Healthcare News & Insights

Hospital has to return $589,705 in Medicare overpayments

Medicare paid Maine Medical Center — a 637-bed, acute-care hospital in Portland, ME — $340 million for 23,690 inpatient and 127,833 outpatient claims during calendar years 2009 and 2010. Now, the facility is returning $589,705 in Medicare overpayments.

In the grand scheme of things,  $589,705 may not seem like much in comparison to $340 million. But in today’s economy, where hospitals are being asked to do more with less, every dollar counts and every dollar you have to give back to the government hurts.

The payback was the result of a Department of Health and Human Services (HHS) Office of Inspector General (OIG) audit.

The audit covered $2,675,038 in Medicare payments for 293 claims. The claims examined by the OIG were selected for potentially being at risk for billing errors based on past auditing experience.

Audit findings

What the audit uncovered was that the hospital complied with Medicare billing requirements for 114 of the 293 inpatient and outpatient claims.

Unfortunately, the OIG found that the remaining 179 claims didn’t fully comply and resulted in net overpayments totaling $589,705. Specifically, 112 inpatient claims had billing errors for a total of $387,904 in overpayments and 67 outpatient claims had billing errors, resulting in $201,801 in overpayments.

Specific problem areas identified in the audit as inpatient claim billing errors included:

  • short stays
  • transfers
  • high severity level diagnosis-related group codes
  • manufacturer credits for replaced medical devices
  • claims paid in excess of charges
  • psychiatric facility emergency department adjustments, and
  • hospital-acquired conditions and present on admission indicator reporting.

Specific problem areas identified in the audit as outpatient claim billing errors included:

  • manufacturer credits for replaced medical devices
  • billing for dental services
  • claims billed with modifiers
  • outpatient intensity modulated radiation therapy planning services
  • outpatient claims billed during inpatient stays, and
  • outpatient claims billed with E/M services.

Overall, the OIG attributed the hospital’s billing errors to not having adequate controls to prevent incorrect billing of Medicare claims and not fully understanding the Medicare billing requirements within the selected areas of risk.

Actions taken

The OIG recommended the hospital refund the $589,705 in overpayments to the Medicare contractor and strengthen controls to ensure full compliance with Medicare requirements.

In a letter to the OIG, Richard Petersen, Maine Medical Center’s president and chief executive officer,  said it will issue a full refund of the overpayments to the Medicare contractor through the OIG’s recommended claims adjustment process after the final report has been issued. In addition, the facility has taken the following steps to strengthen controls to ensure full compliance with Medicare requirements:

  • redesigned and implemented a more comprehensive utilization review approach
  • simplified, clarified and streamlined processes for documentation and communication regarding admission status and coding
  • provided additional coding education, training and monitoring
  • developed a fail-safe work flow to ensure device credits are applied and reported appropriately, and
  • conducted applicable system reviews and updates of billing software to ensure data accuracy.

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