Policy & Regulation News

Hospital Overpaid $110,943 in Medicare Claims

By Stephanie Reardon

OIG audit discovered  the Hospital did not fully comply with Medicare billing requirements, resulting in $110,943 overpayment in Medicare claims.

- The Department of Health and Human Service (HHS) Office of Inspector General (OIG) released the results of its audit on Stormont-Vail Regional Health Center (the Hospital) to determine if Medicare payments to the Hospital for 196 claims complied with Medicare requirements for billing outpatient and inpatient services during calendar year (CY) 2012. During this audit it was discovered that the Hospital did not fully comply with Medicare billing requirements, resulting in overpayments of $110,943.

The Centers for Medicare & Medicaid Services (CMS) pays for hospital outpatient services on a rate-per-service basis that varies according to the ambulatory payment classification.

CMS also pays inpatient hospital costs at predetermined rates for patient discharges. The rates vary according to the diagnosis-related group (DRG) to which a beneficiary’s stay is assigned and the severity level of the patient’s diagnosis.

The OIG is responsible for providing continual and adequate oversight of Medicare payments to hospitals.

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  • The Hospital, located in Topeka, Kansas, claimed 70,226 outpatient and 17,288 inpatient claims for services provided to beneficiaries during CYs 2011 and 2012. Medicare paid the Hospital approximately $193 million for these claims.

    However, it was discovered that he Hospital did not fully comply with Medicare billing requirements for 13 out of 196 claims, resulting in overpayments of $110,943 for CYs 2010 through 2012. Seven outpatient claims had billing errors, resulting in overpayments of $66,141, and six inpatient claims had billing errors, resulting in overpayments of $44,802.

    “These errors occurred primarily because the Hospital did not have adequate controls to prevent the incorrect billing of Medicare claims within the selected risk areas that contained errors.” the report reads.

    The OIG recommended that the Hospital refund the Medicare contractor $110,943, consisting of $66,141 in overpayments for seven incorrectly billed outpatient claims and $44,802 in overpayments for six incorrectly billed inpatient claims. The OIG also recommended that the Hospital strengthen its controls to prevent incorrect Medicare claims billing.

    The Hospital agreed with OIG’s findings for 12 of the 13 claims that were identified as being billed in error. The Hospital has also indicated that it took action to enhance and strengthen its controls.

    The claim that the Hospital disagreed with was identified by OIG as having been incorrectly billed as an inpatient claim and has an associated questioned cost of $6,192. The Hospital said that it believed “… that this claim satisfied the criteria for inpatient admission” and described its process for internal review of short stays in order to validate the physician resource determination.

    The OIG reviewed the Hospital’s response, and hired a contractor to help determine if  the inpatient claim with which the Hospital disagreed met medical necessity requirements. Based on the contractor’s conclusion, OIG determined  that the Hospital should have billed the inpatient claim as outpatient or outpatient with observation services and maintained its findings.