Policy & Regulation News

Medicare Overpays Hospital $414,000 for Incorrect Medical Billing

By Stephanie Reardon

The Hospital did not fully comply with Medicare requirements resulting in approximately $414,000 in overpayments for incorrect medical billing.

- The Department of Health and Human Service (HHS) Office of Inspector General (OIG) released the results of its audit on Missouri Baptist medical Center. The audit was completed to determine if Missouri Baptist Medical Center (the Hospital) complied with Medicare requirements for billing inpatient and outpatient services. During this audit it was discovered that the Hospital did not fully comply with Medicare requirements for billing inpatient and outpatient services which resulted in approximately $414,000 in overpayments.

The Centers for Medicare & Medicaid Services (CMS) pays inpatient hospital costs at specific rates for patient discharges. The rates vary based on the severity of the patient’s diagnosis and the diagnosis-related group (DRG). The payment is intended to cover all inpatient costs for the beneficiary’s stay.

CMS implemented an outpatient prospective payment system (OPPS), which is effective for services provided on or after August 1, 2000, for outpatient services. Under this, CMS pays for hospital outpatient services on a rate-per-service basis that varies according to the assigned ambulatory payment classification.

The Hospital is an acute care facility located in Saint Louis, Missouri. It holds approximately 489 beds. During Calendar Years (CYs) 2011 and 2012, Medicare paid the Hospital approximately $235 million for 19,550 inpatient and 141,189 outpatient claims.

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  • However it was discovered that out of 253 Medicare claims 207 complied with medicare billing requirements, but 46 did not. The 46 non-compliant medicare claims resulted in $413,757 in overpayment for CYs 2011 and 2012 and CY 2010.

    Compliance errors were found in 40 inpatient claims which resulted in $328,323 worth of overpayments. Billing errors were also discovered in six outpatient claims which resulted in $85,434 worth of overpayments.

    Specifically, 29 inpatient claims were submitted with incorrect codes, eight inpatient claims were incorrectly billed for beneficiary stays that should have been billed as outpatient services, three inpatient claims were adjusted after medical device credits were received, five outpatient claims did not appropriately report reduced claims, and one outpatient claim was billed with an incorrect code.

    “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 audit states.

    The OIG recommends that the Hospital refund Medicare  the $413,757 in overpayments and strengthen compliance controls to ensure full compliance with Medicare requirements.

    In written comments the Hospital disagreed with the OIG’s findings on seven of the claims which found that the Hospital should have billed the claim as outpatient. The Hospital indicated that it would appeal the seven disputed Medicare claims. The Hospital agreed with the other 39 claims and indicated that it had fully reimbursed them, except for three claims pending for suspense errors and one claim pending because of updates to the working files.

    After reviewing the Hospitals comments, the OIG hired a contractor to determine if the inpatient claims that the Hospital disagreed with met medical necessary requirements. Based on the contractor’s work, the OIG maintained that its suggestions were valid.