Medicare pays outpatient providers twice, leading to $6M overpayments

Medicare continues to pay twice for nonphysician outpatient services before and during inpatient stays, according to a report from the U.S. Department of Health & Human Services' Office of Inspector General, released last week.

Medicare overpaid hospital outpatient providers by about $6.4 million in 2008 and 2009 for services provided within three days prior to the date of admission, on the date of admission or during inpatient prospective payment system (IPPS) stays.

Although Medicare correctly paid for 66 of the 127 nonphysician outpatient services that OIG reviewed, it paid providers twice for 61 services, resulting $340,073 worth of overpayments, the agency said.

According to the report, the overpayments stemmed from hospitals incorrectly billing Medicare Part B for outpatient nonphysician services such as laboratory services and radiology and surgical procedures.

The OIG found that clerical errors during the patient admitting or billing process caused the mistakes, as well as hospitals not fully understanding Medicare requirements. However, Medicare's inadequate systems also failed to prevent or detect overpayments.

In addition to recouping the $340,073 it overpaid, the OIG called on the Centers for Medicare & Medicaid Services to resolve the remaining 148,175 outpatient services with $6.1 million in potential overpayments.

CMS has followed most of the OIG recommendations, agreeing to collect $284,538 in overpayments from 42 of the 61 billed services that didn't fall outside of the four-year reopening period for collections and/or below the estimated cost of collection, as well as inform providers about the payment window policy for IPPS stays.

OIG has criticized CMS for its faulty auditing and collecting, suggesting that the Medicare and Medicaid recovery programs, especially anti-fraud efforts, are slow and therefore ineffective.

For more:
- read the OIG summary and report (.pdf)