Policy & Regulation News

Human Error Causes $319K in Medicare Overpayment to Hospital

By Ryan Mcaskill

Medicare noncompliance caused Queen’s Medical Center to receive $319,000 in overpayments during a three year audit period.

- Recently, the Department of Health and Human Services (HHS) Office of Inspector General (OIG) released the results of its Medicare compliance review of the Queen’s Medical Center for nearly three years, from January 1, 2010 through September 30, 2012. The study found that during the audit period, the hospital was not fully compliant with Medicare requirements for billing inpatient and outpatient services, resulting in net overpayments of approximately $319,000.

This is part of a series of hospital compliance reviews that the OIG has been conducting. By using computer matching, data mining and data analysis techniques, the OIG has been able to identify hospital claims that are at risk for noncompliance with Medicare billing requirements. These audits are needed because Medicare pays billions of dollars annually and requires proper oversight. In 2012, the final year of the audit period, Medicare paid $148 billion to hospitals, which is 43 percent of all fee-for-service payments.

The Queen’s Medical Center is an acute-care hospital located in Honolulu, Hawaii. During the time period, Medicare paid the hospital approximately $276 million for 23,855 inpatient and 126,165 outpatient claims. The audit examined $3,437,014 in Medicare payments to the Hospital for 223 claims that were judgmentally selected as potentially at risk for billing errors. This consists of 185 inpatient and 38 outpatient claims.

It was discovered that 174 of the 223 claims met Medicare billing requirements, but the remaining 49 claims (33 inpatient and 16 outpatient) were not compliant. This resulted in overpayment of $318,587 ($280,566 inpatient and $38,021 outpatient). There were several errors that resulted in claims not being compliant, all of which were the result of human error. They include:

  • One Medical Will Expand Care With Acquisition of Iora Health
  • CBO: Future Hospital Profitability Requires More Productivity
  • Community Health Centers Faced Hefty Workforce, Nursing Shortages
  • Inpatient

    Incorrect diagnosis-related groups – The hospital used incorrect or unsupported diagnosis codes. This led to 22 noncompliant claims worth $166,290.

    Incorrect billing of Medicare Part A that should have been outpatient – Nine of the claims were incorrectly billed Medicare Part A for beneficiary stays that should have been billed as outpatient or outpatient with observation services. This resulted in overpayments of $104,486.

    Unreported manufacturer credits – Two claims resulted in the hospital receiving reportable medical device credits from a manufacture but it did not adjust its inpatient claim accordingly with the correct condition and value codes to reduce payments. This resulted in $9,790 in overpayments.

    Outpatient

    Manufacturer credits not reported - Two of the claims resulted in the hospital receiving full credits for replaced devices but did not report the – FB modifier and reduced charges on the claims. This resulted in $26,184 in overpayments.

    Incorrect billing number of units – For 14 claims, the hospital billed Medicare with an incorrect number of units of service for surgical procedure and resulted in overpayments of $11,837.

    The OIG recommended that the hospital refund Medicare $318,587 and strengthen its controls to ensure full compliance with Medicare requirements. The hospital agreed with all of the findings except that two of the 185 inpatient claims were incorrectly classified and should have been outpatient. The OIG holds strong thats its findings are valid.