OIG Report: CMS Fails to Collect Millions in Overpayments

The Centers for Medicare and Medicaid (CMS) failed to collect a large portion of Medicare overpayments identified over a two-year period between 2014 and 2016, according to an audit conducted by the U.S. Department of Health and Human Services Office of Inspector General.

According to the watchdog agency, of $498 million in Medicare overpayments identified in an audit, CMS reported collecting $272 million (55 percent). However, CMS only provided documentation to support having collected $120 million of the $272 million it claimed to have collected.

“CMS did not have adequate policies and procedures for obtaining the appropriate documentation needed to support collected overpayments, for properly managing and maintaining documents and records, or for making documents and records readily available for examination,” according to the OIG report.

In addition to failing to collect the money, CMS failed to take corrective actions in response to recommendations made in a prior audit report dated May 2012.

“CMS said that it did not implement two of the six prior audit recommendations because they were related to an audit tracking and reporting system that it no longer used. Of the remaining four recommendations, CMS implemented two, partially implemented one, and did not implement one,” according to the report.

CMS gave various reasons for not collecting sustained overpayments, such as provider appeals and CMS/MAC redeterminations of overpayment amounts. Some of the sustained overpayments are no longer collectible, including $11 million categorized as “overpayment redeterminations” and more than $5.6 million of the $13 million that OIG categorized as “other”

Although CMS delegated part of its collection responsibilities to the Medicare Administrative Contractors (MACs), CMS is ultimately responsible, and the OIG noted that the agency did not have policies and procedures in place to ensure that the MACs adequately managed their collection efforts.

About $17 million of the sustained overpayments are no longer collectible, according to the report. By failing to collect the overpayments and implement the OIG recommendation, millions of dollars owed to the Medicare Trust funds may go uncollected.

However, there were other overpayments that may still be collectible, such as $78 million that CMS had not collected because the providers’ NPRs were on hold pending the establishment of an SSI factor and $45 million that was pending cost report reconciliation.

OIG made the following recommendations to CMS:

• Continue efforts to recover any collectible portion of the $226 million in uncollected overpayments and inform OIG of any additional collections related to this amount.

• Establish policies that define and require retention of documentation that is needed for independent verification of the collection of overpayments.

• Determine what portion of the $152,510,191 was collected and recorded in its accounting system based on policies established in response to OIG’s recommendation in the previous bullet.

• Establish policies and procedures that require staff to clearly describe the reasons for non-collection of an overpayment, maintain any documentation necessary to support those reasons, and obtain approval from an authorized individual not to collect the overpayment.

• Ensure that employees follow established policies and procedures for verifying that collection information is accurately and consistently recorded.

• Provide MACs with specific guidance on what documentation is needed to support the collection of an overpayment.

• Revise 42 CFR section 405.980 and corresponding manual instructions related to the reopening period for claims to be consistent with statutory provisions contained section 1870 of the Social Security Act, which allows Medicare contractors to determine whether overpayments were made and to begin to collect them for 5 years following the year payments were made.

• Establish a mechanism to reopen claims when OIG starts an audit so that CMS can collect overpayments consistent with the 5-year timeframe contained in section 1870 of the Social Security Act.

• Develop a plan, with milestones, for reconciling cost reports applicable to nine audit reports discussed in Appendix B of the OIG report.

Under the Affordable Care Act’s (ACA) overpayment provision and rules promulgated by CMS, a provider who has received an overpayment must report and return it. Once an overpayment is identified, there are strict guidelines that must be adhered to when it comes to the appeals and recoupment process.

The Health Law Offices of Anthony C. Vitale has extensive experience representing clients in audits and overpayments and we can represent your interests through all stages of the overpayment appeals process in an effort to achieve the most successful results. For more information you can contact us at 305-358-4500 or send us an email to info@vitalehealthlaw.com and let’s discuss how we might be able to assist you.

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