OIG: 91 of 150 nursing home Part B patient-months missed Medicare requirements at Novitas

Twelve podiatry items failed because nobody could produce a compliant nursing facility order. Eight E/M items failed because no records came back at all. HHS-OIG posted audit A-06-21-04002 on July 20, 2026: of the 150 patient-months of nursing home Part B services it sampled from Novitas Solutions, Inc. in Jurisdiction H, 91 did not meet Medicare requirements and guidance, and OIG projected $19.5 million in improper payments across the audit period.

150 patient-months, $41,944, one independent reviewer

OIG looked at Part B claims for patients living in nursing homes, billed by the providers who saw them rather than by the facility. The audit period ran October 1, 2018 through September 30, 2019, and it covered payments Novitas made in Jurisdiction H.

The sampling frame was 292,794 patient-months worth $53,688,118. From that, OIG drew a stratified random sample of 150 patient-months totaling $41,944 and sent the records to an independent medical review contractor. A patient-month bundles every payment for one service type for one patient in one calendar month, so it isn't a claim count.

Of the 150, 59 items met the requirements, and 4 of those 59 were never actually reviewed. OIG treated them as non-errors because the billing providers went out of business after OIG had selected the sample. The other 91 items did not meet the requirements and carried $14,322 in improper payments.

Projected across the frame, OIG estimated $19,480,109 in improper payments for the audit period. That $19.5 million is a statistical estimate built from a sample, not a list of identified overpayments.

Where the errors landed, by service type

Four service families were in scope: evaluation and management, psychotherapy, podiatry, and wound care. Three of them accounted for every failure.

The reviewed column totals 153 rather than 150 because 3 sample items included both podiatry and wound care in the same calendar month and got counted in each service type.

Sorted by why they failed rather than by what was billed, the contractor found 49 items not reasonable and medically necessary, 31 insufficiently documented or with no documentation provided, 13 incorrectly coded, and 9 not separately payable under Part B. Those add to more than 91 because 11 items carried more than one type of problem.

E/M: routine checkups and levels the note didn't carry

E/M was the largest single block, 42 of 60 sample items. For 24 of those, the contractor determined the services weren't reasonable and medically necessary. The documentation didn't show an acute issue, a medication or order change, or follow-up on a prior problem that would justify the visit frequency in that month, and in most of those cases the contractor characterized the encounters as routine physical checkups. That frequency standard comes from Novitas LCD L35068, so check your own MAC's E/M policy before you apply it as a national rule.

Another 13 items were incorrectly coded. For 11 of them the contractor found the documentation didn't support the key components required for the level billed and a lower level should have been used. The other 2 flipped initial and subsequent nursing facility care. Worth dating that finding: these are FY2019 claims, leveled under the key-component rules in force then. As of January 1, 2023, CMS instructs that for most E/M visit families you choose the visit level on the level of medical decision making or the amount of time you spend with the patient, so the error is still level-of-service overstatement but the yardstick has changed. The Code Book carries the current descriptors if you need to settle a level with a provider.

A further 10 items were insufficiently documented, and in 8 of those the provider submitted no documentation at all. That's a records-response failure as much as a coding one, and it's the cheapest error on this list to prevent. If your shop still fields additional documentation requests by email thread, that's the gap. It's the same pattern behind insufficient-documentation Medicare denials.

The last 6 E/M items weren't separately payable. 3 related to the patient's hospice diagnosis and belonged to the hospice benefit. The other 3 were billed with modifier 25 where the documentation didn't support a significant, separately identifiable service on the day of another procedure.

Psychotherapy: treatment plan reviews billed as therapy sessions

Psychotherapy failed on 35 of 60 items and carried the largest dollar share of the sample errors. Of those, 25 weren't reasonable and medically necessary: the notes didn't support the frequency of therapy, didn't show progress toward goals, and didn't establish that the patient could participate meaningfully. Those criteria are Novitas LCD L35101.

Another 7 were insufficiently documented, and 6 of the 7 were the same error. The contractor determined the record showed a clinical treatment plan review rather than face-to-face individual psychotherapy, even though a psychotherapy code was billed. The seventh had no start and stop times to support the billed time increment.

A final 3 weren't separately payable because the services related to the patient's hospice diagnosis and should have been paid through the hospice benefit.

Podiatry: a missing facility order sinks the claim

Podiatry failed 14 of 18 items, and the money was small, $433. The cause was almost entirely one thing. Under Novitas LCD L35013, nail debridement for a nursing home patient needs a current nursing facility order for the service, dated and signed with the date of the physician's signature. Of the 14, 12 had no order meeting that requirement and 1 was missing the physician's signature. One more had no documentation submitted at all.

Wound care was the clean lane. All 15 sample items that included surgical debridement met Medicare requirements. Nail debridement was the only podiatry service in scope and surgical debridement the only wound care service, so neither result generalizes past those two procedures.

What OIG told Novitas to do

OIG made two recommendations: add oversight of provider billing for E/M, psychotherapy, and podiatry services, and provide annual education to providers and their billing staff specific to the Medicare requirements for those services. Novitas concurred with both and described actions it has taken or plans to take.

Novitas told OIG it already runs monthly data-driven analyses across billed codes and had found the same types of noncompliance in its own clinical reviews, but that resource constraints mean it can only pursue the most egregious psychotherapy providers. In May 2025 Novitas stated the oversight deficiencies were ongoing concerns while error rates had improved as it focused on billing patterns and education.

Why this reads as a documentation problem

OIG reported no finding that services weren't rendered. What it found were visits and sessions that weren't supported at the level billed, or weren't supported at all once the record was pulled. That's the same failure mode as the SMRC optometry and nursing facility E/M review, and it's fixable at the desk with an evidence check before the claim goes out.

The claims are from October 2018 through September 2019, so this isn't a notice of current exposure. What's current is the remedy. OIG asked for annual, service-specific education for providers and billing staff in Jurisdiction H, and Novitas agreed to deliver it. If you bill nursing facility E/M, psychotherapy, or nail debridement in JH, that education is coming to your inbox.