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Hospitals Owe Wisconsin Insurer $4.7M in Overpayments

Joe Cantlupe, for HealthLeaders Media, January 26, 2010

The Wisconsin Physicians Service Insurance Corp., one of the largest health benefits providers in the state, inadvertently made overpayments to hospitals totaling $4.7 million from 2004 through 2006, according to a federal audit.

A U.S. Department of Health and Human Services inspector general's report found that 478 of the 520 Medicare payments from the Madison, WI, company were overpayments.

The payments were identified as so-called "high-dollar" amounts, at least $200,000 each.

The audit found that the payments were made after unnamed hospitals inaccurately reported information to the service provider contrary to federal guidance.

The inaccuracies included:

  • The number of billing units for blood clotting factor
  • Incorrect diagnosis and procedure codes
  • Excessive charges that resulted in inappropriate payments

According to federal officials, the "hospitals attributed most of the incorrect claims to data entry error and insufficient documentation."

The Wisconsin Physicians Service made the incorrect payments because neither the Fiscal Intermediary Standard System nor the Common Working File had sufficient edits in place to detect and prevent the overpayments, the audit report said.

WPS officials declined to discuss the audit. However, Mark DeFoil, director of contract coordination for Wisconsin Physicians Service, wrote in a letter to the inspector general: "WPS is in the process of adjusting the claims identified in this review" and "intends to recoup the associated overpayments as soon as possible."

"We will be utilizing the results of this audit, where applicable, in future educational activities," DeFoil added.

The inspector general office routinely reviews and determines overpayment issues on "dozens and dozens of cases with varied amounts of money," says Don White, a spokesman for the inspector general's office.

While there are "many audits [nationwide] where overpayments are found," White said the Wisconsin amount was "obviously a lot," referring to the $4.7 million.

The inspector general's office recommended Wisconsin Physicians Service should recover the overpayments. In addition, it should use the audit findings to review "provider education articles related to data entry procedures and proper documentation."

The Wisconsin company should also "consider implementing controls to identify and review all payments greater than $200,000 for inpatient services," according to the audit.


Joe Cantlupe is a senior editor with HealthLeaders Media Online.
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