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CMS Overpaid Hospitals $38.2M for Short-Stay Claims

Margaret Dick Tocknell, for HealthLeaders Media, August 7, 2013

To reduce the payment errors the OIG made these recommendations to CMS and hospitals:

  • Strengthen guidance to better explain the Medicare rule that a clinical condition requiring inpatient care must exist for hospitals to bill for Part A prospective payments for canceled elective surgeries.
  • Implement stronger utilization review controls for claims that include admissions for canceled elective surgeries that did not occur.

In response, CMS noted that guidance is addressed in the final 2014 Inpatient Prospective Payment System rule. Hospital groups are objecting to the final IPPS rule specifying how hospitals are to be paid for Medicare beneficiaries' inpatient care starting Oct. 1. Particularly offensive to hospitals is that the rule establishes controversial terms that define an inpatient admission as opposed to "observation" status.

The report notes that CMS stated that it "does not concur with our recommendation" to emphasize to hospitals "the need for stronger utilization review controls for claims that include admissions for elective surgeries that did not occur. However, CMS stated that it has taken action to address" the concern.

The OIG reviewed the canceled elective surgery claims as part of its 2013 work plan to address emerging issues. The work plan includes almost 30 hospital-related reviews such as payments for mechanical ventilation, payments for discharges to swing beds at other hospitals, and inpatient outlier payments.


Margaret Dick Tocknell is a reporter/editor with HealthLeaders Media.
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