Healthcare News & Insights

OIG audits: Two hospitals owe Medicare $1 million

For hospitals, conforming to federal billing requirements demands 100% compliance, all the time.

Two facilities learned that the hard way.

A recent audit by the Office of the Inspector General, found that Barnes-Jewish Hospital (BJH), in St. Louis, complied with Medicare billing requirements for 182 out of 240 outpatient and inpatient claims reviewed. However, 58 of those 240 claims didn’t meet Medicare’s billing requirements and landed the facility with an overpayment of $725,185.

The breakdown of the 58 claims with billing errors was:

  • 24 outpatient claims had billing errors regarding manufacturer credits for medical devices and excess charges resulting in overpayments of $392,829, and
  • 34 inpatient claims had billing errors regarding excess charges and medical devices, as well as short stays and high-severity DRG codes, resulting in overpayments of $332,356.

The OIG reported the primary reason for the billing errors was the hospital’s failure to have adequate controls in place to prevent billing mistakes on Medicare claims.

In a letter to the OIG, the facility noted it rectified the overpayments by refunding Medicare contractor Wisconsin Physician Services $725,185. The facility also strengthened its processes related to the audit issues by:

  • modifying its existing information systems to address physician signature requirements for admission orders
  • acquiring new software programs to support coding and charge capture
  • developing and delivering coding education to staff, and
  • increasing the frequency of its internal audits.

Indiana University Health (IUH) was also audited by the OIG. And while the facility was found to generally comply with Medicare requirements, 35 of the 198 claims reviewed contained billing errors, which lead to overpayments of $280,000.

The breakdown of the 35 claims that didn’t meet Medicare requirements were:

  • 15 inpatient claims, resulting in overpayments totaling $109,198, and
  • 20 outpatient claims, resulting in overpayments totaling $170,795.

According to the OIG’s report, the reason for IUH’s billing mistakes were the same as BJH: Adequate controls weren’t in place at the facility to prevent incorrect billing of Medicare claims.

In addition to refunding the total amount of overpayments, IUH has put in place extensive coding quality checks and targets cases prone to coding errors in its internal audits.

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