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OIG Calls for More Scrutiny of Medicare Hospital Outlier Payments

Cheryl Clark, for HealthLeaders Media, November 15, 2013

The OIG also found that the average outlier payment was $15,482, which does not include the MS-DRG payment; 6% of outlier payments exceeded $50,000, and for several claims, "the outlier payment exceeded $1 million; the largest during the study period was $1.4 million for a single claim."

The agency said 16 MS-DRGs accounted for 41% of the outlier payments, for example, implantation of a heart assist system (DRG 215) topped the list. That was followed by heart transplant or implant of a heart assist system with major complication/comorbidity (MCC) (DRG 001), heart transplant or implant of a heart assist system without MCC (DRG 002) and pancreas transplant (DRG 010).

3 Recommendations
The OIG recommended that the Centers for Medicare & Medicaid Services make three policy changes to make sure such outlier payments are appropriate:

  1. Instruct Medicare's contractors to increase monitoring of outlier payments to hospitals with claims exceeding specified thresholds.
  2. Start reporting each hospital's outlier payments with public reporting, such as on Hospital Compare. "Such public reporting would provide greater transparency regarding Medicare payments to hospitals, further inform the public and stakeholders about how Medicare distributes limited outlier payment dollars, and demonstrate the direct effect increased charges can have on overall Medicare payments to hospitals."
  3. Examine whether codes for DRGs that frequently accompany higher outlier payments should be changed or adjusted.
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