OIG finds $348M in improper Medicare payments for telehealth psychotherapy

During the first year of the COVID-19 public health emergency, Medicare improperly paid for $580 million of psychotherapy care, including $348 million of telehealth services, according to an audit by the Department of Health and Human Services’ Office of the Inspector General.

The report, which estimated that Medicare paid for $1 billion of psychotherapy that year, included more than 13.5 million psychotherapy services provided from March 2020 through February 2021.

The agency chose two stratified random samples of psychotherapy services during the period, one group of 111 enrollee days for telehealth and another sample of 105 enrollee days for in-person care. According to the OIG, an enrollee day includes all claim lines for Medicare Part B psychotherapy with the same service start date for a particular enrollee.

For 128 of the 216 total sampled enrollee days, providers didn’t meet Medicare requirements. For example, in 60 sampled enrollee days, psychotherapy time wasn’t documented. In 43 enrollee days, treatment plans were incomplete or missing. 

Medicare paid $35,560 for the 128 sampled enrollee days where providers didn’t meet requirements. Based on that sample, the OIG estimated that providers received $580 million in improper payments of the $1 billion that Medicare paid for psychotherapy that year. 

“The deficiencies we identified in our audit occurred because CMS’s oversight was not adequate to prevent or detect payments for psychotherapy services, including telehealth services, that did not meet Medicare requirements and guidance,” the audit’s authors wrote. “CMS’s oversight was partially affected by the unprecedented challenges of the PHE because CMS’s focus was to ensure that Medicare enrollees had access to healthcare.”

In addition, in 54 sampled enrollee days, providers did not meet Medicare documentation and billing guidance, like forgetting provider signatures or not specifying whether services were telehealth or in-person care. Though these errors weren’t associated with improper payments, OIG said the information may be useful for CMS when considering future oversight mechanisms or policy changes. 

THE LARGER TREND

The OIG noted that previous audits conducted before the pandemic had found high numbers of improper payment rates, and this report aimed to determine whether that continued during the early days of the COVID-19 PHE.  

The agency recommended that CMS work with contractors to recover the $35,560 in improper payments from the sample, implement system edits for psychotherapy services to prevent payments for improper billing, and add educational services for providers so they meet requirements. 

“Prior audits of individual providers’ psychotherapy services had similar deficiencies, which is evidence that compliance with Medicare documentation requirements for psychotherapy services was problematic before the PHE,” the OIG wrote. “Now that CMS has reinstituted most program integrity measures, CMS and the MACs [Medicare Administrative Contractors] must take action to establish adequate oversight mechanisms (e.g., conducting medical reviews of psychotherapy services and making providers aware of educational materials on billing and documentation for these services) to ensure that Medicare pays only for psychotherapy services that meet Medicare requirements.”