Health Law Daily Audit finds estimated $22 Million in Medicare overpayments to Indiana hospital
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Wednesday, February 13, 2019

Audit finds estimated $22 Million in Medicare overpayments to Indiana hospital

By Victoria Moran, J.D., M.H.A.

An Indiana hospital disagrees with an OIG review finding that it was noncompliant with Medicare billing requirements and billed for stays that did not meet the higher acute inpatient rehabilitation level of care and billed with incorrect diagnosis-related group (DRG) codes.

As part of its hospital compliance reviews, the HHS Office of Inspector General (OIG) reviewed the billing compliance of an Indiana hospital and found that it only complied for 84 of the 170 inpatient and outpatient claims examined. The 86 noncompliant claims resulted in a net overpayment of $1,266,758 for 2015 and 2016. The OIG cites inadequate billing controls as the reason for the billing errors and recommends the hospital refund the Medicare contractor $22 million in estimated overpayments. The hospital disagreed with the findings and recommendations (OIG Report, No. A-05-17-00026, February 4, 2019).

Claims at risk for noncompliance. Hospital payments accounted for 55 percent of all fee-for-service payments made by Medicare in 2017. The OIG conducted a series of hospital reviews to examine billing compliance and, as part of its reviews, it examined claims at risk for noncompliance (risk areas), including inpatient rehabilitation claims, claims billed with high-severity-level DRG codes, inpatient claims paid in excess of charges, and inpatient and outpatient medical device credits.

The hospital and review. Community Hospital is a 458-bed not-for-profit acute care hospital in Munster, Indiana. The hospital received approximately $275 million for claims during calendar years 2015 and 2016 (the audit period). The OIG selected a stratified random sample of 170 total claims (165 inpatient and five outpatient) from 2015 and 2016; payments for the selected claims totaled $2.8 million. The review focused on the risk areas identified.

Findings. The hospital complied with Medicare billing requirements for 84 of 170 claims. However, the hospital did not comply with requirements and incorrectly billed for 86 inpatient claims resulting in net overpayments of $1,266,758.

Out of 165 inpatient claims, 63 claims were incorrectly billed for stays that did not meet Medicare criteria for the higher acute inpatient rehabilitation level of care. The hospital believes these claims met the Medicare requirements and, therefore, did not give a reason for the errors. These errors resulted in overpayments of $1,126,690. In addition, for 23 of the 165 inpatient claims, the hospital billed using the wrong DRG codes causing higher or lower payments. The hospital used incorrect diagnosis codes to determine the DRG codes, which it attributed to outdated Clinical Documentation Handbooks used by coders. These errors resulted in overpayments of $140,068.

The OIG concluded that the errors occurred because of inadequate controls to prevent incorrect billing. Based on the sample results, the OIG estimated that the hospital received at least $22,051,602 in overpayments for 2015 and 2016.

OIG recommendations. The OIG made three recommendations: (1) refund the Medicare contractor $22,051,602 in estimated overpayments; (2) identify and return any similar overpayments outside of the audit period; and (3) strengthen controls to ensure compliance with requirements.

Hospital’s response. The hospital disagreed with almost all of the OIG’s findings and recommendations, but it agreed that the documentation for some claims in the sample supported a different level of reimbursement. The hospital disagreed with all of the findings on the inpatient rehabilitation claims and argued that the OIG applied the wrong standards, used flawed sampling methodology, and the use of extrapolation was premature.

Companies: Community Hospital; Community Healthcare System

MainStory: TopStory OIGReports IPPSNews CMSNews BillingNews PaymentNews PartANews ProgramIntegrityNews ProviderNews

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