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Analysis

OIG: Medicare Overpaid Hospitals $267M for Post-Acute-Care Transfers to Home Health

By John Commins  
   August 07, 2020

Auditors examined 150 claims and found that only three claims were properly billed and paid by Medicare.

Sloppy coding and oversight from hospitals resulted in more than $267 million in Medicare overpayments for post-acute care transfers of inpatients to home healthcare services, the Department of Health and Human Services Office of the Inspector General said in an audit released this week.

"Medicare improperly paid most inpatient claims subject to the transfer policy when beneficiaries resumed home health services within 3 days of discharge but the hospitals failed to code the inpatient claim as a discharge to home with home health services or when the hospitals applied condition codes 42 (home health not related to inpatient stay) or 43 (home health not within 3 days of discharge)," auditors said.

OIG looked at nearly 90,000 inpatient claims totaling $948 million at risk of overpayment because of the transfer policy in fiscal years 2016 and 2017. The auditors picked 150 inpatient claims and found that only three claims were properly paid by Medicare, while the remaining 147 claims received $722,288 in overpayments.

"Medicare should have paid these inpatient claims using a graduated per diem rate rather than the full payment," OIG said. "Based on our sample results, we estimated that Medicare improperly paid $267 million during a two-year period for hospital services that should have been paid a graduated per diem payment."  

The auditors recommended that the Centers for Medicare & Medicaid Services and its independent contractors to reprocess the claims and attempt to recover some of the money that was paid within the four-year reopening period.

"Also, we recommend that CMS correct its related system edits, improve its provider education related to the Medicare transfer policy, and use data analytics to identify hospitals disproportionally using condition code 42," OIG said.

The auditors also recommended that CMS "reduce the need for clinical judgment" when processing claims under the post-acute-care transfer policy. This could be done, OIG said, through legislative authority to deem any home health service within three-days of discharge to be "related."  

“Based on our sample results, we estimated that Medicare improperly paid $267 million during a two-year period for hospital services that should have been paid a graduated per diem payment.”

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


KEY TAKEAWAYS

OIG looked at nearly 90,000 inpatient claims totaling $948 million at risk of overpayment because of the transfer policy in fiscal years 2016 and 2017.

The auditors picked 150 inpatient claims and found that only three claims were properly paid by Medicare, while the remaining 147 claims received $722,288 in overpayments.

OIG recommended that CMS reprocess the claims and attempt to recover some of the money that was paid within the four-year reopening period.


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