The Office of Inspector General (OIG) discovered improper Medicare payments totaling $39.3 million to acute-care hospitals from 2016 to 2021.
Changes to CMS' system significantly reduced Medicare overpayments to acute-care hospitals for outpatient services provided to beneficiaries who were inpatients of other facilities, according to an audit by OIG.
The report uncovered $39.3 million in inappropriate Medicare Part B payments to acute-care hospitals from September 2016 through December 2021, none of which should have been paid because the inpatient facilities were responsible.
However, only $3.4 million, or less than 9% of the $39.3 million in overpayments, was improperly paid from June 2019 through December 2021, after CMS edited its system in May 2019. The system edits were not working properly prior to May 2019, OIG stated.
The audit was conducted as a follow-up to a previous OIG report that found Medicare overpaid acute-care hospitals $51.6 million from January 2013 through August 2016. The payments were for outpatient services to beneficiaries who were inpatients of long-term care hospitals (LTCHs), inpatient rehabilitation facilities (IRFs), inpatient psychiatric facilities (IPFs), and critical access hospitals (CAHs).
To review payments from 2016 through 2021 and determine if CMS had corrected the system edits, OIG identified inpatient claims from LTCHs, IRFs, IPFs, and CAHs and then used beneficiary information and service dates to find outpatient claims from acute-care hospitals that overlapped with the inpatient claims.
In the report, OIG explains the postpayment and prepayment edits in the Medicare claims processing system as such: Before Medicare administrative contractors (MACs) pay outpatient claims, all claims are sent to CMS' Common Working File (CWF) for verification, validation, and payment authorization. The CWF consists of both postpayment and prepayment system edits that should detect overpayments.
Once the CWF has processed a claim for payment, it sends information to the MAC about potential errors on the claim. If the outpatient claim is processed for payment before the inpatient claim, once the inpatient claim is processed, a postpayment edit should send an alert to the MAC so the payment can be recovered. The MAC is responsible for covering the overpayment.
If the inpatient claim is processed for payment before the outpatient claim, once the outpatient claim is processed a prepayment edit should deny the outpatient claim.
In response to the findings, OIG recommends CMS direct the MACs to recover the portion of the $39.3 million in overpayments that is within the four-year reopening period, as well as instruct acute-care hospitals to refund beneficiaries up to $9.8 million that may have been incorrectly collected from them.
In addition, CMS should notify appropriate providers so they can identify, report, and return any overpayments in accordance with the 60-day rule, along with continuing to review the system edits to prevent future overpayments.
Lastly, OIG also recommends CMS direct the MACs to recover any inappropriate payments after the audit period.
In written comments to the report, CMS concurred with all but the final recommendation and said it will consider how to address any overpayments made after the audit period.
In a separate, recent audit, OIG found that CMS had collected only $120 million of the $498 million in Medicare overpayments, despite CMS reporting it had collected $272 million.
Jay Asser is the contributing editor for strategy at HealthLeaders.
KEY TAKEAWAYS
OIG found $39.3 million in Medicare overpayments to acute-care hospitals for outpatient services provided to beneficiaries who were inpatients of other facilities.
Less than 9% ($3.4 million) of the overpayments was inappropriately paid after CMS edited its system in May 2019.
CMS has concurred with four of OIG's five recommendations on corrective actions to take.