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The Department of Health and Human Services (HHS) Office of Inspector General (OIG) recently issued a report on Memorial University Medical Center’s (MUMC) compliance with Medicare requirements. The OIG’s objective was to determine whether MUMC complied with billing requirements for inpatient and outpatient services. The report was part of the OIG’s series of hospital reviews to assess the $170 billion in Medicare payments to hospitals for the calendar year 2016. Medicare spending in 2016 represented 46 percent of all fee-for-service payments.
For this review, the OIG audited four claim areas that were identified as high-risk for billing non-compliance in its previous reports. Those areas include: inpatient claims billed with high-severity-level-DRG codes; inpatient claims paid in excess of charges; inpatient rehabilitation facility (IRF) claims; and, outpatient medical device claims. The OIG conducted its review of MUMC over the January 1, 2015 to December 31, 2016 time period using a sample totaling roughly $2 million in payments. Noncompliant claims were identified by using computer matching, data mining, and data analysis techniques.
The OIG found that:
- MUMC complied with Medicare billing requirements for 92 of the 131 inpatient and outpatient claims OIG reviewed;
- MUMC did not fully comply with Medicare billing requirements for the remaining 39 claims, which resulted in $599,530 in overpayments from the review sample results;
- 36 inpatient claims had billing errors, resulting in overpayments of $595,719;
- 3 outpatient claims had billing errors, resulting in overpayments of $3,811;
- MUMC received an estimated overpayment of at least $1,455,892 in total Medicare billing for the audit period; and,
- The billing errors could be attributed to inadequate controls to prevent insufficient documentation and human error and to the lack of a formal written policy in the billing of Medicare claims stemming from the selected high-risk areas.
The OIG recommended that MUMC:
- Refund the Medicare contractor the remaining $1,300,820 of the $1,455,892 that had not been repaid during the audit process;
- Exercise reasonable diligence to identify and return any additional similar overpayments received outside of the audit period, in accordance with the 60-day repayment rule; and,
- Strengthen controls to ensure full compliance with Medicare requirements.
MUMC concurred with the OIG’s recommendations to return similar overpayments received outside of the audit period, in accordance with the 60-day repayment rule, by the end of 2017. MUMC also concurred with the OIG’s recommendation to strengthen its compliance controls by modifying current controls and adding new controls as needed. However, MUMC disagreed with 17 of the 39 claim errors that the OIG identified as not fully complying with Medicare billing requirements.
The OIG, in response, sought independent medical review of the 17 disputed claims, which were all for inpatient IRF claims. The independent medical reviewers found that 23 of the 30 total reviewed IRF claims did not meet Medicare criteria for acute inpatient rehabilitation. MUMC indicated that six of the IRF claims were billed incorrectly due to human and system errors. The hospital argued that additional documentation could be provided to meet Medicare medical necessity requirements for the remaining 17 IRF claims. The OIG found that the independent medical reviewers were given all documentation necessary to determine the IRF claims at the time the medical results were discussed. MUMC did not indicate that it had additional documentation at the time of that discussion. The OIG, therefore, maintained its findings. The OIG and medical reviewers both acknowledged MUMC’s right to a formal appeal where it could supply the additional claim related documentation.
The full OIG report is available at: