Medicare Part B Billing for Nursing Home Residents: Lessons From OIG's July 2026 MAC Audit

Nursing home residents receive many Medicare Part B services from practitioners who bill Medicare directly, separate from the nursing home. Physicians and nurse practitioners make visits, psychologists and other mental health professionals provide psychotherapy, and podiatrists provide foot care. These services are generally not subject to SNF consolidated billing, so each practitioner submits claims to Medicare.

In July 2026, the HHS Office of Inspector General (OIG) released an audit of Novitas Solutions, the Medicare Administrative Contractor (MAC) for Jurisdiction H, which covers Arkansas, Colorado, Louisiana, Mississippi, New Mexico, Oklahoma, and Texas. OIG found that 91 of 150 sampled items for evaluation and management (E/M), psychotherapy, and podiatry services to nursing home residents did not meet Medicare requirements and guidance, and estimated that Novitas improperly paid about $19.5 million during the audit period of October 1, 2018 through September 30, 2019.

Although the audit focused on the MAC's oversight, its findings describe exactly why practitioners' claims failed. This article summarizes the audit, explains the errors by service type, and offers practical steps for practitioners, billing companies, and nursing homes. It is educational and does not replace legal or professional advice.

The Audit

Why OIG Did This Audit

OIG has a long history of identifying problems with Part B services furnished to nursing home residents. For this audit, it focused on E/M, psychotherapy, podiatry, and wound care, which are among the Part B services most commonly furnished to residents, and it examined whether one MAC's payments for those services complied with Medicare requirements.

Sample Design

OIG used a sampling frame of 292,794 patient-months, each representing one patient's payments for one service type in one calendar month, totaling about $53.7 million. It drew a stratified random sample of 150 patient-months: 60 E/M, 60 psychotherapy, and 30 podiatry and wound care.

Results

• E/M: 42 of 60 sampled items were noncompliant.

• Psychotherapy: 35 of 60 were noncompliant.

• Podiatry: 14 of 18 were noncompliant.

• Wound care: 0 of 15 were noncompliant.

The sampled items had improper payments of $14,322. OIG estimated improper payments of about $19.5 million for the sampling frame, with a 90 percent confidence interval of about $16.5 million to $22.5 million.

Why the Errors Occurred

OIG concluded that Novitas's oversight of provider billing and education was not sufficient to ensure providers understood Medicare coding and documentation requirements.

Recommendations

OIG recommended that Novitas implement additional oversight, such as documentation and billing guidance, medical reviews, and provider internal audits for E/M, psychotherapy, and podiatry services, and provide annual education to providers and billing staff. Novitas concurred.

E/M Services: What Went Wrong

Of the 42 noncompliant E/M items, some had more than one error:

• 24 were not reasonable and medically necessary, mostly routine checkups or visit frequency without a documented acute issue.

• 13 were incorrectly coded, usually because a lower-level code was warranted.

• 10 were insufficiently documented or had no documentation.

• 6 were not separately payable: 3 were related to hospice care, and 3 lacked support for a significant, separately identifiable service billed with modifier 25.

Lessons for E/M

• Document the reason for each visit. Routine visits without a clinical reason may not be medically necessary.

• Match visit frequency to the patient's condition. Frequent visits require documented acute or changing issues.

• Choose the level of service based on medical decision making or time, as permitted by current CPT and CMS rules for nursing facility E/M codes.

• Make sure documentation exists and is signed for every service billed.

• For hospice patients, bill only services that are separately payable, such as services by the designated attending physician or services unrelated to the terminal illness, with the correct modifiers.

• Use modifier 25 only when a significant, separately identifiable E/M service is documented.

Psychotherapy: What Went Wrong

Of the 35 noncompliant psychotherapy items:

• 25 were not reasonable and medically necessary, because documentation did not support the visit frequency, progress toward goals, or the patient's ability to participate.

• 7 were insufficiently documented: 6 were clinical treatment plan reviews rather than face-to-face psychotherapy, and 1 lacked start and stop times.

• 3 were related to hospice care and not separately payable under Part B.

Lessons for Psychotherapy

• Document the patient's diagnosis, symptoms, and the medical necessity for psychotherapy.

• Document the patient's capacity to participate in and benefit from psychotherapy, especially for patients with significant cognitive impairment.

• Maintain a treatment plan with measurable goals, and document progress or reasons for continued treatment.

• Match frequency to clinical need.

• Bill psychotherapy codes only for face-to-face psychotherapy, not for treatment plan reviews or administrative activities.

• Document start and stop times or total time as required for time-based codes.

• Coordinate with hospice providers for patients receiving hospice care.

Podiatry: What Went Wrong

Of the 14 noncompliant podiatry items, 13 were insufficiently documented, mainly because the nursing facility order for nail debridement did not meet requirements or lacked the physician's signature, and 1 had no documentation. The MAC's local coverage determination for nail debridement includes specific requirements for nursing facility patients, including orders.

Lessons for Podiatry

• Know and follow the applicable local coverage determination for routine foot care and nail debridement.

• Obtain and keep valid orders when required, signed and dated as the policy requires.

• Document the class findings or other criteria that support coverage.

• Document the condition of each nail treated and the service provided.

• Keep complete records for every date of service.

Wound Care: What Went Right

All 15 sampled wound care items met Medicare requirements. Wound care documentation often includes measurements, descriptions, and treatment details that clearly support medical necessity, which is a useful model for other services.

Related OIG Work

The Novitas report is part of a series of OIG audits examining Part B services provided to nursing home residents, which is listed in OIG's Work Plan. OIG has examined Part B services in nursing facilities for many years, and additional reports covering other MAC jurisdictions may follow. Practitioners serving nursing homes should expect continued attention.

Steps for Practitioners and Billing Companies

Audit Your Claims

• Select a sample of E/M, psychotherapy, and podiatry claims for nursing home patients.

• Review medical necessity, frequency, coding level, documentation, and signatures.

• Identify claims for hospice patients and confirm separate payability.

• Review modifier 25 use.

• For psychotherapy, confirm face-to-face service, time documentation, and patient capacity.

• For podiatry, confirm orders and LCD criteria.

Fix Root Causes

• Use templates that prompt for the reason for the visit, findings, and plan.

• Train clinicians on E/M level selection.

• Implement psychotherapy documentation standards.

• Build processes to obtain podiatry orders.

• Check hospice status before billing.

Address Overpayments

If audits identify claims paid in error, evaluate obligations under the 60-day overpayment rule at 42 CFR 401.305 and return identified overpayments.

Steps for Nursing Homes

Nursing homes do not bill these Part B services, but they play a role:

• Provide practitioners with accurate information about residents' conditions and hospice status.

• Maintain orders required for services such as podiatry.

• Avoid arrangements that encourage unnecessary visits, such as routine visits to every resident without clinical need.

• Make sure practitioner notes are available in the resident's record.

• Review arrangements with practitioner groups for compliance with the Anti-Kickback Statute, such as free space or staff provided to practitioners in exchange for referrals.

Data Patterns That May Draw Attention

• Practitioners seeing every resident in a facility on a fixed schedule.

• High volumes of high-level E/M codes.

• Psychotherapy for large numbers of residents with advanced dementia.

• Frequent routine foot care for many residents.

• Services billed for hospice patients.

• Heavy use of modifier 25.

A Hypothetical Example

A psychotherapy group serving several nursing homes audits 50 claims after reading OIG's report. It finds that many residents with advanced dementia were receiving weekly psychotherapy without documentation of their ability to participate, that several sessions were treatment plan reviews billed as psychotherapy, and that some patients were receiving hospice care. The group revises admission criteria, requires documentation of capacity and measurable goals, separates treatment plan reviews from billable sessions, checks hospice status, and refunds identified overpayments. Its documentation quality improves and its claim volume becomes consistent with clinical need.

Why These Findings Matter Beyond Jurisdiction H

The audit covered only Novitas's Jurisdiction H and a single year, but the error types are not unique to that region. Practitioners who serve nursing homes in every state face the same Medicare requirements: services must be reasonable and necessary, coded correctly, documented, signed, and separately payable. OIG directed its recommendations to Novitas, but the underlying problems sit with the providers that billed the services. When a MAC increases oversight and education in response to an OIG report, providers can expect more targeted probe reviews, education requests, and data-driven edits.

The Audit Period and Today's Rules

The audit period, October 2018 through September 2019, predates several changes. In 2023, CMS adopted revised E/M rules for nursing facility visits, under which practitioners select the level of service based on medical decision making or total time, and certain nursing facility codes were consolidated. Practitioners should review their claims against the rules in effect for each date of service. The core lessons, however, do not depend on the coding framework: visits must have a clinical reason, documentation must support the level billed, and services must be separately payable.

Building a Compliance Program for Nursing Home Practice

Practitioners and groups that focus on nursing home patients benefit from a compliance program tailored to that setting. Key elements include:

Written Policies

• Criteria for initial and follow-up visits, including how frequency is determined.

• Documentation standards for E/M, psychotherapy, and podiatry.

• Procedures for verifying hospice status before billing.

• Procedures for obtaining orders when required.

• Signature and authentication requirements.

Training

• Annual training for clinicians on medical necessity, coding, and documentation.

• Training for billing staff on modifiers, hospice billing, and claim edits.

• Updates when CMS or contractor guidance changes.

Auditing and Monitoring

• Regular audits of a sample of claims for each clinician.

• Monitoring of data patterns such as visit frequency, code distribution, and modifier use.

• Follow-up audits after corrective action.

Response and Correction

• A process for investigating problems, correcting systems, and returning overpayments.

• Documentation of corrective actions.

Coordination With Hospice Providers

Hospice-related errors appeared in both the E/M and psychotherapy findings. When a nursing home resident elects hospice, the hospice is responsible for services related to the terminal illness and related conditions. Separately payable Part B services are limited. For example, the patient's designated attending physician who is not employed by the hospice may bill professional services related to the terminal illness with the appropriate modifier, and practitioners may bill services unrelated to the terminal illness with the appropriate modifier and supporting documentation. Practitioners should:

• Check hospice election status before each billing cycle.

• Ask the nursing home to notify them when a resident elects or revokes hospice.

• Document whether each service is related or unrelated to the terminal illness.

• Coordinate care with the hospice interdisciplinary group.

Common Myths About Part B Nursing Home Services

Myth: Monthly Visits Are Always Covered

Visit frequency must be supported by the patient's condition. Routine visits without a documented clinical reason may not be reasonable and necessary.

Myth: Psychotherapy Is Covered for Any Resident With a Mental Health Diagnosis

Psychotherapy requires documentation that the patient can participate in and benefit from treatment, a treatment plan with goals, and progress or a reason for continued treatment.

Myth: The Nursing Home's Order Covers All Podiatry Visits

Orders must meet the applicable coverage requirements, including signatures and timing, and the service must meet coverage criteria.

Myth: The MAC Audit Does Not Affect Providers

OIG recommended more oversight and education, which can lead to reviews of individual providers' claims.

Questions Leadership Should Ask

• How often do our clinicians see each nursing home patient, and is frequency documented?

• What is our distribution of E/M levels compared with peers?

• How do we verify hospice status before billing?

• Do psychotherapy notes document patient capacity, goals, progress, and time?

• Do podiatry records include valid orders and coverage criteria?

• When did we last audit our nursing home claims?

• Do we have a process for returning overpayments within the required time frames?

Key Takeaways

• OIG found that 91 of 150 sampled items did not meet requirements, with an estimated $19.5 million in improper payments.

• E/M errors centered on medical necessity, coding levels, documentation, and hospice-related services.

• Psychotherapy errors centered on medical necessity, non-billable activities, time documentation, and hospice.

• Podiatry errors centered on orders.

• Wound care documentation met requirements and offers a useful model.

• Practitioners should audit now, fix root causes, and return overpayments.

Documentation Checklist by Service

E/M Visits

• Reason for the visit, including the acute issue, change in condition, or chronic condition requiring management.

• Relevant history and examination.

• Assessment and plan showing medical decision making.

• Total time, when time is used to select the level.

• Signature and credentials.

• Support for modifier 25 when another service is billed the same day.

• Hospice status and, when applicable, related or unrelated status and modifiers.

Psychotherapy

• Diagnosis and symptoms supporting medical necessity.

• Assessment of the patient's cognitive ability to participate and benefit.

• Treatment plan with measurable goals and planned frequency.

• Session note describing the therapeutic intervention and the patient's response.

• Start and stop times or total face-to-face time.

• Progress toward goals or explanation for continued treatment.

• Signature and credentials.

Podiatry

• Valid order when required, signed and dated.

• Findings supporting coverage under applicable contractor guidance, such as class findings or systemic conditions.

• Description of each nail or lesion treated and the service performed.

• Signature and credentials.

Responding to Reviews

If a contractor requests records for nursing home services, respond within the deadline, generally 45 days for MAC requests and 30 days for Unified Program Integrity Contractor requests. Include complete documentation, signatures or attestation statements when allowed, orders, and hospice information. If claims are denied, consider appealing. Filing a redetermination within 30 days prevents recoupment during that level under 42 CFR 405.379, and filing a reconsideration within 60 days provides the same protection at the next level. Submit all evidence by the reconsideration level, because new evidence is generally limited later.

Lessons for Billing Companies

Many practitioners who serve nursing homes rely on outside billing companies. Billing companies cannot fix clinical documentation, but they can add controls that catch many of the errors OIG found. Useful controls include eligibility checks that flag hospice elections, edits that hold claims with modifier 25 for review, reports that show visit frequency by patient and practitioner, and checks that confirm a signed note exists before a claim is submitted. Billing companies should also report recurring documentation problems to their clients, keep records of the education they provide, and help clients evaluate and return overpayments. Contracts between practitioners and billing companies should define these responsibilities clearly, including who reviews denials and who responds to additional documentation requests.

How the Nursing Home Benefits

A nursing home whose practitioners bill accurately avoids disruption to resident care, preserves relationships with practitioner groups, and reduces the risk that problems with outside practitioners draw attention to the facility itself. Facilities can ask practitioner groups to describe their compliance programs and audit results as part of regular partnership reviews.

A short annual review of this kind, combined with clear expectations in written agreements, helps both sides stay aligned with Medicare requirements over time.

Frequently Asked Questions

What did OIG find in its July 2026 audit?

That 91 of 150 sampled items for E/M, psychotherapy, and podiatry services to nursing home residents in Novitas's Jurisdiction H did not meet Medicare requirements, with an estimated $19.5 million in improper payments.

What were the most common E/M errors?

Lack of medical necessity, especially routine visits without acute issues; incorrect coding levels; insufficient documentation; and services not separately payable, such as hospice-related services.

What were the psychotherapy errors?

Lack of medical necessity, treatment plan reviews billed as psychotherapy, missing time documentation, and hospice-related services.

What were the podiatry errors?

Mainly missing or invalid nursing facility orders for nail debridement.

Does the audit affect practitioners directly?

The audit focused on the MAC, but its findings describe practitioners' errors, and OIG recommended more oversight and education, which may lead to more reviews.

Conclusion

OIG's July 2026 audit shows that Part B services to nursing home residents remain vulnerable to errors: routine E/M visits without clinical need, incorrect coding levels, psychotherapy without documented capacity or goals, and podiatry without proper orders. With OIG recommending more MAC oversight and education, practitioners and billing companies should audit their own claims now, fix documentation and coding practices, check hospice status, and return overpayments. Nursing homes can help by providing accurate information and maintaining compliant arrangements.

How HealthBridge Can Help

HealthBridge is a healthcare management consulting firm that helps practitioners, billing companies, and nursing homes audit Part B services, improve E/M, psychotherapy, and podiatry documentation, check hospice billing, review arrangements, and address overpayments. If you serve nursing home residents, please get in touch with us. We will be happy to help you with this topic.

References

• U.S. Department of Health and Human Services, Office of Inspector General. Novitas Solutions, Inc., Improperly Paid Approximately $19.5 Million for Selected Medicare Part B Services Provided to Patients Residing in Nursing Homes (A-06-21-04002), July 2026. https://oig.hhs.gov/reports/all/2026/novitas-solutions-inc-improperly-paid-approximately-195-million-for-selected-medicare-part-b-services-provided-to-patients-residing-in-nursing-homes/

• U.S. Department of Health and Human Services, Office of Inspector General. Full Report A-06-21-04002. https://oig.hhs.gov/documents/audit/11798/A-06-21-04002.pdf

• U.S. Department of Health and Human Services, Office of Inspector General. Work Plan: Medicare Part B Services Provided to Patients Residing in Nursing Homes. https://oig.hhs.gov/reports/work-plan/browse-work-plan-projects/medicare-part-b-services-provided-to-patients-residing-in-nursing-homes/

• Centers for Medicare & Medicaid Services. Medicare Claims Processing Manual, Chapter 12, Physicians/Nonphysician Practitioners. https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/downloads/clm104c12.pdf

• Centers for Medicare & Medicaid Services. Medicare Benefit Policy Manual, Chapter 15, Covered Medical and Other Health Services. https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/downloads/bp102c15.pdf

• Centers for Medicare & Medicaid Services. Medicare Claims Processing Manual, Chapter 11, Processing Hospice Claims. https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/downloads/clm104c11.pdf

• Centers for Medicare & Medicaid Services. Medicare Coverage Database. https://www.cms.gov/medicare-coverage-database/search.aspx

• Electronic Code of Federal Regulations. 42 CFR 401.305, Requirements for Reporting and Returning of Overpayments. https://www.ecfr.gov/current/title-42/chapter-IV/subchapter-A/part-401/subpart-D/section-401.305

• Electronic Code of Federal Regulations. 42 CFR 405.379, Limitation on Recoupment of Provider and Supplier Overpayments. https://www.ecfr.gov/current/title-42/chapter-IV/subchapter-B/part-405/subpart-C/section-405.379

• Office of the Law Revision Counsel. 42 U.S.C. 1320a-7b, Criminal Penalties for Acts Involving Federal Health Care Programs. https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title42-section1320a-7b&num=0&edition=prelim