CMS won't check $14.2M in questionable ER Medicare billing
Summary
Medicare is only supposed to pay emergency department rates when a patient was actually treated in an emergency department. A federal audit found $15.1 million in Medicare payments from 2021-2022 where the billing codes said otherwise -- $922,524 confirmed improper on physician claims, and $14.2 million more, potentially improper, on hospital claims. CMS agreed to recover the physician share. It declined to even check whether the hospital share needs to be paid back.
Every physician claim reviewed had the wrong code
On the physician side, 's findings are unambiguous: all 9,749 emergency-department procedures it reviewed had an incorrect, nonemergency place-of-service code attached -- most often coded as inpatient hospital, on-campus outpatient hospital, or an independent clinic. That 100% figure isn't a random-sample shock finding -- built its review population using data mining specifically to surface claims that already paired an emergency department code with a nonemergency location, so every claim it pulled was, by design, one that already showed the mismatch. The dollar total is real regardless: $922,524 in confirmed improper payments. Just two of Medicare's seven regional claims contractors, Noridian Healthcare Solutions and Novitas Solutions, were responsible for $893,847 of that total, about 97%. Both told they've since updated their systems to catch the error.
View data as table
| Hospitals, non-CAH (potential) | 9,553,078 |
|---|---|
| Hospitals, critical-access (potential) | 4,656,827 |
| Physicians (confirmed) | 922,524 |
A much larger, murkier problem at hospitals
The hospital side of the audit is bigger and less settled. flagged 111,705 hospital-billed emergency department procedures coded with a nonemergency revenue center code -- $9.55 million at standard hospitals and $4.66 million at critical-access hospitals, $14.2 million combined. couldn't confirm these as overpayments outright, because 's own billing manual, unlike the physician rules, never standardized which codes hospitals should use for emergency visits -- leaving hospitals to apply their own internal guidelines instead of one federal standard. 's recommendation wasn't to assume fraud; it was to actually go check.
One recommendation accepted, four declined
made five recommendations. agreed to just the first: recovering the $922,524 in confirmed physician overpayments. It declined the other four -- assessing the $14.2 million in hospital payments for recovery, extending system-edit fixes to the five contractors that hadn't already self-corrected, standardizing the manual language hospitals use for emergency billing, and reviewing claims filed after the audit period to see whether the problem is still happening. OIG's written response was blunt⧉: after reviewing 's objections, it maintains that all five recommendations remain valid.
View data as table
| CMS declined to assess | 14,209,905 |
|---|---|
| CMS agreed to recover | 922,524 |
CMS's case, and OIG's answer to it
's reasoning wasn't purely a budget argument. It pointed to pandemic-era billing flexibilities that overlapped the audit period, and said assessing $14.2 million in hospital claims "does not represent a rational investment of 's limited resources." It also directly disputed part of the finding: for the $4.66 million tied to critical-access hospitals specifically, told it believed those payments "were made appropriately." On the recurrence check, argued that since the two contractors behind 97% of the physician-side errors had already fixed their systems, further review "would not be the best investment of resources."
pushed back point by point. On the pandemic flexibilities, it noted it had already excluded the specific claim types (home-based and inpatient care) those flexibilities covered. On the critical-access hospitals, didn't concede the point -- it acknowledged hospitals can elect an optional cost-based payment method, but said its finding was about which billing codes were used for the service location, a separate question from how the hospital gets paid. And the two contractors' system fix, noted, addresses only the physician-side problem those two contractors caused -- not the separate, larger hospital revenue-code issue, and not the other five contractors' books.
There's a patient-side cost, too
There's a second, smaller number in this audit that's easy to miss: calculated that Medicare enrollees may have been charged up to $394,591 in Part B deductibles they shouldn't have owed, tied to these same miscoded hospital claims. Because declined to assess the underlying hospital payments, there's currently no mechanism in motion to determine which of those enrollees are owed a refund, or to issue one.
The takeaway
- is fixing the smallest, clearest-cut piece of the problem. The $922,524 it agreed to recover is about 6% of the $15.1 million this audit flagged -- the confirmed, unambiguous physician-side errors, not the larger and murkier hospital-side total.
- The bigger number, $14.2 million, isn't being checked at all. recommended determine whether that hospital money is actually owed back; mostly argued the assessment isn't worth its limited resources, though for the $4.66 million tied to critical-access hospitals specifically, it went further and disputed the finding outright.
- Without a recurrence check, no one knows if this is still happening. declined to review claims filed after the 2021-2022 audit period, reasoning that two contractors' fixes cover 'the vast majority' of the confirmed errors -- an argument that, by 's own account, doesn't reach the hospital-side problem at all.
This audit does not allege fraud by physicians, hospitals, or -- it identifies a coding-compliance gap and a disagreement between two federal bodies over how much of it is worth fixing. 's objections are presented here as reported in its own written comments, alongside 's specific rebuttals to each; nothing in the report suggests either side is arguing in bad faith. The $394,591 potential enrollee-deductible figure is 's own upper-bound estimate, not a confirmed amount actually collected from patients, since states it could not identify the actual amount collected.
Sources(1) ▾
- U.S. Department of Health and Human Services, Office of Inspector General, Emergency Department Procedure Codes Used on Medicare Claims for Services Billed With Nonemergency Department Sites of Service Resulted in Over $15 Million in Improper and Potentially Improper Payments (A-07-23-05139) (2026-03-01) — The full - audit report, read directly for this piece via its extractable text layer. Covers Medicare claims for calendar years 2021-2022 in which providers billed emergency department procedure codes but recorded the service location as a nonemergency setting, and includes 's full written response (Appendix C) and 's point-by-point reply to that response. oig.hhs.gov · original document
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Medicare's rule is straightforward: providers can only bill emergency department procedure codes when a patient was actually seen in an emergency department. A March 2026 HHS Office of Inspector General audit⧉ reviewed $15,132,429 in Medicare payments from 2021 and 2022 where providers billed emergency department codes but recorded the service location as somewhere else entirely -- an inpatient hospital bed, an outpatient clinic, an independent office. Of that total, $922,524 was confirmed improper. The other $14.2 million, billed by hospitals, remains potentially improper -- and has decided not to check.