Federal officials allowed doctors to overbill for office visits and evaluations that cost the Medicare program more than $6 billion extra. But even after a government audit revealed this problem, the agency overseeing the program says it won’t take action in response.

The Medicare overcharges were discovered by the inspector general for the Department of Health and Human Services. Auditors determined that the excess billing amounted to $6.7 billion in 2010 alone.

“The natural question that comes out of this is: Are these physicians billing appropriately?” Dwayne Grant, regional inspector general for evaluation and inspections in the Atlanta region, who oversaw the new report (pdf), told ProPublica. “We don't want to pay them too much, but we don't want to pay them too little either.”

The IG’s office said that most physicians who handle Medicare patients don’t charge for the highest rate, known as Level 5. A small, but not insignificant number—1,200—did use Level 5 exclusively. Another 600 did so more than 90% of the time.

In addition, more than half of the claims reviewed were billed at the wrong rate or lacked documentation to justify the service.

After receiving the audit’s findings, the Centers for Medicare and Medicaid Services, which runs Medicare, announced it would not review the billings of doctors who use Level 5.

The reason: It is not cost effective.

Apparently, a separate review by one of Medicare’s contractors found some overpayments among 5,200 claims, but that any potential savings were eclipsed by the cost of conducting the review.

This is not the first time that the IG found a need to conduct such an investigation. In 2012, the agency determined that, over time, doctors had increasingly billed Medicare for more expensive office visits. But no determination was made as to whether or not claims were improper.

-Noel Brinkerhoff

To Learn More:

Medicare Overpays Billions for Office Visits, Patient Evaluations (by Charles Ornstein, ProPublica)

Improper Payments for Evaluation and Management Services Cost Medicare Billions in 2010 (Department of Health and Human Service, Inspector General) (pdf)

Overbilling by Doctors and Hospitals Costs Medicare a Billion Dollars a Year (by David Wallechinsky and Noel Brinkerhoff, AllGov)

AMA Helps Doctors Overbill Medicare by Exaggerating Time Needed for Procedures (by Noel Brinkerhoff, AllGov)

Private Insurance Companies Cost Medicare $34 Billion This Year (by David Wallechinsky, AllGov)