Healthcare News & Insights

What hospitals can learn from latest OIG audit

The Office of the Inspector General (OIG) just completed another round of its hospital billing compliance audits. Based on its findings, hospitals can get an idea of what the feds are looking at right now – and how to avoid issues with their own billing and coding.

488689611From previous reviews of hospital billing patterns, the OIG found that several types of claims were likely to be billed incorrectly, including

  • inpatient short stays
  • inpatient claims paid in excess of charges
  • inpatient claims billed with high-severity-level diagnosis-related group (DRG) codes, and
  • inpatient and outpatient manufacturer credits for replaced medical devices.

So the OIG examined claims in these categories that were billed by the University of North Carolina Hospital (UNC), and what it found didn’t look good for the facility.

Audit findings

According to the OIG’s official report about the audit, it found UNC didn’t comply with federal requirements for billing these claims in a number of instances. And because of this, it received at least $2.4 million worth of overpayments over an almost two-year period.

During the time period reviewed in the audit, the hospital received over $33 million in payments for more than 2,460 claims that fell into the four categories the OIG identified as being rife with issues for hospital billing.

From those claims, the OIG pulled a random sample of 251 claims with payments totaling over $3.5 million for a closer look. It found that 59 of these claims had errors that led to over $450,000 worth of overpayments.

Using the sample, the agency came up with the $2.4 million figure for the estimated overpayments to UNC. And it’s asking the hospital to strengthen billing controls to ensure full compliance – along with refunding the money.

Hospital’s side

UNC tells a slightly different story, however, and the hospital is appealing most of the claims examined in the audit.

Out of the 59 sample claims reviewed, the hospital acknowledges billing mistakes in three claims for medical devices in which the hospital was reimbursed by Medicare in full for devices it received at a discount. It attributes these issues to human error.

It also admitted that there were coding mistakes in additional claims involving the use of the wrong DRG code and the wrong discharge status code.

The biggest area UNC objects to regarding the OIG’s audit findings: its view on short stays.

While the OIG determined that many claims for inpatient stays it reviewed weren’t supported by medical necessity, the hospital said its providers admitted patients based on evidence that their conditions might worsen. So even if patients didn’t get sicker, the stays were valid.

Avoiding billing & coding issues

Time will tell whether the hospital is successful with its appeals.

But from this review, it’s clear: The feds have their eyes on hospital billing, particularly for short hospital stays and claims with high-severity DRG codes.

That means your billing department needs to be aware of the issues where the OIG and other federal agencies will be placing the most scrutiny, and there should be a system in place where these claims are double-checked for errors before submission.

Example: Your electronic health records (EHR) system could be programmed to “flag” certain claims for additional review by a coding or compliance professional before sending them off to payors.

Implementing this step alone might save your hospital from losing millions if an audit happens.

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