OIG: Over Half of Medicare’s $1B Spending on Psychotherapy Services Was ‘Improper’

Medicare improperly paid an estimated $580 million for psychotherapy services during the COVID-19 public health emergency (PHE).

That’s according to a new audit from the Office of the Inspector General (OIG), which reported that between March 2020 and February 2021, Medicare Part B paid $1 billion for psychotherapy services, including telehealth services. The audit included 13.5 million psychotherapy sessions.

More than half of those services did not comply with Medicare requirements. Most improper payments were for telehealth services ($348 million), but non-telehealth services also made up a significant portion ($232 million).


In the audit, the OIG selected “stratified random samples of psychotherapy.” These samples included 111 enrollee days for telehealth services and 105 enrollee days for in-person services. Providers only met the Medicare requirements 84 days out of the total 216 days evaluated.

The audit found that Medicare paid $35,560 for the 128 sample days, which didn’t meet their requirements.

The most common reason providers did not meet Medicare requirements was that psychotherapy time was not documented. Other common reasons included incomplete or missing treatment plans and missing or insufficient documentation.


In response, the OIG has made several recommendations to the Centers for Medicare & Medicaid Services (CMS), including working with Medicare contractors to recover the $35,560 in improper payments found in the sample days.

The OIG also recommended that CMS implement system edits for psychotherapy services to curb incorrect billing. Additionally, the agency advises bolstering efforts to educate providers on requirements and guidelines for psychotherapy.

In January, the Biden administration announced that the PHE, which relaxed several regulations and notably expanded telehealth coverage, would end on May 11. Still, the federal government has made several of these flexibilities permanent.

Last year CMS finalized new rules to permanently cover some telehealth services provided in Medicare beneficiaries’ homes.

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