 

37.4%–47.6% 

$2,065,237,356–$4,458,049,093 

6.8%–13.9% 

35.5%–45.6% 

$1,658,804,226–$3,954,733,313 

1.4%–8.0% 

Percentage of upcoded claims for E/M services 

Percentage of miscoded claims for E/M services that 

were upcoded by 1 level 

Percentage of miscoded claims for E/M services that 

were upcoded by 2 levels 

Percentage of miscoded claims for E/M services that 

were upcoded by 3 levels 

Percentage of miscoded claims for E/M services that 

were upcoded by 4 levels 

Medicare payments for upcoded claims for E/M 

services 

657 

293 

293 

293 

293 

657 

26.0% 

45.3% 

16.8% 

0.8% 

0.004% 

$4,569,195,340 

21.7%–30.7% 

37.2%–53.7% 

11.4%–24.0% 

0.1%–4.8% 

0.001%–5.0% 

$3,617,700,452–$5,520,690,228 

Percentage of downcoded claims for E/M services 

Percentage of miscoded claims for E/M services that 

were downcoded by 1 level 

Percentage of miscoded claims for E/M services that 

were downcoded by 2 levels 

Percentage of miscoded claims for E/M services that 

were downcoded by 3 levels 

657 

293 

293 

293 

14.5% 

33.5% 

3.6% 

0.0% 

11.2%–18.5% 

26.1%–41.8% 

1.5%–8.5% 

0.0%–5.0% 

continued on next page 

Improper Payments for Evaluation and Management Services Cost Medicare Billions in 2010 (OEI-04-10-00181) 30 
 

 

 

 

 

Table D-2 (Continued): Sample Sizes, Point Estimates, and Confidence 

Intervals of Incorrectly Coded Claims for E/M Services, 2010 

Estimate Description Sample 

Size Point Estimate 95-Percent Confidence Interval 

Percentage of miscoded claims for E/M services 

that were downcoded by 4 levels 

Medicare payments for downcoded claims for E/M 

services 

293 0.0% 

657 ($1,762,426,570) 

0.0%–5.0% 

($2,254,640,000)–($1,270,210,000) 

Percentage of miscoded claims for E/M services 

that were upcoded or downcoded by 1 level 293 78.8% 71.2%–84.8% 

Percentage of claims for E/M services with other coding 

errors (e.g., wrong code, unbundling) 

Medicare payments for claims for E/M services with other 

coding errors 

657 2.0% 

657 $454,874,455 

0.9%–4.0% 

$80,378,029–$829,370,881 

Percentage of claims for E/M services for which the correct 

code was unable to be determined 657 2.5% 1.3%–4.8% 

*To calculate the payments for claims for E/M services that were miscoded, we subtracted the payment amount for the correct code from the payment
 

amount for the code on the claim. 

**At the time of our review, physicians could use either version of the documentation guidelines, but not a combination of the two, when determining the
 

appropriate level for an E/M service. For these claims, physicians used the 1997 Documentation Guidelines for an extended history of present illness along
 

with elements from the 1995 Documentation Guidelines. 

Source: OIG analysis of 2010 E/M medical records, 2014. 

Table D-3: Sample Sizes, Point Estimates, and Confidence Intervals of 

Claims for E/M Services Lacking Documentation, 2010 

Estimate Description Sample 

Size Point Estimate 95-Percent Confidence Interval 

Percentage of claims for E/M services lacking documentation 

Medicare payments for claims for E/M services lacking 

documentation 

657 

657 

19.0% 

$4,607,620,806 

15.2%–23.3% 

$3,435,418,912–$5,779,822,701 

Percentage of insufficiently documented claims for E/M 

services 

Medicare payments for insufficiently documented claims 

for E/M services 

657 

657 

12.0% 

$2,622,446,473 

9.0%–15.8% 

$1,724,480,895–$3,520,412,050 

Percentage of undocumented claims for E/M services 

Medicare payments for undocumented claims for E/M 

services 

657 

657 

7.0% 

$1,985,174,334 

4.7%–10.1% 

$1,162,105,045–$2,808,243,623 

Percentage of claims for E/M services with illegible, missing, 

or unacceptable signatures 657 13.4% 10.2%–17.3% 

Source: OIG analysis of 2010 E/M medical records, 2014. 

Improper Payments for Evaluation and Management Services Cost Medicare Billions in 2010 (OEI-04-10-00181) 31 
 

 

 

 

APPENDIX E 

Sample Sizes, Point Estimates, Confidence Intervals, and 

Results of Statistical Tests of Claims for Evaluation and 

Management Services, by Stratum 

Table E-1: Sample Sizes, Point Estimates, and Confidence Intervals of 

Claims for E/M Services by Stratum, 2010 

Estimate Description Sample 

Size Point Estimate 95-Percent Confidence Interval 

Percentage of incorrectly coded claims for E/M services billed 

for by high-coding physicians 

Percentage of miscoded claims for E/M services that were 

upcoded by high-coding physicians 

Percentage of miscoded claims for E/M services that were 

downcoded by high-coding physicians 

Medicare payments for incorrectly coded claims for E/M 

services billed for by high-coding physicians 

Percentage of Medicare payments for incorrectly coded claims 

of total Medicare payments for claims for E/M services billed 

for by high-coding physicians 

Average inappropriate Medicare payment per high-coding 

physician for incorrectly coded claims for E/M services 

298 

156 

156 

298 

298 

298 

56.4% 

99.4% 

0.6% 

$26,027,127 

25.1% 

$15,594 

50.7%–61.9% 

95.6%–99.9% 

0.1%–4.4% 

$22,518,898–$29,535,356 

21.9%–28.2% 

$13,492–$17,696 

Percentage of claims for E/M services billed for by other 

physicians that were incorrectly coded 

Percentage of miscoded claims for E/M services that were 

upcoded by other physicians 

Percentage of miscoded claims for E/M services that were 

downcoded by other physicians 

Medicare-allowed amounts for claims for E/M services billed 

for by other physicians that were incorrectly coded 

Percentage of Medicare-allowed amounts for incorrectly 

coded claims of total Medicare-allowed amounts for claims for 

E/M services billed for by other physicians 

Average inappropriate Medicare payment per other physician 

for incorrectly coded claims for E/M services 

359 

145 

145 

359 

359 

359 

42.3% 

64.1% 

35.9% 

$3,235,616,097 

10.3% 

$7,348 

37.3%–47.5% 

56.0%–71.5% 

28.5%–44.0% 

$2,037,378,284–$4,433,853,911 

6.8%–13.8% 

$4,627–$10,070 

Percentage of insufficiently documented claims for E/M 

services billed for by high-coding physicians 

Percentage of insufficiently documented claims for E/M 

services billed by other physicians 

298 

359 

19.5% 

12.0% 

15.3%–24.4% 

9.0%–15.8% 

Percentage of undocumented claims for E/M services billed 

for by high-coding physicians* 

Percentage of undocumented claims for E/M services billed 

for by other physicians* 

298 

359 

4.7% 

7.0% 

2.8%–7.8% 

4.7%–10.1% 

*The difference between these error rates was not statistically significant at the 95-percent confidence level. 

Source: OIG analysis of 2010 E/M medical records, 2014. 

Improper Payments for Evaluation and Management Services Cost Medicare Billions in 2010 (OEI-04-10-00181) 32 
Improper Payments for Evaluation and Management Services Cost Medicare Billions in 2010 (OEI-04-10-00181) 33 

Table E-2: Sample Sizes, Point Estimates, and Confidence Intervals of Upcoded and Downcoded CServices by Stratum, 2010 

High-Coding Physicians Other Physicians 

Estimate Description Sample 

Size 

Point 

Estimate 

95-Percent 

Confidence Interval 

Sample 

Size 

Point 

Estimate 

9

Confidenc

By 4 levels* 156 1.3% 0.3%–5.0% 137 0.0% 0

Upcoded By 3 levels 156 9.6% 5.9%–15.4% 137 0.7% 0

Percentage of 

miscoded claims for E/M services that were 

upcoded or 

downcoded 

By 2 levels* 

By 1 level 

156 

156 

23.1% 

65.4% 

17.1%–30.3% 

57.6%–72.4% 

137 

137 

16.8% 

45.3% 

11.4

37.1

ncoded 

By 1 level By 2 levels 

156 156 

0.6% 0.0% 

0.1%–4.4% 0.0%–1.2% 

137 137 

33.6% 

3.6% 

26.2

1

DowBy 3 levels* 156 0.0% 0.0%–1.2% 137 0.0% 0

By 4 levels* 156 0.0% 0.0%–1.2% 137 0.0% 0

*The difference between these error rates was not statistically significant at the 95-percent confidence level. Source: OIG analysis of 2010 E/M medical records, 2014. 
 

 

Table E-3: Results of Independent Group T-Tests for Claims for E/M 

Services by Stratum, 2010 

Description Stratum Point 

Estimates P-Value 

Difference in percentage of incorrectly coded claims for E/M 

services, by stratum 

High-Coding

Other

 56.4% 

42.3% 

0.0003 

Difference in percentage of miscoded claims for E/M 

services that were upcoded, by stratum 

High-Coding 

Other 

99.4% 

64.1% 

<0.0001 

Difference in percentage of miscoded claims for E/M 

services that were upcoded by 1 level, by stratum 

High-Coding

Other

 65.4% 

45.3% 

0.0005 

Difference in percentage of miscoded claims for E/M 

services that were upcoded by 2 levels, by stratum 

High-Coding 

Other 

23.1% 

16.8% 

0.1817 

Difference in percentage of miscoded claims for E/M 

services that were upcoded by 3 levels, by stratum 

High-Coding

Other

 9.6% 

0.7% 

0.0004 

Difference in percentage of miscoded claims for E/M 

services that were upcoded by 4 levels, by stratum 

High-Coding 

Other 

1.3% 

0.0% 

0.1580 

Difference in percentage of miscoded claims for E/M 

services that were downcoded, by stratum 

High-Coding

Other

 0.6% 

35.9% 

<0.0001 

Difference in percentage of miscoded claims for E/M 

services that were downcoded by 1 level, by stratum 

High-Coding 

Other 

0.6% 

33.6% 

<0.0001 

Difference in percentage of miscoded claims for E/M 

services that were downcoded by 2 levels, by stratum 

High-Coding

Other

 0.0% 

3.6% 

0.0248 

Difference in percentage of miscoded claims for E/M High-Coding 0.0% 

--* services that were downcoded by 3 levels, by stratum Other 0.0% 

Difference in percentage of miscoded claims for E/M High-Coding 0.0% 

--* services that were downcoded by 4 levels, by stratum Other 0.0% 

Difference in percentage of insufficiently documented claims 

for E/M services, by stratum 

High-Coding 

Other 

19.5% 

12.0% 

0.0093 

Difference in percentage of undocumented claims for E/M 

services, by stratum 

High-Coding

Other

 4.7% 

7.0% 

0.2139 

*No claims in our sample were downcoded by 3 or 4 levels. As a result, these point estimates were the same and the difference between these
 

error rates was not statistically significant.
 

Source: OIG analysis of 2010 E/M medical records, 2014.
 

Improper Payments for Evaluation and Management Services Cost Medicare Billions in 2010 (OEI-04-10-00181) 34 
 

 

APPENDIX F 

Sample Sizes, Point Estimates, Confidence Intervals, and 

Results of Statistical Tests of Claims for Evaluation and 

Management Services, by Subgroups 

Table F-1: Sample Sizes, Point Estimates, and Confidence Intervals of 

Claims for E/M Services by Medical Record Type, 2010 

Estimate Description Sample 

Size Point Estimate 95-Percent Confidence Interval 

Percentage of claims for E/M services documented in paper 

medical records 

Percentage of claims for E/M services documented in 

electronic medical records 

618 

618 

64.1% 

35.9% 

58.8%–69.1% 

30.9%–41.2% 

Percentage of incorrectly coded claims for E/M services 

documented in paper medical records* 

Percentage of incorrectly coded claims for E/M services 

documented in electronic medical records* 

411 

207 

44.0% 

48.3% 

37.5%–50.7% 

39.5%–57.3% 

Percentage of insufficiently documented claims for E/M 

documented in paper medical records* 

Percentage of insufficiently documented claims for E/M 

services documented in electronic medical records* 

411 

207 

14.5% 

10.0% 

10.4%–19.9% 

5.8%–16.8% 

*The difference between these error rates was not statistically significant at the 95-percent confidence level. 

Source: OIG analysis of 2010 E/M medical records, 2014. 

Table F-2: Results of Chi-Square Tests for Claims for E/M Services by

Medical Record Type, 2010 

Description Medical Record 

Type 

Point 

Estimates P-Value 

Difference in percentage of incorrectly coded claims, by 

medical record type 

Difference in percentage of insufficiently documented claims, 

by medical record type 

Paper 

Electronic 

Paper 

Electronic 

44.0% 

48.3% 

14.5% 

10.0% 

0.4405 

0.2382 

Source: OIG analysis of 2010 E/M medical records, 2014. 

Improper Payments for Evaluation and Management Services Cost Medicare Billions in 2010 (OEI-04-10-00181) 35 
 

 

Table F-3: Sample Sizes, Point Estimates, and Confidence Intervals of 

Claims for E/M Services by Medical Record Format, 2010 

Estimate Description Sample 

Size Point Estimate 95-Percent Confidence Interval 

Percentage of claims for E/M services formatted with 1995 

Documentation Guidelines for Evaluation and Management 

Services 

Percentage of claims for E/M services formatted with 1997 

Documentation Guidelines for Evaluation and Management 

Services 

Percentage of claims for E/M services for which the format of 

the medical record was unable to be determined 

618 

618 

618 

72.1% 

16.5% 

11.4% 

67.1%-76.7% 

12.9%-20.9% 

8.4%-15.3% 

Percentage of incorrectly coded claims for E/M services 

formatted with 1995 Documentation Guidelines* 

Percentage of incorrectly coded claims for E/M services 

formatted with 1997 Documentation Guidelines* 

400 

131 

43.2% 

52.7% 

37.1%-49.5% 

39.6%-65.4% 

Percentage of insufficiently documented claims for E/M 

services formatted with 1995 Documentation Guidelines* 

Percentage of insufficiently documented claims for E/M 

services formatted with 1997 Documentation Guidelines* 

400 

131 

9.1% 

5.5% 

6.1%–13.5% 

1.8%–15.6% 

*The difference between these error rates was not statistically significant at the 95-percent confidence level. 

Source: OIG analysis of 2010 E/M medical records, 2014. 

Table F-4: Results of Chi-Square Tests for Claims for E/M Services by

Medical Record Format, 2010 

Description Medical Record 

Format 

Point 

Estimates P-Value 

Difference in percentage of incorrectly coded claims for E/M 

services, by medical record format 

Difference in percentage of insufficiently documented claims 

for E/M services, by medical record format 

1995

1997

1995 

1997 

43.2% 

52.7% 

9.1% 

5.5% 

0.2002 

0.3743 

Source: OIG analysis of 2010 E/M medical records, 2014. 

Improper Payments for Evaluation and Management Services Cost Medicare Billions in 2010 (OEI-04-10-00181) 36 
APPENDIXG 

Agency Comments 

DEPARTMENT OF HEALTH ,'ic HUMAf\i SERVICES Cenws ror Medicare & Medicaid Serv.ces 

A.ilmiuistrator 

Wash•ngton, DC 20201 

APR -8 Z014 OATE: 

TO: 	 Daniel R. Levinson 

Inspector C1eneral 

FROM: 	 ~aiilyn Tavenner 

Adn1inisttaJor 

SUBJECT: 	 Office of Inspector General (01C1) Drafi Report: Improper Payments for 

Evaluation and Management Services Cost Medicare Billions in 20 I 0 (OU-04­

10-00181) 

Thank you tor the opportunity to review and comment on the ahov..: subject O!Ci draft report. 

The Centers for Medicare & Medicaid Services (CMS) appreciates th~: time and r..:sources that 

OIG used to review these important services. OICJ's report identiftes and addresses improper 

hilling and payments for Part B services relating to evaluation and management (ElM) services 

in 2010. OIG 's study reports that in 2010, Medicare inappropriately paid $6.7 billion for claims 

for E/M services that were incorrectly coded and/or lacking documentation, representing 21 

percent or Medicare payments for E/M services that year. Incorrectly coded claims included 

both up coding (26 percent) and clown coding ( 14.5 percent). Additionally, O!G found that highcoding physicians' claims were more likely to be incorrectly coded or insufficiently documented 

than other physicians' claims. We are working to lurther reduce these improper payments 

through a combination of education and medical review activities. 

The 010 recommendations and CMS responses to those rewmmendations arc discussed below. 

OIG Recommendation 

The 010 recommends that CMS consolidate the 1995 and 1997 Docunwnt:uion Guidelines [(,)r 

Evaluation and Management Services. 

C~S Response 

The CMS docs not concur with the recommendation that we ~:onsolidate the 1995 and 1997 

documentation guidelines. In December 2010. CMS issued the Evaluation and tvlanagement 

Guide that is designed to provide education on evaluation and managemern services. It includes 

inlon11ation on medical record document8tion. billing and coding considerations. as well as 

inf(mllation on the 1995 and 1997 documentation guidclint!s. Additionally. we recently made 

available via the Ov!S website. h!.\J2:/Iwww.cms.gov/Outreach-and-Education(Mcdic.m:~: 

I eaminn-N,etwork-;'vlLN/MLNl;dWeh~)uideiEMIJO(jllml, a "Frequ.:nlly Asked Questions" 

document that emphasizes the ability to use the 1995 or 1997 guidelines lor an extended his10ry 

Improper Payments for Evaluation and Management Services Cost Medicare Billions in 2010 (OEI-04-10-00181) 37 
 

 

Improper Payments for Evaluation and Management Services Cost Medicare Billions in 2010 (OEI-04-10-00181) 38 
 

Improper Payments for Evaluation and Management Services Cost Medicare Billions in 2010 (OEI-04-10-00181) 39 
 

ACKNOWLEDGMENTS 

This report was prepared under the direction of Dwayne Grant, Regional 

Inspector General for Evaluation and Inspections in the Atlanta regional 

office, and Jaime Durley, Deputy Regional Inspector General. 

Rachel Bessette served as the lead analyst for this study. Other principal 

Office of Evaluation and Inspections staff from the Atlanta regional office 

who contributed to the report include Michelle Verges. Central office staff 

who provided support include Kevin Farber, Althea Hosein, 

Kevin Manley, and Christine Moritz. 

Improper Payments for Evaluation and Management Services Cost Medicare Billions in 2010 (OEI-04-10-00181) 40 
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 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. These evaluations focus on preventing fraud, waste, or abuse and promoting 

economy, efficiency, and effectiveness of departmental programs. To promote impact, OEI 

reports also present practical recommendations for improving program operations. 

Office of Investigations 

The Office of Investigations (OI) conducts criminal, civil, and administrative investigations 

of fraud and misconduct related to HHS programs, operations, and beneficiaries. With 

investigators working in all 50 States and the District of Columbia, OI utilizes its resources 

by actively coordinating with the Department of Justice and other Federal, State, and local 

law enforcement authorities. The investigative efforts of OI often lead to criminal 

convictions, administrative sanctions, and/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 for OIG’s internal operations. OCIG represents OIG in all civil and 

administrative fraud and abuse cases involving HHS programs, including False Claims Act, 

program exclusion, and civil monetary penalty cases. In connection with these cases, OCIG 

also negotiates and monitors corporate integrity agreements. OCIG renders advisory 

opinions, issues compliance program guidance, publishes fraud alerts, and provides other 

guidance to the health care industry concerning the anti-kickback statute and other OIG 

enforcement authorities.