Jurisdiction 15 Received $548K in Medicare Overpayments
Billing errors related to cardiac medical device manufacturer’s credits led to $580,000 in overpayments during 2011.
- The Department of Health and Human Services Office of Inspector General (OIG) released the results of its audit of CGS Administrators. It found that payments CGS made to hospitals in Jurisdiction 15 for replaced cardiac medical devices were not correct and resulted in Medicare overpayments of $548,000 during the calendar year of 2011.
The Centers for Medicare and Medicaid Services (CMS) pays medicare claims through the Medicare administrative contractor or fiscal intermediary in each jurisdiction. During the audit period, Medicare contractors nationwide paid hospital $243.7 million for certain inpatient and outpatient cardiac medical device claims potentially eligible for a manufacturer’s credit. Past reviews have shown that Medicare contractors have overpaid hospitals when it comes to credits for replaced cardiac medical devices.
The audit focused on Jurisdiction 15, which is made up of Kentucky, Ohio and West Virginia and CGS Administrators LLC is the Medicare contractor for that jurisdiction. The Medicare contractors paid hospitals $15,100,833 for 770 inpatient and 1,089 outpatient cardiac medical devices claims billed with principal diagnosis codes indicating there was a mechanical complication of an implantable cardiac device.
A total of 641 claims that totaled $9,717,370 were reviewed and consisted of 309 inpatient and 332 outpatient claims. It was discovered that 86 of the 614 inpatient and outpatient claims for replaced cardiac medical devices were not correct. These incorrect payments resulted in $547,553 of overpayments. Before the results were released, the hospitals had refunded $19,465 for an additional five claims.
There were several different issues that caused the overpayments. These include:
•45 of 309 inpatient claims, hospitals received a reportable medical device credit but did not adjust the claim with proper condition and value codes to reduce payment.
•16 or 332 outpatient claims, hospitals received a full credit but did not properly report the “FB” modifier and reduce charges on its claim.
•25 of 641 claims (21 inpatient, 4 outpatient), hospitals did not obtain a credit for replaced devices for which a credit was available under the terms of the manufacturer’s warranty.
According to the report, CGS believes that the incorrect billing is the result of inadequate policies and procedures for reporting manufacturing credits, lack of awareness of warranties and credit availability, and hospital misapplication of the credit amounts.
The OIG recommended that CGS recover the $547,533 in identified overpayments and use the results of the audit to improve its hospital education activities. CGS agreed with the findings and recommendations. However, it did comment that the errors on claims were committed on the provider side and in their billing practices with medicare contractors not able to prevent 100 percent of the errors in data submitted by providers. CGS asked that CMS allow for a clerical reopening when errors in data is found and CMS agreed.
