OIG Report – Medicare Pays Twice for Outpatient Services Provided Before or During an Inpatient Stay

On June 4, 2012, the US Department of Health and Human Services Office of the Inspector General’s (“OIG”) Office of Audit Services issued a report (A-01-10-00508) entitled “Medicare Continues To Pay Twice for Nonphysician Outpatient Services Provided Shortly Before or During an Inpatient Stay”.

The OIG conducted an audit of hospitals and hospital out-patient providers during 2008 and 2009 and determined that Medicare made approximately $6.4 million in overpayments to hospital outpatient providers.  The overpayments were made for  services provided to beneficiaries within 3 days prior to the date of admission, on the date of admission, or during an inpatient prospective payment system (IPPS) stay.  The OIG found that overpayments occurred because: (1) provider controls failed to prevent or detect incorrect billing, (2) providers were unaware that beneficiaries were in-patients at other facilities, and (3) providers were unaware of or did not understand Medicare requirements.

The OIG also determined that Medicaid contractors: (1) were not aware of edits and alerts that would clue them into to incorrect billing, (2) existing edits did not prevent or detect certain incorrect payments, and (3)  contractors incorrectly overrode  edits or took no action to recover or offset overpayments .

The OIG concluded its report by recommending that CMS recover its identified overpayments, take more significant action to reject claims or recoup overpayments when identified by edits; and remind hospitals of the importance of adequate controls to prevent incorrect billing for services.

As a result of the OIG’s findings, hospitals and outpatient providers can expect more review, audits and scrutiny overall of overpayments for services that are expected to be bundled into the IPPS rate.

You can find a copy of the OIG report here —>  OIG A-01-10-00508

For more information on the OIG Report, Medicare Program Integrity initiatives or related issues, please feel free to contact Ari Markenson or any member of our health care practice group for a further discussion.

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