OIG: Acute care hospitals owe Medicare $51.6M, CMS agrees to provider clawbacks

Medicare overpaid acute care hospitals by $51.6 million, according to an OIG audit.

A new government report finds that Medicare improperly paid acute care hospitals for outpatient services they provided to patients who were inpatients at other facilities. And now Medicare wants the money back.

The Centers for Medicare and Medicaid Services has agreed to claw back the $51.6 million and require hospitals to refund patient copays and deductibles.

The Department of Health and Human Services Office of Inspector General audited (PDF) Medicare payments made between Jan. 1, 2013, and Aug. 31, 2016, and found that in that window CMS made $51.6 million in improper payments to hospitals for outpatient services provided to patients who were inpatients at long-term care facilities, critical access hospitals, inpatient rehabilitation facilities and inpatient psychiatric facilities. 

Medicare typically would not pay an acute care hospital for outpatient treatments for a patient who is an inpatient at a different facility, according to the OIG, and instead the services should be rendered through an agreement between the two facilities, with payments going to the inpatient provider.  

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In addition, Medicare beneficiaries were responsible for $14.4 million in coinsurance and unnecessary deductibles paid to the acute care hospitals, the OIG found. 

"Medicare overpaid the acute care hospitals because the system edits that should have prevented or detected the overpayments were not working properly," the OIG concluded

"If the system edits had been working properly since 2006, Medicare could have saved almost $100 million, and beneficiaries could have saved $28.9 million in deductibles and coinsurance that may have been incorrectly collected from them or someone on their behalf." 

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OIG made three recommendations to CMS to resolve this issue: 

  1. Recover the $51.6 million in inappropriate payments.
  2. Have the acute care hospitals refund the patients' $14.4 million in coinsurance and deductibles.
  3. Identify improper payments outside of the audit window, and recover those as well.

CMS has agreed to these recommendations, OIG said. 

OIG conducted the audit as previous investigations showed Medicare made inappropriate payments for outpatient services for people who were inpatients at acute care hospitals, and the organization wanted to see whether the trend extended to other types of facilities.