Monday, July 30, 2012

High Medicare Overpayment Rates Found for Certain Hospital Services

Audits, investigations, and inspections conducted by the Office of Inspector General (OIG) at the Department of Health and Human Services have identified certain payments to hospitals that are at risk for noncompliance with Medicare billing requirements.  These “at risk” payments were identified using computer matching, data mining, and analysis techniques.

A recent OIG audit at Boston Medical Center (the Hospital) revealed just how much risk of overpayment is involved.

The Hospital is a 508-bed acute care facility that received approximately $324 million from Medicare for inpatient and outpatient services provided to beneficiaries during calendar years 2009 and 2010.  The Office of Inspector General conducted an audit of $5,005,544 in Medicare payments to the Hospital for 270 claims that it selected as potentially “at risk” for billing errors.  The objective was to determine whether the Hospital complied with Medicare requirements for billing inpatient and outpatient services on selected claims.

The Hospital complied with Medicare billing requirements for only 138 of the 270 inpatient and outpatient claims reviewed by OIG.  The Hospital did not fully comply with Medicare billing requirements for the remaining 132 claims, resulting in net overpayments totaling $1,000,802 for calendar years 2009 and 2010.

 In plain English, Medicare made more than $1 million in overpayments on $5 million in total claims, or a 20% overpayment rate for the sample used in the audit.  And on a claims basis, almost half (49%) of the 270 claims made resulted in overpayments.

 OIG found that overpayments occurred primarily because the Hospital did not have adequate controls to prevent incorrect billing of Medicare claims and did not fully understand the Medicare billing requirements.  OIG recommend that the Hospital refund to the Medicare contractor $1,000,802 and strengthen controls to ensure full compliance with Medicare requirements.

In written comments on the OIG’s draft report, the Hospital concurred with the findings and recommendations and stated that it has refunded the overpayments.

 If this is happening at respected hospitals that cooperate with OIG, one can only imagine what is happening at less reputable institutions.

John Howley
New York, New York

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