Medicare Overpaid $51.6M to Acute Care Hospitals

A federal audit shows that Medicare could have saved nearly $100 million since 2006 if system edits that were supposed to prevent or detect the errors were functioning.

Medicare mistakenly paid acute-care hospitals $51.6 million for outpatient services that were provided to inpatients at other hospitals, according to an audit by the Department of Health and Human Services’ Office of the Inspector General.

In addition, Medicare beneficiaries paid unnecessary deductibles and coinsurance of $14.4 million to the hospitals for outpatient services over the three-year period examined in the audit.

Medicare is not supposed to pay an acute-care hospital for outpatient services provided to an inpatient at another hospital, such as a long-term-care hospital. Those services should be provided under arrangements between the two hospitals, and Medicare should pay the inpatient hospital for all services provided to beneficiaries as part of the hospital's inpatient payment rate.

OIG blamed the snafu on failed systems edits that did not prevent or detect the overpayments during the audit review period between 2013-2016.

“If the system edits had been working properly since 2006, Medicare could have saved almost $100 million, and beneficiaries could have saved $28.9 million in deductibles and coinsurance that may have been incorrectly collected from them or someone on their behalf,” OIG said.

The audit recommended that Centers for Medicare & Medicaid Services direct the Medicare contractors to:

•  Recover the $51.6 million in improper payments to acute-care hospitals in accordance with CMS's policies and procedures;
   
• Instruct the acute-care hospitals to refund beneficiaries up to $14.4 million in deductible and coinsurance amounts that may have been incorrectly collected from them or from someone on their behalf;
   
• Identify and recover any improper payments to acute-care hospitals after our audit period, which ended on August 31, 2016.

“We also recommended that CMS correct the system edits to prevent overpayments to acute-care hospitals and instruct the Medicare contractors to more effectively educate acute-care hospitals not to bill Medicare for outpatient services they provided to beneficiaries who were inpatients of other facilities, but rather to provide those services under arrangements and look to the inpatient facilities for payment,” OIG said.

CMS concurred with OIG’s recommendations.