OIG to CMS: Use Compliance Audits to Create Better Oversight

Last month, the Office of Inspector General (OIG) published a report based on a series of 12 audits conducted during calendar years 2016 through 2018. Its purpose was to determine whether the claims were billed appropriately, whether the Centers for Medicare & Medicaid Services’ (CMS) took action regarding recommendations in the audits and how CMS could improve oversight by using the audits.

The audits were part of OIG’s Work Plan Initiatives. Here’s what they found:

• Of the 387 improperly paid claims identified in our previous 12 hospital compliance audits, 333 were inpatient claims that resulted in $5,260,147 in net overpayments, and 54 were outpatient claims that resulted in $53,729 in net overpayments.

• Of these 387 improperly paid claims, 229 claims were appealed at the first level, of which 22 overpayment determinations were overturned.

• In addition, 126 claims were appealed at the second level, of which 6 overpayment determinations were overturned.

• 359 overpayment determinations remained, resulting in sustained overpayments totaling $5,041,721.

After considering the results of the first and second levels of appeal, OIG determined that the total overpayments received by the 12 hospitals was $82 million. During those calendar years, Medicare paid hospitals approximately $555.2 billion or 49 percent of all fee-for-service payments.

The most common error types for these improper payments included incorrectly billed inpatient rehabilitation facility (IRF) services (200 of 333 claims) and incorrectly billed HCPCS codes that were not supported by the medical records and claims with the improper number of units billed.

The 12 audits covered in this report resulted in a total of 36 recommendations. OIG found that while CMS has taken some actions to ensure that its recommendations were implemented, it often failed to provide enough information for OIG to ensure that its recommendations were followed.

For its part CMS has said that it does not have enough resources or staff available to centrally track every issue or error identified in the OIG reports. OIG noted that if CMS used its provider-specific audit reports, it could improve Medicare program oversight by focusing on services at high risk for improper payment. In addition, CMS’s actions could lead to improvements in hospital specific internal controls, the OIG noted in its report.

In its report OIG made the following recommendations to CMS:

• Continue to follow up on the overpayment recovery recommendations contained in the
  12 audits covered by this report.
• Improve tracking and responding on the status of claims identified in our reports as they
  proceed through the appeals process.
• Direct its MACs to follow up with 8 of the 12 hospitals that have not responded to the
  recommendation to follow the 60-day rule or have not followed up at the conclusion of
  the appeals process (for those that are appealing the results of their audits).
• Revise its SOP to require MACs to follow up with providers at the conclusion of the
  appeals process and require the MACs to provide additional detail to CMS regarding
  specific follow-up actions taken.
• Consider the results of this audit and future hospital compliance audits in its risk
  assessment process.

While CMS did not explicitly state that it concurred or did not concur with OIG’s first and fifth recommendations, it instead requested that the recommendations be removed.

CMS concurred with the second, third, and fourth recommendations. In addition, CMS reiterated steps that it continues to take in response to the original underlying 12 audits, including collecting 91 percent of the sustained amount of overpayments identified in the audits.

The Health Law Offices of Anthony C. Vitale can assist clients with matters relating to Medicare audits. For more information give us a call at  305-358-4500 or email info@vitalehealthlaw.com.