Noridian did not submit 10 Medicare cost reports to CMS for reconciliation and had not resolved the outlier payments from five of them.
- The Department of Health and Human Service (HHS) Office of Inspector General (OIG) released the results of its audit of Noridian Healthcare Solutions. It was performed to determine if cost reports Nordian submitted to the Centers for Medicare & Medicaid Services (CMS) for reconciliation followed Federal guidelines and any outlier payments from these reports were resolved by the December 31, 2011 deadline.During the audit it was discovered that Noridian did not submit 10 cost reports to CMS for reconciliation and Noridian had not resolved the outlier payments from five of them, which caused a financial difference of more than $6.9 million.
CMS organizes Medicare services and pays hospitals that participate in programs for providing inpatient hospital services to Medicare beneficiaries. CMS uses contractors to process and pay Medicare claims submitted for medical services. Outlier payments are designed to protect hospitals from excessive losses due to high Medicare costs. Contractors hired by CMS calculate outlier payments on claim submissions made by hospitals and determine whether payment is owed to Medicare or to the hospital.
In 2003, CMS implemented inpatient outlier regulations, authorizing Medicare contractors to resolve outlier payments prior to the completion of certain hospital cost reports to confirm that these payments showed the actual costs that each hospital accrued.
However, it was discovered that out of 21 cost reports that qualified for filing, Nordian did not submit 10 of them. Three of the unsubmitted cost reports had not been settled and should have been given to CMS to reconcile. The difference between the outlier payments associated with these three cost reports and the recalculated outlier payments added up to approximately $6,919,974.
Seven of the unsubmitted cost reports had been settled, but should have been submitted for reconciliation anyway. The outlier payments for the seven unsubmitted cost reports is approximately $17,667,277.
Eleven other cost reports were submitted to CMS with outlier payments for reconciliation. Out of these cost reports, Nordian submitted and resolved 6 of these by the deadline. The outlier payments for the five cost reports that were referred but not reconciled totaled approximately $7,213,678.
OIG added several recommendations for Nordian. These include:
• Review the three cost reports that were not settled or sent to CMS. Then, if appropriate, request CMS approval to recoup $6,919,974 in funds and interest from healthcare providers and refund it to the Federal Government.
• Review the seven cost reports that are settled but not submitted. Nordian should determine if they can be reopened, and work with CMS to resolve $17,667,277 in funds and interest from healthcare providers that the Federal Government may be owed.
• Review the five cost reports submitted to CMS with outlier payments that qualified for reconciliation. Nordian should partner with CMS to reconcile $7,213,678 in outlier payments due to the Federal Government, finalize cost reports, and ensure providers return funds to Medicare.
• Ensure control procedures are in place to prevent these types of issues from happening going forward, and ensure that these reports meet federal requirement.
In written reports Nordian agreed with OIG’s recommendations.