OIG finds fewer Medicare improper payments to acute care hospitals in latest audit

Acute care hospitals generated $39.3 million in Medicare Part B improper payments over four years but faced a steep drop after the federal government implemented new tools to root out such errors.

The Department of Health and Human Services’ Office of Inspector General (OIG) conducted an audit from September 2016 through December 2021 on inappropriate Medicare payments to acute care hospitals for outpatient services for beneficiaries already in another facility such as a critical access or long-term care hospital.

The Centers for Medicare & Medicaid Services (CMS) performed the audit because a prior review from January 2013 through August 2016 unearthed a whopping $51.6 million in overpayments. In light of the staggering amount, CMS reviewed similar payments to acute care hospitals for outpatient services from 2016 through 2021. 

Researchers looked at the inpatient claims from long-term care hospitals, critical access hospitals, inpatient rehab facilities and psychiatric facilities. They then identified outpatient claims from acute care facilities and looked for any overlap. 

During the entire period, OIG found $39.3 million in Medicare payments to the hospitals, but none of those payments should have been made since the beneficiaries were already in other facilities. 

However, there was a steep drop in improper payments to acute care hospitals after May 2019. The reason is how overpayments are identified. 

Providers are required to send a common working file to a Medicare administrative contractor (MAC), which is a third party that processes Medicare claims. The file contains both post- and pre-payment edits to claims to alert the MAC of any potential errors.

However, before May 2019, the common working file edits weren’t working properly. 

“After CMS modified the edits in May 2019, only $3.4 million (less than 9% of the $39.3 million in improper payments for the entire audit period) was inappropriately paid from June 2019 through Dec. 2021,” the OIG report said. “Further review of the edits is needed to determine whether any refinements are necessary to identify and recover any improper payments made after our audit period.”

OIG called for CMS to make steps to recover the $39.3 million.

The audit comes less than a week after a similar review found Medicare paid critical access hospitals and doctors more than $1 million in duplicate claims in 2019. That review called on CMS to create a post-payment review of claims to better identify any errors.