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2023 Changes to Colorectal Screening Tests
Published on Mar 22, 2023
 | Coding 
 | Billing 

Did You Know?

The Code of Federal Regulations defines colorectal cancer screening tests as being any of the following procedures furnished to an individual for the purpose of early detection of colorectal cancer:

  • Screening fecal-occult blood tests.
  • Screening flexible sigmoidoscopies.
  • Screening colonoscopies, including anesthesia furnished in conjunction with the service.
  • Screening barium enemas.
  • Other tests or procedures established by a national coverage determination, and modifications to tests under this paragraph, with such frequency and payment limits as CMS determines appropriate, in consultation with appropriate organizations.

Why It Matters?

Effective January 1, 2023: If you code outpatient colonoscopy procedures, be aware of new Medicare guidelines where a positive stool-based colorectal cancer-screening test can, in some cases, constitute a screening colonoscopy.

The excerpt below is from the Code of Federal Regulations and can be seen in section K at this link: eCFR :: 42 CFR 410.37 -- Colorectal cancer screening tests: Conditions for and limitations on coverage.

“A complete colorectal cancer screening. Effective January 1, 2023, colorectal cancer screening tests include a follow-on screening colonoscopy after a Medicare covered non-invasive stool-based colorectal cancer screening test returns a positive result.”

Also refer to Coding Clinic for HCPCS 4th quarter 2022, page 17 for additional information.

What Can I Do?

Share this information with your outpatient coding professionals. For non-Medicare payers, it may be necessary to contact them directly for guidance.

Jeffery Gordon

Fiscal Year 2022 Fourth Quarter PEPPER Release
Published on Mar 15, 2023

The fourth quarter FY 2022 Short-Term Acute Care Program for Evaluating Payment Patterns Electronic Report (PEPPER) was released last week. At the same time, the 36th Edition of the related PEPPER User’s Guide is now posted on the PEPPER Resources website.

About the PEPPER

As part of a hospital’s Compliance Program, regular chart audits should be completed to confirm guidance with Medicare coverage, coding, and billing requirements. The PEPPER is a free resource that provides a compare of a hospital to its state, MAC region, and the nation for specific Target Areas. This comparison enables a hospital to identify whether it is an outlier as compared to other short-term acute care hospitals.

In general, there are two types of Target Areas, targets related to DRG coding and admission necessity focused target areas. The “PEPPER does not identify the presence of payment errors, but it can be used as a guide for auditing and monitoring efforts. A hospital can use PEPPER to compare its claims data over time to identify areas of potential concern:

  • Significant changes in billing practices
  • Possible over- or under – coding, and
  • Changes in lengths of stay.”

When CMS approves a Target Area it is because it has been identified as prone to improper Medicare payments. Historically, target areas have been the focus of past Office of Inspector (OIG) or Recovery Auditor audits.

35th Edition PEPPER User’s Guide, What’s New?

Three target areas have been removed from the report including Excisional Debridement, Emergency Department Evaluation and Management Visits, and Chronic Obstructive Pulmonary Disease.

In keeping with the trend that MMP has noticed where services are moving away from the inpatient hospital setting, the existing Spinal Fusion target area has been modified to now include hospital outpatient spinal fusion claims.

The last change is to the existing Percutaneous Cardiovascular Procedures target area. This has been modified to remove reference to the following two outpatient codes in the denominator:

  • Current Procedural Terminology® (CPT®) code 92942, and
  • Healthcare Common Procedure Coding System (HCPCS) code C9606.

Moving Forward

Also included in the PEPPER User’s Guide are suggested interventions for when a hospital is a high or low outlier for each of the review targets.

DRG Coding Focused Target Area Example: Unrelated OR Procedure

  • Suggested Interventions for High Outliers: “This could indicate that there are coding or billing errors related to over-coding of DRGs 981, 982, 987, 988, or 989. A sample of medical records for these DRGs should be reviewed to determine whether the principal diagnosis and principal procedure are correct.
  • Suggested Intervention for Low Outlier: “This could indicate that the principal diagnosis is being billed with the related procedures No intervention is necessary.”

Admission Necessity Focused Target Area Example: Spinal Fusion

  • Suggested Interventions for High Outlier: “This could indicate that unnecessary spinal fusion procedures may have been performed. A sample of medical records for spinal fusion cases, including both the inpatient and outpatient setting, should be reviewed to validate the medical necessity of the procedure. Medical record documentation of 1) previous non-surgical treatment, 2) physical examination clearly documenting the progression of neurological deficits, extremity strength, activity modification, and pain levels, 3) diagnostic test results and interpretation, and 4) adequate history of the presenting illness, may help substantiate the necessity of the procedure.”
  • Suggested interventions for Low Outlier: “Not applicable, as this is an admission-necessity focused target area.”

Of note, more than half of the target areas in the 36th Edition User’s Guide are admission-necessity focused. Moving forward, I encourage you to review your hospital’s latest PEPPER and take advantage of suggested interventions available in the User’s Guide, paying close attention to documentation that may help substantiate the inpatient admission.


PEPPER Resources:

Beth Cobb

Peripheral Nerve Block for Pain Management after Total Knee Arthroplasty
Published on Mar 08, 2023
 | Coding 

Did You Know?

A peripheral nerve block (PNB) may be reported for postoperative pain management following a Total Knee Arthroplasty (TKA), if not captured by the hospital’s Chargemaster.

Why It Matters?

Various studies have shown that PNBs following a TKA can deliver safe and effective pain relief. This type of pain relief can improve postoperative pain, patient satisfaction, and decrease the need for opioid use. Coding PNBs do not affect the DRG; however, reporting a procedure code for PNB will give a more accurate clinical picture of what was required to take care of that TKA patient.

Also, an ICD-9 Coding Clinic noted that coding a procedure for management of postoperative pain was permissible.

What Can I Do?

  1. Review documentation from the Anesthesiologist that indicates the surgeon requested a PNB for postoperative pain management. This documentation is typically found on a Pre-Anesthesia Evaluation sheet. Types of PNB: Femoral, Obturator, Sciatic, Lumbar Plexus, and Adductor Canal Nerve.
  2. Contact the business office to see if this procedure was captured in the Chargemaster.
  3. Verify if there is a hospital policy for coding secondary procedures that do not affect the DRG.
  4. Educate coding staff.


Coding Clinic, 2nd Quarter 2000, page 14

Review on Nerve Blocks Utilized for Perioperative Total Knee Arthroplasty Analgesia | Published in Orthopedic Reviews (

Anita Meyers

Colorectal Cancer Awareness Month
Published on Mar 08, 2023
 | Coding 

Did You Know?

The U.S. Preventive Services Task Force’s indicated in their May 18, 2021 Final Recommendation statement for colorectal cancer screening that:

  • It is estimated that 10.5% of new colorectal cancer cases occur in persons younger than 50 years,
  • Incidence of colorectal cancer (specifically adenocarcinoma) in adults aged 40 to 49 years has increased by almost 15% from 2000-2002 to 2014-2016,
  • In 2016, 25.6% of eligible adults in the US had never been screened for colorectal cancer, and
  • In 2018, 31.2% were not up to date with screening.

Based on these recommendations, this time last year I wrote that 45 was the new 50 for colorectal cancer screening.

Why it Matters?

Effective January 1, 2023, the recommended minimum age for certain colorectal screening tests has decreased from 50 to 45 years of age and older.

MLN Matters article MM13017, Removal of a National Coverage Determination and & Expansion of Coverage of Colorectal (CRC) Screening includes:

  • A list of the specific screening tests where the minimum age has decreased from 50 to 45 years and older, and  
  • An expanded definition of CRC screening tests and new billing instructions for colonoscopies under certain scenarios.

Also, National Coverage Determination (NCD 210.3) Colorectal Cancer Screening Tests has been revised to reflect the decrease in minimum age for each of the covered indications listed in this policy.

2023 Colorectal Cancer Screening Claims Being Held: Palmetto GBA, the Medicare Administrative Contractor for Jurisdictions J and M posted the following open claims issue regarding colorectal cancer screening claims:

“CMS has instructed Medicare Administrative Contractors to hold colorectal cancer screening claims with HCPCS codes G0104, G0105, G0106, G0120, G0121, G0327, G0328, 81528 and CPT® code 82270 until April 4, 2023. Claims for dates of service on or after January 1, 2023, will be held to allow the CMS system maintained to make updates to the claim processing system to accommodate 2023 colorectal cancer screening coverage changes.”

What Can You Do?

As a healthcare provider, be aware of the changes in Medicare’s colorectal screening coverage. The following changes have been made to the MLN Educational Tool Medicare Preventive Services

  • Information has been added about reduced coinsurance (starting January 1, 2023) when a screening colorectal cancer procedure becomes diagnostic or therapeutic,
  • The reduced minimum age for colorectal cancer screening tests from 50 to 45, and
  • If a non-invasive stool-based test returns a positive test, colorectal cancer screening tests now include a follow-up screening colonoscopy.  

As a healthcare consumer, I encourage everyone to talk with your doctor about your risk(s) for colorectal cancer and the need for screening tests.


U.S. Preventive Services Task Force May 18, 2021 Final Recommendation Statement for colorectal cancer screening:

MLN MM13017:

MLN Educational tool Medicare Preventive Services:

NCD 210.3 Colorectal Cancer Screening Tests:

Palmetto GBA Claims Payment Issue: 2023 Colorectal Cancer Screening Claims Being Held:

Beth Cobb

February 2023 Medicare Transmittals, MLN Articles and Coverage Updates
Published on Mar 01, 2023
 | Billing 
 | Coding 

Medicare Transmittals & MLN Articles

January 24, 2023: MLN MM12865: Provider Enrollment: Regulatory Changes Make sure your staff knows about recent enrollment changes, including Skilled Nursing Facility (SNF) screening and fingerprinting requirements, screening of certain changes of ownership, and screening for “bump-ups.”


January 27, 2023: MLN MM13063: Rural Health Clinic & Federally Qualified Health Center Medicare Benefit Policy Manual Update This article highlights key 2022 and 2023 updates for Rural Health Clinics (RHCs) and Federally Qualified Health Centers (FQHCs) for example, effective January 1, 2023, RHCs and FQHCs are paid for chronic pain management (CPM) services when a minimum of 30 minutes of qualifying non-face-to-face CPM services are provided during a calendar month.


February 2, 2023: MLN MM13017: Removal of a National Coverage Determination & Expansion of Coverage of Colorectal Cancer Screening This article details removal of NCD 160.22 Ambulatory Electroencephalographic (EEG) Monitoring, the minimum age for certain colorectal screening tests (CRC) decreasing from 50 to 45, and expansion of the definition of CRC screening tests and new billing instructions for colonoscopies under certain scenarios.


February 2, 2023: MLN MM13052: New Payment Adjustments for Domestic N95 Respirators Under the OPPS & IPPS, CMS is providing payment adjustments to hospitals for National Institute for Occupational Safety and Health (NIOSH) approved surgical N95 respirators cost differential. To be reimbursable by Medicare, NIOSH-approved surgical N95 respirators must be wholly made in the United States. Action needed related to this MLN article is to make sure your reimbursement staff know about the cost reporting period changes and documentation requirements starting January 1, 2023.


February 2, 2023: MLN MM13082: Clinical Laboratory Fee Schedule & Laboratory Services Subject to Reasonable Charge Payment: Quarterly Update The next CLSF data reporting period for Clinical Diagnostic Laboratory Tests (CDLTs) is delayed until January 1- March 31, 2024. This article also provides information about the general specimen collection fee increase and new and discontinued HCPCS codes.


MLN MM12103: Extension of Changes to the Low-Volume Hospital Payment Adjustment & the Medicare Dependent Hospital Program Affected Providers includes Low-volume hospitals and Medicare-dependent hospitals (MDHs). This article includes information and criteria and payment adjustments for FY 2023 and the extension of the MDH program through September 30, 2023. 

Revised Transmittals & MLN Articles


December 14, 2022 – Revised January 23, 2023: MLN MM13031: Hospital Outpatient Prospective Payment System: January 2023 Update This article was revised due to a revision to Change Request (CR) 13031 updating tables 5 and 6 and added table 20 to update the pass-through status of 5 devices to extend pass-through status for a 1-year period starting on January 1, 2023.


Coverage Updates

February 6, 2023: MLN MM13070: ICD-10 & Other Coding Revisions to National Coverage Determinations: July 2023 Update NCDs with changes effective July 1, 2023 includes: NCD 20.4 – Implantable Cardiac Defibrillators (ICDs), NCD 20.7 – Percutaneous Transluminal Angioplasty (PTA), NCD 20.20 External Counterpulsation Therapy, NCD 150.3 – Bone Density Studies, NDC 150.10 – Lumbar Artificial Disc Replacement (LADR), NCD 210.1 – Prostate Cancer Screening, and NCD 220.13 – Percutaneous Image-Guided Breast Biopsy.


February 23, 2023: Transmittal 11875 (Change Request 13073): NCD 50.3 – Cochlear Implantation Manual Update The purposed of this CR is to update manuals with the revised eligibility criteria for the cochlear implantation NCD that is expanding beneficiary coverage for treatment of bilateral pre- or post-linguistic, sensorineural, moderate-to-profound hearing loss in individuals who demonstrate limited benefit from amplification.



Beth Cobb

February 2023 PAR Physician Part B Pro Tip: Transthoracic Echocardiography
Published on Feb 22, 2023
 | Billing 
 | Coding 

MMP’s Protection Assessment Report (P.A.R.) combines current Medicare Fee-for-Service review targets (i.e., MAC, RAC, OIG) with hospital specific paid claims data made possible through a collaboration with RealTime Medicare Data (RTMD). Monthly, our newsletter spotlights current review activities.


February 22nd is National Heart Valve Disease (HVD) Awareness Day. One way to diagnose HVD is to perform an echocardiogram. You can read more about causes, risk factors, symptoms, and treatment of HVD  in a related article in this week’s newsletter. This article highlights one MAC’s Targeted Probe and Educate (TPE) review results for Transthoracic Echocardiography (CPT® code 93306).  


Palmetto GBA Jurisdiction J Part B TPE Review Results for Transthoracic Echocardiography July through September 2022

Palmetto GBA recently published their review results for CPT® code 93306: Echocardiography, Transthoracic, Real-Time with Image Documentation, for July through September 2022 claims. Jurisdiction J includes Alabama, Georgia, and Tennessee.


Review Results by the Numbers

  • Thirty-seven providers received additional documentation requests (ADRs) for claims for this review.
  • Palmetto GBA reviewed 1,480 claims.
  • The state specific claim denial rate was 35% in Tennessee, 46% in Alabama and 50% in Georgia.
  • Overall, 45% of the claims were denied.
  • The total dollar denied amount was $101,664.11.
  • Twenty-five providers were found to be “non-compliant” and will progress to a second TPE review of records.


    National Volume and Payment for CPT® 93306 July – September 2022 Claims

    In Palmetto GBA’s article Medicare Coverage of Echocardiography, they “identified CPT 93306 as an area of vulnerability” and noted “this code is a major risk.” As this is a TPE review target, is seems Palmetto GBA continues to identify CPT® 93306 as “an area of vulnerability” and “major risk.”


    Since the RTMD database now covers all 50 states and D.C. and inpatient discharges, outpatient hospital services and CMS 1500 Professional Services, I wanted to quantify this “major risk” at the national level.


    RTMD July-September 2022 Part B Professional Claims by Site of Service

    • Non-Hospital: 710,467 claims volume and $107,785,891 payment
    • 21-Inpatient Hospital: 569,770 claims volume and $30,110,417 payment
    • 22-Outpatient Hospital: 556,523 claims volume and $29,110,491 payment
    • 19-Off Campus-Outpatient Hospital: claims 85,517 volume and $4,624,688 payment
    • 23-Emergency Room Hospital: 12,983 claims volume and $674,203 payment


    The Total Volume was 1,935,260 and the Total Payment was $172,305,690. For this three-month time, a 45% claims denial rate equates to 870,867 non-paid claims with a loss in revenue of just over $77.5 million.


    Reasons for Claim Denial

  • 26% of the denials were due to Palmetto GBA not receiving the documentation requested or the documentation was incomplete, and they were unable to make a reasonable and necessary determination.
  • 24% of denials were due to the documentation that was submitted not supporting medical necessity of the services billed based on Palmetto GBA’s applicable Local Coverage Determination (LCD L37379).
  • 19% of the denials were due to documentation containing an incorrect, incomplete, or illegible patient identification or date of service.
  • 18% of the denials were due to a claim billed in error by the Provider.
  • Finally, 11% of the denials were due to documentation not being signed by the rendering Provider.


    Specific to documentation not supporting medical necessity, Palmetto GBA noted in the article mentioned above, that “Echocardiography performed for screening purposes is not covered. Screening includes testing performed on patients who present with risk factors (including the risk factor such as having a positive family history, e.g., familial history of Marfan’s disease). Screening service for high-risk patients is considered good medical practice but is not covered by Medicare. When a screening test is performed, use the appropriate screening ICD-10 code to indicate the test is being done for screening purposes. When the result of the test is abnormal, subsequent diagnostic services may be billed with the test-result diagnosis; however, the initial screening test must be listed as screening, even though the result of the screening test may be a covered condition. Symptoms or an existing condition must be present in the medical record to meet medical necessity.”


    Moving Forward

    For Providers in Palmetto GBA’s Jurisdiction J or M, Take the time to read LCD L37379 and related Local Coverage Article (LCA) A56625 to identify covered indications and diagnoses for this procedure. Palmetto GBA has also made available an on-demand webinar Medicare Coverage of Echocardiography CPT® Code 93306, noting it should be of interest to the Part B Providers staff, managers, supervisors, medical record departments or third parties that respond on behalf to medical records requests from Palmetto GBA or any other CMS review contractor.


    For Providers in other MAC jurisdictions, search the Medicare Coverage Database to identify any applicable LCDs or LCA in place for CPT® 93306.



  • Palmetto GBA February 2, 2023 TPE Review Results for Transthoracic Echocardiography:
  • Palmetto GBA Article Medicare Coverage of Echocardiography:,flow%2C%20valves%2C%20and%20chambers
  • Palmetto GBA Medicare Coverage of Echocardiography OnDemand Webinar:

Beth Cobb

National Medicare Claims Review Contractor Year One Review Results
Published on Feb 15, 2023
 | Billing 
 | Coding 

We are fast approaching the ten-year anniversary of the Two-Midnight Rule that went into effect on October 1, 2013. Following the start date of this rule, CMS provided sub-regulatory guidance. Specific to claims reviews, CMS directed Medicare review contractors to apply the Two-Midnight presumption that “directs medical reviewers to select Part A claims for review under a presumption that the occurrence of 2 midnights after formal inpatient hospital admission pursuant to a physician order indicates an appropriate inpatient status for a reasonable and necessary Part A claim.”

Initially, Medicare Administrative Review Contractors (MACs) were tasked with auditing short stay claims. Next, this task was turned over to the two Beneficiary and Family Centered Care Quality Improvement Organizations (BFCC-QIOs) KEPRO and Livanta. In 2019, reviews were halted as CMS began the process of selecting one contractor to perform Short Stay Reviews (SSRs) and Higher Weighted DRG (HWDRG) reviews nationally.

In April 2021, Livanta announced they had been awarded the contract to be the National Medicare Claim Review Contractor. Livanta notes on their website that “claim review services represent an important activity of advancing Medicare’s triple aim of better health, better care, and lower costs.”

In October 2021, Livanta began requesting records monthly and they have recently posted their First Year Review Findings for SSRs and HWDRG reviews.

First Year Review Findings for Short Stay Reviews

Livanta notes in this report that SSRs focus on appropriate application of the Two-Midnight Rule, they are not incentivized to find errors, providers may provide supplementation documentation for initially denied claims, and a hospital may request education sessions at any point in the review process.

Livanta developed a review strategy, approved by CMS, to score each eligible paid claim to account for the influences of volume, cost, and clinical risk of improper payment. This score also scores a claim by length of stay (LOS) with a 0-day LOS scoring higher than a 1-day LOS.


Year 1 Report Highlights

  • Livanta reviewed 18,672 short stay claims,
  • 2,663 (14%) reviews were denied,
  • The 0-Day LOS error rate was eighteen percent,
  • The 1-Day LOS error rate was thirteen percent,
  • The highest volume of claims denied were circulatory system claims, and
  • The principal diagnosis with the highest number of denials was I480 (Paroxysmal atrial fibrillation).

    Higher Weighted DRG Reviews

    A HWDRG review occurs when a claim is resubmitted by a hospital with a higher weighted DRG as a correction to an original claim. The focus of this type of review is “on medical necessity of the inpatient admission and DRG validation.” Further, “this review activity helps ensure that the patient’s diagnostic, procedural, and discharge information is coded and reported properly on the hospital’s claim and matches documentation in the record.” Similar to SSRs, each claim is scored to account for the influences of volume, cost, and clinical risk.

    Year 1 Report Highlights

  • Livanta completed 54,251 reviews.
  • A Livanta physician identified 4,804 clinical coding errors due to lack of evidence to support the diagnosis code.
  • >There were 6,480 technical coding errors that involved inappropriate application of ICD-10-CM/PCS coding guidelines.

Top Three Reasons for a Denial

  1. The principal diagnosis was not supported by the medical record and coding guidelines.
  2. Submission of a major complication or comorbidity (MCC) or CC not supported by documentation in the medical record. Common diagnoses cited in the report were sepsis, encephalopathy, and malnutrition.
  3. Inappropriate query submissions and unsupported responses.

Moving Forward

Share this information with your Coding and Clinical Documentation Integrity professionals. I also encourage you to review information available to Providers on Livanta’s website and sign up for their monthly newsletter, The Livanta Claims Review Advisor.


Beth Cobb

New / Revised ICD-10-CM Codes: Substance Use of Unspecified Severity in Remission
Published on Feb 15, 2023
 | Coding 

Did You Know?

There are new ICD-10-CM codes for substance abuse or dependence as of October 1, 2022.  Assign the following substances to “in remission” when the previous severity of use is unknown (whether there was abuse or dependence), classifying the substance as unspecified.


Why It Matters?

Prior to October 1, 2022, identifying “in remission” was not possible for these substances.  Now, “in remission” can be reported, which will capture more specific information that can be used for data outcomes.

New Code



Alcohol use, unspecified, in remission


Opioid use, unspecified, in remission


Cannabis use, unspecified, in remission


Sedative, hypnotic, or anxiolytic use, unspecified, in remission


Cocaine use, unspecified, in remission


Other stimulant use, unspecified, in remission


Hallucinogen use, unspecified, in remission


Inhalant use, unspecified, in remission


Other psychoactive substance use, unspecified, in remission


There is also a new code for alcohol use when the pattern is unknown, but the alcohol usage is not complicated and is not associated with an alcohol-induced disorder, such as alcohol-induced mood disorder.


New Code



Alcohol use, unspecified, uncomplicated


What Can I Do?

Stay abreast of all new ICD-10-CM codes and new Coding Clinic references.


Coding Clinic for ICD-10-CM/PCS, Fourth Quarter 2022, Page 16

Susie James

FY 2022 HHS Agency Financial Report
Published on Jan 30, 2023
 | Coding 
 | Billing 

Payment Integrity: Medicare FFS Hospital Outpatient

The FY 2022 HHS Agency Financial Report ( was published in late 2022.  Section 3 of this document includes the Payment Integrity Report where HHS indicates “the actual overpayments identified by the Comprehensive Error Rate Testing program during the FY 2022 report period were $24,004,089.28. The MACs recovered the identified overpayments via standard payment recovery methods. As of the report publication date, MACs reported collecting $15,552,853.67 or 64.79 percent of the actual overpayment dollars.”


The improper payment estimate for hospital outpatient claims increased from 4.57 percent in RY 2021 to 5.43 percent in RY 2022. However, this increase was not statistically significant. The primary reason cited for hospital outpatient errors was “missing documentation to support the order, or the intent to order for certain services.   


Mitigation Strategies and Corrective Actions

HHS addresses improper payments through mitigation strategies and corrective actions believing that “targeted actions will prevent and reduce improper payments in these areas.” Strategies and corrective actions in the hospital outpatient setting cited in this report includes:  


Internal Policy Change: In 2020, HHS implemented the Prior Authorization for Certain Hospital Outpatient Department (OPD) Services process. This initiative was once again expanded in the CY 2023 OPPS Final Rule to include Facet Joint interventions effective July 1, 2023.


Internal Process: Medical Review Strategies

Medical review strategies are developed “using improper payment data to target the areas of highest risk and exposure. HHS requires its Medicare review contractors to identify and prevent improper payments due to documentation errors in certain error-prone claim types,” including hospital outpatient claims.


Audits: Targeted Probe & Educate (TPE)

Medicare Administrative Contractors (MACs) perform the TPE process. In 2022, MACs continued to offer extensions as needed due to the continued impacts of COVID-19. Approximately 3,280 hospital outpatient providers were reviewed by the MACs in 2022.


Audits: Supplemental Medical Review Contractor (SMRC)

The SMRC conducts reviews on a post-payment basis at the direction of CMS. When the SMRC completes a review, the results are shared with the MACs for claim adjustments. Providers receive detailed review result letters and MAC demand letters for overpayment recovery. Letters include educational information regarding what was incorrect in the original billing of the claim. In 2022, the SMRC performed post-payment medical reviews for 26,777 hospital outpatient claims.


Audits: Recovery Audit Contractor (RAC) Reviews

In 2022, the largest share of Medicare FFS RAC collections (37.4 percent) were from hospital outpatient overpayments.


Moving Forward

  • Prepare for the July 1, 2023 addition of Facet Joint interventions to the Prior Authorization for Certain OPD Services process.
  • Identify active TPE, SMRC and RAC review targets to assess your compliance with related documentation, coding, and billing requirements.
  • Respond to additional documentation requests in a timely manner.

Beth Cobb

2022 CERT Annual Report
Published on Jan 30, 2023

Fiscal Year 2022 Supplemental Improper Payment Data

On December 8, 2022, the Comprehensive Error Rate Testing (CERT) published the 2022 Medicare Fee-for-Service Supplemental Improper Payment Data (

This report supplements the FY 2022 HHS Agency Final Report for Fiscal Year 2022, highlights common causes of improper payments, and includes tables allowing you to drill down into the review findings.


Estimated Improper Payment Rates

Calculation for the FY 2022 Medicare FFS improper payment rate included claims submitted during the 12-month period from July 1, 2020 through June 30, 2021. As compared to FY 2020 and 2021, the improper payment rate is trending up:


Improper Payment Rate

  • FY 2020: 6.27%
  • FY 2021: 6.26%
  • FY 2022: 7.46%

    Improper Payment Amount

  • FY 2020: $25.74 billion
  • FY 2021: $25.03 billion
  • FY 2022: $31.46 billion.


    “It is important to note that the improper payment rate is not a “fraud rate,” but is a measurement of payments that did not meet Medicare requirements. Improper payments are attributed to one of five major error categories (no documentation, insufficient documentation, medical necessity, incorrect coding, or other).

    Similar to prior years, in FY 2022 “insufficient documentation” was the main cause of improper payments. The CERT defines “insufficient documentation” as when the medical record documentation submitted is inadequate to support payment for the services billed. In other words, the CERT contractor reviewers could not conclude that the billed services were actually provided, were provided at the level billed, and/or were medically necessary. Claims are also placed into this category when a specific documentation element that is required as a condition of payment is missing, such as a physician signature on an order, or a form that is required to be completed in its entirety.

    While the CERT data reports on improper payments in several settings (i.e., skilled nursing facilities, hospital outpatient, hospice), this article focuses on Part A (Hospital IPPS) findings.



    “0 or 1 day” Length of Stay Claims

    A compare of improper payments rates for Part A hospital claims by length of stay (LOS) has been a part of this report since the October 1, 2013 implementation of the Two-Midnight Rule:


  • 2014: “0 or 1 Day” stay claims highest improper payment rate to date at 37.18%,
  • 2021: “0 or 1 Day” stay claims lowest improper payment rate to date at 16.8%.
  • 2022: The “0 or 1 Day” claims rate increased to 20.1% with projected improper payments of $1.5 billion.


In addition, to the CERT’s focus on claims by length of stay, short stays (“0 of 1 Day” Stays) are also actively being reviewed by the OIG as part of their Work Plan ( and Livanta, the National Medicare Claim Review Contractor (, who is actively requesting short stay claims across the nation on a monthly bases.  


Top 20 Service Types with Highest Improper Payments: Part A Hospital IPPS

Table D4 of this report includes the top 20 DRG types with the highest improper payment rate. The table also details the percentage of error by each of the CERT’s major error categories.


Overall, 44.4% of the errors in the top 20 service types were due to error category medical necessity. A claim is placed in this category when the CERT contractor reviewer receives adequate documentation from the medical records submitted to make an informed decision that the services billed were not medically necessary based upon Medicare coverage and payment policies. One hundred percent of the errors for the following two DRG Types was attributed to medical necessity:


  • DRG Group 252, 253, and 254: Other Vascular Procedures, and
  • DRG Pair 551 and 552: Medical Back Problems.


    Top Root Causes of Improper Payments

    The 2022 report includes tables highlighting the top root cause of improper payments for the top three service types with the highest projected improper payments in the Part A (Hospital IPPS) setting.



    Moving Forward

    Moving forward, here are ideas and resources to help in your efforts to prevent claims errors:

  • Visit the CERT Provider Website ( to find information about the CERT, how to submit records, sample request letters and much more,
  • Become familiar with National and Local Coverage Determinations and Local Coverage Articles that detail indications and limitations of specific services. For example, CMS has published an MLN Booklet titled Major Joint Replacement (Hip or Knee) ( to provide guidance on what to document to avoid denied claims, and
  • Take the time to review the CERT’s Supplemental Improper Payment Data report annually.
  1. Major Hip and Knee Joint Replacement or Reattachment of Lower Extremity (DRGs 469, 470) Top Root Cause: “Inpatient admission not medically necessary and the invasive procedure should have been billed as an outpatient procedure.”
  2. Endovascular Cardiac Valve Replacement and Supplement Procedures (DRGs 266, 267) Top Root Cause: “Documentation to support medical necessity for the procedure – missing.”
  3. Percutaneous Intracardiac Procedures (DRGs 273, 274) Top Root Cause: NCD requirement(s), other documentation required for payment – Missing.”

Beth Cobb

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