Revised billing rules for canceled surgeries could save millions

Medicare could save more than $38 million over two years by strengthening billing requirements for canceled elective surgeries, according to a new report from the Office of Inspector General.

The OIG found most short-stay hospital inpatient claims for canceled elective surgeries were not reasonable and necessary and therefore did not meet Medicare requirements for Part A prospective payments, it noted in a report summary.

Based on 80 sampled claims representing $345,717 in overpayments, the OIG estimates Medicare made $38.2 million in Part A inpatient hospital payments in 2009 and 2010 for unreasonable and unnecessary short-stay, canceled elective surgery admissions.

In those 80 claims, payments didn't satisfy federal requirements because either a clinical condition did not exist on admission or a new condition did not develop after admission that required inpatient care, according to the report.

The OIG also pointed out inpatient admissions were medically unnecessary when hospitals canceled surgeries because preoperative exams showed admitted patients were not ready for their surgeries. In addition, the report said cancellations due to hospitals' lack of preparedness did not warrant billing inpatient claims.

Given its findings, the OIG called on the Centers for Medicare & Medicaid to issue specific national rules so hospitals clearly understand a clinical condition requiring inpatient care must exist for hospitals to bill for Part A prospective payments for canceled elective surgeries. It also emphasized the need for stronger hospital utilization review controls to confirm whether admissions were reasonable and necessary after elective surgeries had been canceled.

Canceled surgeries aren't only hurting Medicare's wallet. Patient no-shows and cancellations on the day of surgery cost hospitals millions of dollars each year. In fact, Tulane University Medical Center researchers found 6.7 percent of scheduled elective outpatient surgeries were canceled in 2009 and totaled almost $1 million in lost revenue for that year, FierceHealthcare previously reported.

For more:
- here's the OIG summary and report (.pdf)