News: Medicare inappropriately paid for outpatient services for inpatients

The Office of Inspector General (OIG) recently reviewed $51.6 million in Medicare Part B payments to acute care hospitals only to find that Medicare did not appropriately pay the hospitals for any of the reviewed outpatient services, Revenue Cycle Advisor reported. In addition, beneficiaries were charged with $14.4 million in unnecessary deductibles and coinsurances for the hospital outpatient services.

The review looked at 129,792 claims to identify instances when outpatient services were improperly provided to beneficiaries who were being treated as inpatients at other facilities, including long-term care hospitals. If an acute care hospital provides outpatient care to a patient who is being treated as inpatient at a long-term care hospital (or other facility where the patient is an inpatient), the services should be provided under arrangements between the two facilities. In this instance, Medicare would then pay the inpatient facility for all services, according to Revenue Cycle Advisor.

Medicare overpaid the acute care hospitals examined in the report because common working file edits in the hospitals’ systems that should have detected overpayments did not work correctly, according to the report. In 94% of the cases, the Medicare contractor processed the outpatient hospital claim prior to the facility inpatient claim and the contractor did not recover the improper payment when alerted to do so. In just 6% of cases, the contractor processed the facility inpatient claim prior to the hospital outpatient claim. The prepayment edit failed to deny these claims.

The OIG recommends that CMS instruct Medicare contractors to recover the $51.6 million in overpayments and that the acute care hospitals refund beneficiaries up to $14.4 million for incorrectly collected deductibles and coinsurances. The OIG also recommends that Medicare contractors identify and recover any improper hospital payments paid after the audit ended in August 2016, according to the report.

Editor’s note: This article originally appeared in Revenue Cycle Advisor. To read about the OIG’s work plan for 2017, click here.