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Recent Compliance Updates & Tips

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Claims Flawed OIG Extrapolations and

Overstatements of Repayment Demands

In a letter to CMS, the American Hospital Association (AHA) requested that CMS take prompt action to address flawed compliance reviews conducted by the OIG, particularly related to the use of extrapolated data. The AHA asserted that the methods the OIG used were flawed in their extrapolation and often went beyond statistical limitations. The AHA also stated that the OIG audits “regularly include fundamental flaws and inaccuracies, both in the OIG’s understanding and application of Medicare payment rules and in the procedures the OIG uses to conduct the audits.” It asserted that these flaws result in “vastly overstated repayment demands, unwarranted reputational harm, and diversion of hospital and physician leaders’ time from their core mission of caring for patients.” The letter further stated that the OIG misunderstands the application of the Medicare payment rules, applying them in an uneven manner and, at times, using outdated and obsolete rules.

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The AHA also stated that “[w]hen hospitals object to the numerous errors in the audits, the OIG and CMS tell the hospitals that they can appeal the repayment demand.” Often, the OIG includes claims already adjudicated in favor of the hospital in its extrapolated findings. The AHA also criticized the inconsistency in the appeals process. The result of these flawed findings inflates repayment demands, sometimes in the millions of dollars, forcing hospitals to engage in appeals. The AHA continues, “[a]ppeals consume vast amounts of time and money for both the hospital and the government, which could be better spent by the hospitals on patient care and by the government on rooting out actual cases of fraud, waste and abuse in the Medicare program.” The AHA cites to the fact that OIG findings are frequently overruled on hospital appeal, noting that the high costs of OIG mistakes could have been avoided or corrected before a payment demand was made. In short, the AHA states that it is premature for CMS to issue repayment demands based upon the OIG’s flawed extrapolated findings.

AHA Recommended Actions for CMS

  1. Extrapolate only if there is a significant error rate.
  2. Delay extrapolation until the appeals process is complete.
  3. Allow rebilling of denied inpatient claims regardless of the usual timely filing period.
  4. Provide feedback to the OIG to facilitate issuance of an amended audit report and improvements in audits.
  5. Review and address legal issues raised by hospitals before an audit is performed or before a repayment demand is issued.

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Strategic Management Services has decades of experience assessing hospital and health care compliance programs. If you have any questions about the effectiveness of your program,contact us online or give us a call at (703) 683-9600 to speak to an expert.

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