OIG discovers fewer Medicare illegal payments to acute care hospitals

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Written By Prajeeta Basnet

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OIG discovers fewer Medicare illegal payments to acute care hospitals. Inappropriate Medicare Part B payments to acute care hospitals totalled $39.3 million during a four-year period. But they experienced a sharp decline after the federal government introduced new tools to identify and eliminate such mistakes. The Office of Inspector General (OIG) of the Department of Health and Human Services undertook an audit of improper Medicare payments to acute care hospitals for outpatient services provided to beneficiaries already residing in another facility, such as critical access or long-term care hospital, from September 2016 through December 2021.

Researchers examined the inpatient claims from psychiatric facilities, critical access hospitals, long-term care hospitals, and inpatient rehab centers. Then they looked for any overlaps in the outpatient claims from acute care facilities. Medicare paid the hospitals $39.3 million during the course of the investigation, but none of the payments was necessary because the beneficiaries were already residing in other institutions.

The OIG discovers fewer Medicare illegal payments to acute care hospitals.

After May 2019, however, there was a sharp decline in erroneous payments to acute care hospitals. The method used to identify overpayments is the cause. To a Medicare Administrative Contractor (MAC), a third party that handles Medicare claims, providers must deliver a shared working file. To notify the MAC of any potential problems, the file contains modifications to claims both before and after payment. The common functional file edits, however, weren’t functioning properly prior to May 2019.

“From June 2019 through December 2019, just $3.4 million (less than 9% of the $39.3 million in erroneous payments for the whole audit period) was improperly paid after CMS corrected the modifications in May 2019. The OIG report stated that 2021. In order to find and recover any erroneous payments received beyond our audit period, a more thorough examination of the modifications is required. OIG demanded that CMS take action in order to recover the $39.3 million.

The audit comes less than a week after a comparable investigation discovered that Medicare paid more than $1 million in duplicate claims to critical access hospitals and physicians in 2019.  In order to more effectively spot any problems, the review urged CMS to develop a post-payment assessment of claims.

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