Survive the audit

The Office of Inspector General flagged 58 cents of improper payment in every dollar billed for Medicare psychotherapy in its last major audit. The Recovery Audit Contractor program looks back three years. The triggers are known. The fixes are not exotic.

The Office of Inspector General (OIG) published its psychotherapy audit in May 2023, covering one COVID-era year: March 2020 through February 2021. Of $1 billion billed under Medicare Part B, $580 million, or 58%, were improper. The two largest subcategories: $348 million in telehealth services and $232 million in non-telehealth. The leading cause in both was not fraud. It was missing or inadequate documentation. That audit is now three years old. The OIG's active work plan still lists psychotherapy documentation compliance as project W-00-24-35801, a continuing project that has run across six iterations since 2018. The Recovery Audit Contractor (RAC) program looks back three years, which means auditors requesting records today are looking at claims filed while most practices were still rebuilding from the COVID-19 public health emergency (PHE).

Picture a 35-clinician group practice in Ohio. In the spring of 2025, it receives a Targeted Probe and Educate (TPE) request from its Medicare Administrative Contractor (MAC): 35 randomly selected psychotherapy claims, records due in 45 days. The practice's compliance officer, hired eight months before the letter arrived, had already been running internal audits. She pulled the 35 records. Three had missing time documentation. Two had progress notes that read nearly identically across five or six consecutive sessions. One had a supervision note for incident-to billing that did not confirm the supervising physician was on-site at the time of service. Six flagged claims out of 35 is a 17% initial error rate. That number is not unusual. It is the kind of number practices discover only when someone asks.

The compliance officer voluntarily corrected all six claims before the MAC completed its review. That reduced the overpayment finding by roughly 60%. The remaining exposure still reached back into 2022.

Across all OIG projects on this topic, the seven most common triggers are consistent: high CPT 90837 (60-minute individual psychotherapy) concentration above 80% of all psychotherapy claims; cloned notes; missing time documentation on time-based codes; missing provider signature; no treatment plan on file; absent supervision documentation for incident-to billing; and, in the COVID-era data, no originating-site record for telehealth sessions. Across all Medicare fee-for-service programs, the CMS reported an overall improper payment rate of 7.66% for fiscal year 2024, representing $31.70 billion. Behavioral health, and psychotherapy specifically, runs well above that system average in OIG's findings.

The compliance officer's job was not to catch fraud. It was to make sure the documentation matched the service before the MAC asked to see it. That is unglamorous work, and it is the only kind that changes the outcome once the letter arrives.

The move: Pull 10 random psychotherapy claims from the last 90 days and check them against the seven triggers above. If more than one fails, that is your internal audit program. Build it before the MAC letter shows up.