News: OIG found CMS edits saved millions in Medicare overpayments

A recent audit by the Office of Inspector General (OIG) found that changes to CMS' system has significantly reduced Medicare overpayments to acute care hospitals for outpatient services. The OIG showed $39.3 million in overpayments had been made, particularly for services provided to beneficiaries who were inpatients of other facilities from September 2016 to December 2021, when in fact the inpatient facilities were responsible. On the other hand, of that $39.3 million, only $3.4 million was improperly paid after CMS edited its system in May 2019, Healthleaders reported.

The Medicare claims processing system had both postpayment and prepayment edits made. One such edit says that, before Medicare administrative contractors pay outpatient claims, all claims are sent to CMS’ Common Working File for verification, validation, and payment authorization, after which it sends information back to the contractors about any potential errors on the claim. If the inpatient claim is processed after the outpatient, they get an alert so the payment can be recovered.

With these findings in mind, the OIG recommended that the $39.3 million in overpayments be recovered to CMS by the contractors, and that acute care hospitals refund beneficiaries up to $9.8 million. They also said CMS should notify providers to return any overpayments, and that CMS recover any inappropriate payments after the audit period. CMS in turn has concurred with all but the last of these recommendations.

Editor’s note: To read Healthleaders’ coverage of this story, click here. To access the OIG audit, click here.