In 2007, the federal government overpaid health care providers by an estimated $14 million because Medicare claims contained erroneous place-of-service codes, according to an HHS-OIG report. Medicare reimburses providers at a higher rate for services provided in a non-facility setting, such as a physician’s office or an independent clinic. This higher reimbursement rate helps to cover the additional overhead costs of running the facility.
According the HHS-OIG audit, an astounding ninety percent of the claims sampled were miscoded as being for services conducted in a non-facility setting when, in fact, the services were performed at a hospital or an ambulatory surgical center. HHS-OIG “attribute[d] the overpayments to internal control weaknesses at the physician billing level and to insufficient postpayment reviews at the Medicare contractor level…” The False Claims Act would have been violated if the providers had submitted these false claims with reckless disregard or with actual knowledge of their falsity.