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OIG Calls for More Scrutiny of Medicare Hospital Outlier Payments

Cheryl Clark, for HealthLeaders Media, November 15, 2013

The distribution of outlier payments, intended to protect hospitals from losses from extraordinarily costly Medicare cases, is disproportionate and ought to be monitored better, says the Office of Inspector General.

An examination of hospital claims processed through Medicare's Inpatient Prospective Payment System (IPPS) between 2008 and 2011, led the Office of Inspector General to identify scores of " high-outlier hospitals."

Of 3,186 acute care hospitals, 158 received an average of 12.8% of their Medicare reimbursement from "outlier" payments between 2008 and 2011. For all other hospitals, outlier payments made up only 2.2%.

Moreover, for some of these 158 hospitals, outlier payments were most of their Medicare payments: 64.8% in the case of Cancer Treatment Centers of America in Philadelphia; and 53.5% for Midwestern Region Medical Center in Zion, IL.

As a result of these findings, published Thursday by OIG, the agency is calling for "increased scrutiny" of the trend citing "concerns about why charges and estimated costs for similar patient care cases vary substantially across hospitals."

Additionally, outlier payments tended to consist of care rendered for just a few conditions, raising questions about whether Medicare's payment system should be changed, the agency said.

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