OIG: NY Hospital Received $14.2M in Medicare Improper Payments

August 16, 2016 - A New York-based hospital overbilled Medicare by over $14.2 million between 2011 and 2012 because it did not have appropriate medical billing measures to prevent and identify improper payments, reported the Office of the Inspector General (OIG).

During the audit period, OIG found that about 43 percent of the New York-Presbyterian Hospital’s Medicare claims were improperly billed to Medicare.

“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,” stated the report.

As a result, Medicare reimbursed the hospital nearly $1.5 billion for 76,437 inpatient and 579,761 outpatients claims between 2011 and 2012.

However, OIG stated that the hospital was significantly overpaid for many of the claims it submitted to Medicare. In a sample of 285 inpatient and outpatient claims, OIG found that New York-Presbyterian Hospital did not follow Medicare billing requirements for 123 claims, resulting in $819,903 improper payments for the audit period.

The auditors also discovered that 3,884 claims from the hospital were “potentially at risk for billing errors,” which accounted for over $32.8 million.

To prevent future improper payments, OIG advised New York-Presbyterian Hospital to improve its controls to ensure that the hospital is in full compliance with Medicare billing requirements. It also recommended that the hospital “exercise reasonable diligence to investigate the potential overpayments outside of the Medicare reopening and recovery periods and work with the Medicare contractor to return any identified overpayments…in accordance with the 60-day repayment rule.”

CMS requires providers to report and repay any improper payments within 60 days of identifying the claims reimbursement in question. Providers must investigate any potential improper payments under the regulation and determine if they were overpaid and by how much over a 6-year lookback period.

In response, New York-Presbyterian Hospital disagreed with the OIG’s recommendation to reimburse Medicare for certain improper payments. The hospital stated that some of the overpayments identified in the initial OIG report could not be recovered by CMS, especially since some of the claims were outside of a 4-year reopening period. The potential improper payments were “time-barred” and the hospital reported that it does not have to return the overpayments.

New York-Presbyterian Hospital also disagreed with the OIG’s findings that indicated it did not comply with all of Medicare’s billing requirements for 91 out of the 123 identified improper payments.

“The Hospital stated that our review misapplied Medicare coverage, coding, and documentation requirements, resulting in an incorrect error rate; therefore, the Hospital believes the extrapolation of overpayments is improper and statistically unsound,” the report stated.

Despite refuting some recommendations from OIG, the hospital agreed to strengthen its controls that maintain full compliance with Medicare billing programs. New York-Presbyterian Hospital told the federal watchdog that it incorrectly billed Medicare for 16 inpatient and 16 outpatient claims during the audit period, causing a total overpayment of $143,920.

While OIG investigates on a case-by-case basis, the improper payments at the New York-based hospital may be a symptom of a larger problem with Medicare billing, reported the Council for Medicare Integrity.

The industry group stated that the Medicare improper payment rate is 12.1 percent and has been over the legal billing error rate threshold of ten percent for the past three years. Medicare has overpaid providers nearly $125 billion for medical services that were either unnecessary or improperly billed.

While CMS developed the Recovery Audit Contractor Program to reduce unnecessary Medicare spending and recover improper payments, the federal agency has recently reduced the number of reviews performed in the program and now allows Medicare providers that inappropriately billed 91 percent of the time to have a maximum of five percent of their claims reviewed for accuracy.

The new improper payment recovery rules put more pressure on Medicare, which is projected to be bankrupt by 2028, reported the industry group.

“The Medicare insolvency date continues to trend in the wrong direction,” said Kristin Walter, spokesperson for the Council for Medicare Integrity.

“There is a significant long-term shortfall that needs to be addressed to keep the program afloat. The government has great tools at their disposal that could help bolster the solvency and longevity of the program, but those tools are now being used at half capacity. It’s time to stop giving our tax dollars away to line the pockets of hospitals and instead recover them to be used to cover the future healthcare needs of our nation’s seniors.”

Dig Deeper:

• Key Ways to Improve Claims Management and Reimbursement in the Healthcare Revenue Cycle

• OIG: CMS Not Reducing Medicare, Medicaid Improper Payments