OIG: CMS stuck with $543M in 'not collectible' overpayments

The ability of the Centers for Medicare & Medicaid Services to recover billions of dollars in Medicare overpayments is hampered by poor record-keeping, as well as turnover among the contractors responsible for collecting overpayments, an Office of Inspector General audit found.

The OIG audit focused on overpayments classified as "currently not collectible" (CNC)--those more than six months overdue. About 20 percent of total overpayments end up being classified as CNC, CMS told auditors.

Cumulative overpayments in fiscal 2010 totaled $9.6 billion, with $543 million in new CNC overpayments for that year alone, according to the report. Contractors generate letters to collect the overpayments from providers, either through direct payment or by withholding future Medicare Part A and B payments until the full amount is recovered.

CMS could provide detailed data for only seven of the 32 contractors trying to collect CNC overpayments, OIG said. For those seven contractors, the type of provider owing money was not recorded in the Healthcare Integrated General Ledger Accounting System (HIGLAS). More significantly, 97 percent of 2010 CNC overpayments for those seven contractors went unrecovered.

The contractors blamed inaccurate contact information that prevented or delayed collection letters reaching providers. They, along with CMS, also said requiring providers to supply tax identification numbers and provider transaction access numbers could help with recovery efforts, according to the report.

The OIG recommended CMS ensure the provider type is specified on HIGLAS, that demand letters are mailed to the contacts and addresses specified by providers, and that tax ID numbers and other identifiers are used to help collect overpayment.

CMS partially concurred with the first recommendation, saying knowing the type of provider involved won't help contractors collect money.

It disagreed with the second recommendation, contending that demand letters already are mailed to addresses identified by providers, who are legally required to update their contact information, according to a response from CMS Administrator Marilyn Tavenner.

CMS concurred with the third recommendation.

"Reducing the incidence of overpayments is a high priority for CMS," spokesman Brian Cook told USA Today. "Even as an overpayment is designated 'currently not collectible,' we continue to aggressively pursue repayment, including through our own internal processes, referral to the Department of Treasury and extended repayment schedules."

For more:
- download the audit report (.pdf)
- read the USA Today article