Medicare paid an estimated $19.5M for care that failed review

Medicare pays for a nursing-home resident's doctor visits, therapy sessions, and podiatry care separately from the nursing home's own bill -- each provider submits its own claim to a regional Medicare Administrative Contractor (MAC).▸ A July 2026 HHS Office of Inspector General audit⧉ tested whether Novitas Solutions, the MAC responsible for Arkansas, Colorado, Louisiana, Mississippi, New Mexico, Oklahoma, and Texas, was paying those claims correctly. It sampled 150 patient-months of evaluation-and-management, psychotherapy, podiatry, and wound-care billing from a pool of 292,794 patient-months worth $53.7 million. Ninety-one of the 150 -- three in five -- didn't meet Medicare's own requirements. Projected across the full pool, OIG estimates Novitas improperly paid approximately $19.5 million for these services in a single year.

OIG built a stratified sample -- 60 evaluation-and-management (E/M) claims, 60 psychotherapy claims, and 30 combined podiatry/wound-care claims -- and sent each to an independent medical reviewer with the underlying nursing-home records: physician orders, care plans, nurse notes, medication logs.▸ Podiatry failed most often, 14 of 18 sampled items (78%), almost all for missing the physician's order Medicare requires before billing a nail-debridement visit. E/M nursing-facility visits failed 42 of 60 times (70%), largely daily visits the reviewer found weren't medically justified by the patient's condition. Psychotherapy failed 35 of 60 times (58%). Wound care was the exception: all 15 sampled wound-care claims held up under review.

Across the 91 failed claims, reviewers cited four kinds of problems (some claims had more than one).▸ The largest, by far: 49 items were billed for care the documentation didn't show was reasonable or medically necessary -- frequent E/M visits to patients whose records showed no acute issue, order change, or follow-up need, and psychotherapy sessions without documented progress toward any treatment goal. Another 31 items were missing documentation altogether or didn't have enough of it to support the bill. Thirteen were coded at a higher, more expensive level of service than the documented visit supported. And nine were billed to Medicare Part B for care that should have gone through a different benefit entirely -- six of them E/M visits for patients who had already elected hospice, where the hospice program, not Part B, is supposed to cover care tied to the terminal diagnosis.

OIG picked Novitas because it was one of the three Medicare contractors nationwide that paid the most for these four service types -- part of a national pool of comparable claims that totaled $187 million⧉ when OIG started the audit.▸ Within just Novitas's own jurisdiction, the $19.5 million estimate -- with a 90% confidence range of $16.45 million to $22.51 million -- comes to more than a third, 36%, of everything Novitas paid for these services to nursing-home patients that year. Novitas told OIG it already runs monthly data-driven reviews and educates providers on billing rules, but that for psychotherapy claims specifically, it can only pursue the most egregious providers because of resource constraints -- and that nursing homes have long been a known risk area for exactly this kind of billing error.

OIG recommended Novitas add oversight -- more medical reviews, documentation checks, provider audits -- to catch these errors before payment, and deliver annual, targeted education to providers on the Medicare rules for these services.▸ Novitas concurred with both recommendations, and OIG's report notes that Novitas separately told auditors its error rates have been improving as it identifies billing patterns and focuses education efforts. The $19.5 million estimate covers what OIG's sample found for one audit year; the recommendations are aimed at preventing the same pattern going forward, not at recovering the specific dollars already paid.