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Methodist Healthcare Received $5.8M in Medicare Overpayments

By Ryan Mcaskill

- The Department of Health and Human Services Office of Inspector General (OIG) released is Medicare compliance review of Methodist Healthcare – Memphis Hospitals. Examining claims filed between January 1, 2011 through June 20, 2012 and it was discovered that the hospital received at least $5.8 million in overpayments from Medicare.

The review was conducted as part of a series of reviews that were launched because claims from the organization were flagged as being at risk. Using computer matching, data mining and other data analysis techniques, a number of claims were marked for future examination. For the calendar year of 2012, Medicare paid hospitals $148 billion, which represents 43 percent of all fee-for-services payments. This creates a need for proper and continual oversight of Medicare payments to hospitals.

Methodist Healthcare – Memphis Hospitals is a 1,293-bed acute care facility located in Memphis, Tennessee. Centers for Medicare & Medicaid Services’ (CMS) National Claims History data found that during the audit period, Medicare paid the hospital approximately $474 million for 35,921 inpatient and 132,554 outpatient claims for services provided to beneficiaries during the calendar years of 2011 and 2012.

During the audit period, $29,002,241 in Medicare payments to the hospital was handed out for 3,590 inpatient claims that were potentially at risk for billing errors. The OIG took a random sampling of 150 claims with payments totaling $1,670,356 that were serviced during the time frame.

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  • The OIG found that 102 of the 150 inpatient claims were handled correctly, but the remaining 48 claims were not in compliance. This resulted in overpayments of $353,426. By extrapolating the findings, it is estimated that $5,893,302 was received in overpayments.

    These errors are attributed to inadequate controls to prevent the incorrect billing of Medicare claims within the selected risk areas that contained errors. According to the report, the errors are attributed to incorrectly billing a patient as inpatient, incorrectly billing as a separate inpatient stay, incorrectly billed diagnosis related group codes and incorrectly billed patient discharge status codes.

    It is recommended that the hospital repay the Medicare program the full $5,893,302 in estimated overpayments and take steps to strengthen controls to ensure full compliance with Medicare requirements.

    The hospital responded to the study and disagrees with 27 of the inpatient claims that were consider to be noncompliant. The hospital claims that there is proper documentation to support the appropriate level of care that was originally billed. The hospital added that it also questions the validity of the extrapolation and as it includes claims reviewed by the Recovery Audit Contractors.

    The OIG responded to the hospital, stating that it stands behind the report and that in the auditor’s professional opinion, the hospital did not fully comply with the Medicare billing requirements for those 27 disputed claims.