APA is questioning the conclusion in a report by the inspector general of the U.S. Department of Health and Human Services (HHS) that nearly 59 percent of Medicare claims for acute outpatient psychiatric care are "unallowable or unsupported" because they failed to meet Medicare coding criteria.

APA has filed a request under the Freedom of Information Act to obtain the data used by the Department of Health and Human Services’ Office of the Inspector General (OIG) to compile its report. APA wants to determine for itself whether the startling conclusions are justified by the data before it prepares a response to the report.

APA will examine, for example, whether multiple claims eligible to be bundled ended up in the rejection pile based on just one or two coding mistakes or questionable services and whether wide variations in claims review practices affected the data.

"APA wants the data so we can be sure that the report does not overstate the extent of the claims problem," noted Sam Muszynski, director of APA’s Office of Healthcare Systems and Financing.

"There is something very wrong about review procedures that deny 59 percent of services rendered by clinically responsible service systems," said Lloyd Sederer, M.D., an APA deputy medical director and head of its Division of Clinical Services.

He added that APA is committed to working with the Health Care Financing Administration (HCFA) to change the procedures that the agency and its insurance intermediaries use to review outpatient services. APA’s goal in this, Sederer said, is to make sure that "patients can receive needed care and that service systems are fairly reimbursed for providing medically necessary care."

To prepare its report, the OIG reviewed a sample of 1997 Medicare claims for psychiatric services from acute-care hospitals in the 10 states with the highest volume of outpatient psychiatric claims. These are California, Connecticut, Florida, Illinois, Louisiana, Massachusetts, Michigan, New York, Pennsylvania, and Texas. The government looked at a variety of outpatient service claims including partial hospitalization programs.

The OIG’s analysis uncovered three areas in which it says reimbursement requests for psychiatric services failed to meet Medicare criteria—services were either "not documented in accordance with Medicare requirements, not reasonable and necessary, and/or rendered by unlicensed personnel." (Licensed personnel who are eligible to provide Medicare mental health services include physicians, psychologists, social workers, and clinical nurse specialists.)

The OIG reported that more of the problem claims were attributable to partial hospitalization than other types of acute outpatient services. The agency is not charging that all or even most of these questionable claims amount to fraud, just that they are incorrect.

The OIG made four recommendations to HCFA that it believes will dramatically reduce the incidence of such errors and inappropriate coding on Medicare reimbursement claims. HCFA is the agency within the Department of Health and Human Services that administers the Medicare program. The recommendations call on HCFA to take these actions:

• Consider implementing a first claim medical review of a random sample of new outpatient psychiatric service claims to ensure that Medicare program requirements are met.

• Require Medicare Part A fiscal intermediaries (FIs) to increase post-payment reviews of outpatient psychiatric service claims.

• Require Medicare FIs to initiate recovery of payments for claims found in error.

• Emphasize further its documentation requirements for all types of outpatient psychiatric services through seminars, education sessions, and newsletters.

The inspector general’s report notes that HCFA officials were receptive to all but the first recommendation. "HCFA believed that a first claim medical review of all new outpatient psychiatric claims would not be cost beneficial because of the volume of claims involved," stated the OIG report.

HCFA has told the OIG that in response to the other three recommendations, it will instruct its Medicare Part A insurance intermediaries to "increase the data analysis of psychiatric outpatient claims and increase the level of medical review based on the result; recover any funds paid in error; and educate providers on proper documentation through education sessions, bulletins, and seminars."

The Medicare claims audit, which was conducted between January and March 1999, determined that for the calendar year 1997 in the 10 states studied, "acute care hospitals billed Medicare approximately $224 million. . .for unallowable or unsupported" partial hospitalization and other outpatient psychiatric services. These same hospitals accounted for about 77 percent of all psychiatric-related Medicare claims filed in the U.S. during 1997.