Pinnacle Failed to Properly Refer Medicare Cost Reports
An estimated $1.4 million should have been recouped from healthcare providers and returned to Medicare.
- According to a recent report from the Department of Health and Human Services’ Office of Inspector General, Pinnacle Business Solutions did not always refer Medicare cost reports and reconcile outlier payments that qualified for reconciliation to the Centers for Medicare and Medicaid Services (CMS). This resulted in an estimated $1.4 million that should be recouped from health care providers and returned to Medicare.
CMS implemented inpatient outlier regulations in 2003 that authorized Medicare contractors to reconcile payments before the settlement of certain hospital cost reports to ensure they reflect the actual costs that each hospital had incurred. Effective April 2011, CMS gave Medicare contractors the responsibility to perform reconciliations upon receipt of authorization from the CMS Central Office.
This review of Pinnacle, is part of a series of reviews that determine whether Medicare contractors had referred the cost reports that qualified for reconciliation and reconciled outlier payments in accordance with the shift in responsibility. Pinnacle is a Medicare contractor for Arkansas, Louisiana and Mississippi. Pinnacle’s responsibilities transitioned to Novitas Solutions, Inc. The object of the review is to determine whether Pinnacle referred cost reports to CMS in accordance with Federal guidelines and reconciled the outlier payments associated with the referred cost reports by December 31, 2011.
According to the study, of the 23 cost reports with outlier payments that qualified from reconciliation, Pinnacle referred 12 cost reports to CMS in accordance with Federal guidelines but did not refer 11 cost reports that should have been referred. Of those, four cost reports had not been settled and should have been referred to CMS. The recalculated outlier payments totaled at least $3,073,552.
Pinnacle also had not reconciled the outlier payments associated with any of these cost reports by December 31, 2011. The financial impact of the outlier payments associated with 8 of the 12 cost reports that were referred but not reconciled was at least $8,598,266.
The OIG recommends that all of the cost reports, within and since the end of the audit period, be reviewed and settled appropriately. The organization also needs to work with CMS to ensure all outlier payment are handled correctly. Furthermore, the company needs to ensure that the correct control procedures and policies are in place for all cost reports.
Novitas concurred with all of the recommendations laid out several steps that have been taken to correct these actions. Company officials did state, however, that some of the cost reports could not be reopened because they had surpassed the three-year reopening limit. All of the remaining reports will be completed with appropriate corrective actions.
“After reviewing Novitas’s comments, we maintain that all of our findings and recommendations remain valid,” the report reads. “With respect to the nine cost reports associated with our second and fourth recommendations, CMS regulations allow for cost reports to be reopened beyond 3 years if there is evidence of ‘similar fault.’”
