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Audit Finds $2.4M Medicare Overpayments at U. Wisconsin Hospitals

Analysis  |  By John Commins  
   July 06, 2018

The health system incorrectly billed for two types of severe malnutrition, which are classified as major complications or comorbidities that trigger higher Medicare payments, HHS says.

An incorrect Medicare billing code for "severe malnutrition" could force the University of Wisconsin Hospitals and Clinics Authority to return $2.4 million in overpayments to the federal government.

The Office of the Inspector General at the Department of Health and Human Services found the alleged error after examining $9.5 million in Medicare payments for 497 claims submitted by the health system from 2014 through 2016.

Auditors based their findings on a random sample of 100 claims totaling $1.7 million.

"The Hospital complied with Medicare billing requirements for severe malnutrition diagnosis codes for 10 of the 100 claims that we reviewed. However, the Hospital did not comply with Medicare billing requirements for the remaining 90 claims," HHS said.

UWHCA strongly contests the findings and the recommendation to return the overpayment.

"It is well-established that patients with malnutrition are at an increased risk of adverse outcomes, complications, readmissions, and longer lengths of stay," Troy G. Lepien, chief compliance officer at UWHCA said in a letter to HHS.

"UWHCA has devoted significant resources to ensuring our patients' nutrition needs are addressed and thus that they have improved outcomes. UWHCA also takes pride in the strength of its billing and coding compliance program," Lepien wrote.

The auditors said that "Nutritional Marasmus and other/unspecified severe protein-calorie malnutrition are two types of severe malnutrition listed in the International Classification of Diseases, Clinical Modification."

"Previous OIG reviews have determined that hospitals incorrectly billed for Kwashiorkor, a third type of severe malnutrition. Nutritional Marasmus and other/unspecified severe protein-calorie malnutrition are each classified as a type of major complication or comorbidity (MCC). Adding MCCs to a Medicare claim can result in a higher Medicare payment," HHS said.

For 88 claims, the billing errors resulted in net overpayments of $562,361.

"These errors occurred because the health system used severe malnutrition diagnosis codes when it should have used codes for other forms of malnutrition or no malnutrition diagnosis code at all," HHS said.

Auditors said the medical records held no evidence that the malnutrition was severe or that it had an effect on the treatment or the length of the hospital stay.

"On the basis of our sample results, we estimated that the Hospital received overpayments of at least $2,412,137 from 2014 through 2016," the audit said.  

Follow Up

UWHCA issued a statement Friday morning saying it "intends to appeal all claims denied based on the OIG recommendations." 

"UW Health strongly disagrees with the findings and recommendations in the OIG report. Most importantly, we believe the contractor did not apply nationally-accepted evidence-based standards to assign malnutrition diagnosis codes. UW Health uses the most up-to-date definition of malnutrition and current methodology for assessing malnutrition."

"Several international nutrition organizations have published evidence-based guidelines for diagnosing and coding malnutrition, and UW Health uses a metric that incorporates these current understandings." 

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.

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