OIG: Most hospital-based clinics overcharge Medicare

Hospitals erroneously bill Medicare millions of dollars a year because they incorrectly classify the patients they treat, according to a report issued late last week by the U.S. Department of Health and Human Services' Office of the Inspector General. 

Hospitals wrongly classify many patients as "new" as opposed to "returning" or "established," the OIG report said. Medicare pays clinics a higher rate when it treats patients for the first time.

While the overpayments themselves were fairly nominal, averaging $21.47, the OIG expressed concern that the error-prone bills are so common. And the error rate is extraordinarily high: of the 110 bills for hospital-based clinic visits surveyed, only two were correctly submitted, according to the OIG. Throughout the entire Medicare system, the OIG estimates, the program overpays claims for clinic visits by about $3.8 million per year, for a total of $7.53 million in calendar years 2010 and 2011.

Most hospital executives expect outpatient clinic visits will continue to rise, primarily to better control costs and coordinate care.

The OIG recommended the Centers for Medicare & Medicaid Services (CMS) make an effort to recover the overpayments. It also suggested that Medicare Administrative Contractors, or MACs, pay closer attention to the matter and "provide additional guidance to hospitals on billing clinic visits for new or established patients," as well as "direct MACs to instruct hospitals on the need for stronger compliance controls that ensure proper billing of clinic visits."

Although CMS said it would make an attempt to recover the overpayments, it rejected the advice given to the MACs, saying it has revised outpatient codes pertaining to clinic visits to avoid confusion. It also did not want to push the MACs on the compliance issue, noting that CMS "must always consider return on investment when conducting medical review because of the limited resources associated with medical review activities," the OIG report said.

To learn more:
- read the OIG report (.pdf)

Related Articles:
Hospital execs project shift to outpatient care, more HIT spending
Patients using outpatient services more often
Hospital operators: Outpatient growth offsets weak inpatient admissions
Admissions traffic from ED, outpatient clinics on the rise
OIG: Include more outpatient services in inpatient lump-sum payment

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