HHS OIG Targets Ophthalmology Practices for Medicare Billing Compliance: Eight Key Takeaways

April 29, 2021

One of the most challenging billing compliance issues ophthalmology practices encounter in coding and reimbursement is understanding when services provided on the same day as a surgical procedure are payable separately from Medicare’s “global surgery payment.” On March 29, 2021, the U.S. Department of Health and Human Services’ (HHS’) Office of Inspector General (OIG) released a report, An Ophthalmology Clinic in California: Audit of Medicare Payments for Eye Injections of Eylea and Lucentis, examining these issues in an audit of an ophthalmology practice’s billing of Medicare for intravitreal injections and other services provided to patients on the same day as the injections. The clinic was not specifically identified by the OIG, but is located in Newport Beach, California, and opened in 2008.

In recent years, the OIG has shown substantial interest in scrutinizing ophthalmology practices’ performance of intravitreal injections and use of Eylea and Lucentis. Previous OIG audits and evaluations have found that Medicare has routinely made payments for services related to intravitreal injections that do not qualify for reimbursement under Medicare’s rules. The OIG has also scrutinized these services for their substantial costs to the Medicare program. In 2018, Medicare paid approximately $270 million for intravitreal injections and an additional $2.9 billion for Eylea and Lucentis for Medicare beneficiaries. Further, in releasing the audit report, OIG noted it planned to release additional reports — one for each provider it audited in a series of such reviews.

The audit determined that this ophthalmology clinic had failed to familiarize itself with Medicare’s billing requirements, and as a result, it had routinely improperly billed Medicare for services not eligible to be billed separately because the services are included in Medicare’s global surgery payment. Notably, of the 100 beneficiary days sampled by OIG, all included at least one service or drug that did not comply with Medicare requirements.

As a result of this audit, the clinic agreed to (i) repay Medicare for the overpayments identified by the audit, (ii) review other claims it had submitted to Medicare to determine whether any additional payments the clinic received from Medicare required repayment, and (iii) implement policies and procedures to ensure its employees understand Medicare’s coverage, documentation and payment requirements for intravitreal injections and other ophthalmology services. On the basis of the claims reviewed and extrapolated by the OIG alone, the clinic was required to return nearly $400,000 to Medicare and to exercise reasonable diligence to identify and return additional similar overpayments.

This audit should serve as an important reminder to ophthalmology practices of the need to understand Medicare’s billing requirements. Further, providers need to ensure that patient records adequately reflect documentation support for the billed clinical services. Here are eight key takeaways from the audit for ophthalmology providers.

  1. Medicare’s Coverage for Wet AMD Injections.

    Medicare covers ophthalmology services that are “reasonable and necessary” for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member. Among these services, Medicare covers the treatment of eye diseases, including wet age-related macular degeneration (wet AMD), which occurs when abnormal blood vessels grow underneath the retina and leak blood or fluid that blurs central vision. This disease is the leading cause of severe vision loss in people over age 65 in the United States. Wet AMD is commonly treated with intravitreal injections, which involves injecting a drug into the retina. Medicare considers the treatment minor surgery, covered under Medicare Part B for outpatient services.
  1. Medicare Pays a Single Fee for All Necessary Services Related to a Procedure.

    Medicare reimburses physicians for surgical procedures, including intravitreal injections, through a “global surgery package” payment. Medicare’s payment for a surgical procedure includes the following:
  1. Pre-Operative Services — the initial consultation or evaluation of the problem by a physician to determine the need for surgery, commonly referred to as evaluation and management services (E&M services)
  1. Intra-Operative Services — services that are a usual and necessary part of the surgical procedure
  1. Post-Operative Services — follow-up services that are related to recovery from the surgery and routinely performed by the surgeon or by members of the same group with the same specialty

Intravitreal injections, as minor surgery, have a zero-day pre- and post-operative period. This means there is no pre-operative period and no post-operative days, but the visit on the day of the procedure is generally not payable as a separate service (absent the discussion in No. 3 below).

In addition to the global surgery payment, Medicare reimburses physicians with a separate payment for the drugs used in the intravitreal injection. Eylea and Lucentis are two common, high-cost drugs that physicians routinely use to treat wet AMD and Medicare provides reimbursement for their use. Medicare does not have a national requirement limiting the frequency at which a provider may bill for this injection, but the Food and Drug Administration’s (FDA) approved dosing guidelines for Eylea and Lucentis provide that the injections initially should be administered between once every 28 days and once every three months with regular assessment.

  1. Modifiers May Be Used for Services Unrelated to, Distinct From, or Significant and Separately Identifiable From the Surgery.

    In certain circumstances, a provider may receive an additional payment for certain services not included in the global surgery package payment. Medicare also allows a separate payment for other services, such as diagnostic imaging services, when the services are unrelated to, distinct from, or significant and separately identifiable from the surgery. Medicare has stringent requirements for when such services qualify for reimbursement. When a physician bills for such a service on the same day as the surgical procedure, a “bypass modifier” is attached to the billing code so Medicare provides additional reimbursement beyond the global surgery payment.

    In the audit report, the clinic appears to have been flagged by the OIG because it utilized a bypass modifier with 82 percent of the clinic’s non-drug injection services. Each bypass modifier has its own distinct requirements, but a bypass modifier is generally permissible only when (i) the clinical circumstances justify the use of the modifier, and (ii) the services provided under a modifier code are unrelated to, distinct from, or significant and separately identifiable from the surgery. Otherwise, the service should be considered part of the surgical bundle.

    Modifier 25 and Modifier 59 are two commonly used bypass modifiers and the OIG flagged that the clinic frequently used these bypass modified to claim additional reimbursement from Medicare for procedures it performed in connection with the intravitreal injections. Modifier 25 indicates that a service was for a significant, separately identifiable E&M service that was above and beyond the other service provided or beyond the usual pre-operative and post-operative care associated with the procedure. Modifier 59 indicates that a service was distinct or independent from other non-E&M services provided on the same day.
  1. Services Must be Significant and Clearly Distinct Surgical Procedures to Be Separately Payable.

    The OIG selected a stratified random sample of Medicare payments for intravitreal injections of Eylea and Lucentis and other services provided on the same days as the injections the clinic provided from Jan. 1, 2018, through Dec. 31, 2018, comprising 100 beneficiary days for its review. Of the 627 services and drugs associated with the 100 sampled beneficiary days, the OIG found 195 services were not separately payable and 106 billed services and drug charges were not reasonable and necessary.

    The audit specifically flagged that that the clinic routinely billed Medicare for certain services and drugs not separately identifiable from intravitreal injections. As a result, the OIG determined these were not eligible to be billed separately to Medicare. First, the clinic billed Medicare for 100 services for administration of an anesthesia drug, lidocaine, which, as pain control, was included in the injection procedure and therefore not separately reimbursable. Second, in general, the E&M services provided on the same date of service as a minor surgical procedure are also included in the payment for the procedure and are therefore not separately payable by Medicare. Despite this, the audit identified 95 cases where the clinic did just that.

    As one example, the audit noted one case where a patient received an extended ophthalmoscopy (eye exam) and injection of an anesthetic in addition to an intravitreal injection of Eylea. The extended ophthalmoscopy and anesthetic were billed to Medicare separately, but as previously discussed, neither of these services was eligible to be separately billed because the patient had received, and the provider had been paid for, other diagnostic services and Eylea. These services and drugs provided the same results and were included in the global surgery payment and the payment for Eylea. Only when a service is a significant and separately identifiable E&M service unrelated to the decision to perform the minor surgical procedure is the service eligible for separate reimbursement.
  1. Services Must Be Clinically Appropriate and Medical Necessity Must Be Robustly Documented.

    Services provided to patients must be medically reasonable and necessary to be eligible for Medicare reimbursement. The audit indicates that the OIG targeted the clinic because 50 percent of intravitreal injections billed by the clinic were provided in fewer days than the FDA’s recommended dosing guidelines for Eylea and Lucentis, and deduced that the services provided may not have been medically reasonable and necessary.

    While the audit found that the clinic generally complied with Medicare requirements when billing for intravitreal injections of Eylea and Lucentis, the audit also found that six services and drugs billed by the clinic were not supported by documentation showing they were reasonable and necessary. As a result, these claims were not eligible for reimbursement. For example, one claim was found ineligible for reimbursement because the clinic provided a patient with a second intravitreal injection of Eylea only 11 days after the first intravitreal injection, which was well short of the FDA dosing guidelines of 28 days from the first intravitreal injection. While the FDA dosing guidelines are just that, guidelines, a service must have medical necessity justified in the patient’s medical record. OIG noted in this example that the 11-day justification was because the patient was going to be out of town on the day the FDA guidelines prescribe for the second dose (i.e., 28 days after the first dose). While a government auditor may afford some level of deference to a provider’s clinical judgment, providers will not be given deference when the services were clearly not medically reasonable and necessary.

    Providers should ensure that patients’ medical records provide robust documentation for clinical findings. These medical records will be the focus of any audit. A healthcare provider may have provided necessary and appropriate services, but if the medical record does not contain documentation to support these clinical findings these claims may not hold up under an audit review.
  1. Providers Must Report and Return Identified Overpayments. 

    Under the 60-day rule, Medicare generally requires providers to report and return within 60 days any identified overpayments they received over the preceding six years. As a result of the audit, the clinic was required to identify, report and return any overpayments in accordance with the 60-day rule and identify any of those returned overpayments stemming from similar conduct as at issue in the audit. Providers should understand that their responsibilities for services they bill to Medicare do not end up on their receipt of reimbursement. The 60-day rule requires investigation upon knowledge of a potential overpayment. Furthermore, providers who fail to timely report and return an identified overpayment may be subject to substantial liability under the False Claims Act. As further discussed below, providers need to ensure they have robust compliance programs, which include billing audits to promptly identify and correct any billing compliance concerns.
  1. The Best Defense Is a Robust Compliance Program That Includes Education and a Strong Audit Function.

    In addition to disallowance and recovery of payments for impermissible services billed by healthcare providers to Medicare, the government has a variety of other tools to address noncompliance by healthcare providers participating in federal healthcare programs such as Medicare. These tools include administrative sanction such as exclusion or termination from participation in federal healthcare programs, suits under the False Claims Act, civil monetary penalties and criminal prosecution. A healthcare provider facing any of these enforcement mechanisms likely will see severe disruption to or termination of its practice of medicine. A good compliance program can help providers avoid or reduce these consequences.

    The OIG has recommended that every healthcare provider adopt an effective compliance plan based on “seven fundamental elements,” including implementing written policies, procedures and standards of conduct; conducting effective training and education; and conducting internal monitoring and auditing. The OIG and Medicare have emphasized that a strong compliance program based on the seven fundamental elements can help providers ensure the proper submission and payment of claims, reduce billing mistakes, avoid fraud and abuse, promote patient safety and ensure the delivery of high-quality patient care.

    This audit demonstrates that providers without strong compliance programs and firm understanding of Medicare’s billing requirements face substantial risk from a government audit. The clinic’s medical director acknowledged he was unfamiliar with Medicare’s billing requirements and relied on a third-party billing company to determine how each service should be billed. The third-party payor billing company relied on the physician to code bills correctly. A strong compliance program will help providers ensure their practices are compliant, but perhaps more importantly, help providers identify improper conduct so it may be corrected before the issues become as substantial as a financial penalty through repayment, as this clinic faces.
  1. Ophthalmology Providers Should Expect OIG and Medicare to Continue to Target Noncompliant Billing.

    The OIG stated that this was the first of a series of audits the OIG plans to issue on intravitreal injections and related services provided by ophthalmology practices. Ophthalmology practices should expect the OIG and Medicare to closely scrutinize healthcare providers at risk for noncompliance with Medicare billing requirements for surgical intravitreal injection procedures, as Medicare pays more each year for such injections.

    As the audited clinic would likely attest, healthcare providers should maintain and implement compliant billing policies to ensure compliance with payor requirements. Healthcare providers subject to a government audit or investigations should expect their practices to be substantially disrupted and should expect to devote significant administrative and financial resources for months or years in response to any audit or investigation. Targeted providers should also expect commercial payors to follow with their own audits.

Contact one of the authors of this alert for more information on best practices healthcare providers can implement to ensure their services comply with Medicare’s billing requirements or other compliance concerns.

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