CMS should do more to ensure hospitals aren’t overpaid, watchdog days

The Centers for Medicare & Medicaid Services overpaid 12 hospitals an estimated $82 million, according to the inspector general of the Department of Health and Human Services.

A federal watchdog is pushing the Centers for Medicare & Medicaid Services to do a better job of overseeing hospitals and making sure they aren’t paid too much for services.

The Office of Inspector General in the Department of Human Services issued a report Thursday calling for the CMS to employ more rigorous oversight. The inspector general’s office said recommendations in audits of hospitals can help the agency ensure hospitals are being billed appropriately.

The inspector general’s office identified over 350 instances of overpayments to 12 hospitals, totaling more than $5 million.

The watchdog estimates hospitals were overpaid more than what was found in those claims. Overall, the inspector general’s office estimates the total overpayments to the 12 hospitals reached $82 million over a three-year span.

The inspector general’s office examined the overpayments and CMS’ response to the office’s findings. While the watchdog recommended that CMS should get the hospitals to repay the money, It’s not fully clear what CMS has done to recoup the funds, the watchdog said.

“With respect to our recommendations to repay funds, CMS provided us with insufficient information; therefore, we could not identify the actions CMS had taken to ensure that our recommendations were implemented,” the inspector general’s office said.

The inspector general’s office recommends that CMS continue to improve its tracking of claims.

CMS utilizes contractors to collect overpayments, and they are expected to recoup any excess funds paid to healthcare providers within 60 days. The inspector general recommended CMS adhere to the 60-day rule, but said it received insufficient information to determine if that guidance was being followed.

“As a result of CMS’s incomplete responses, we are not able to verify that some hospitals have repaid funds or implemented our recommendations to follow the 60-day rule and strengthen internal controls,” the inspector general’s office said.

However, the watchdog concluded, “CMS has not used the results from our 12 issued audit reports in its internal control activities. CMS could use our hospital compliance audit reports to enhance its oversight of the Medicare program.”

The inspector general’s office examined Medicare payments to hospitals from 2016 through 2018, and performed a series of audits to determine if hospitals were being billed correctly. Medicare paid hospitals $555 billion from 2016 through 2018, the report notes.

CMS could require its contractors to undergo periodic reviews to address some of the deficiencies found in the audits, the inspector general said.

In response to the recommendations, CMS said that it doesn’t have the staff or resources available to address each of the deficiencies cited by the inspector general. But the inspector general countered that CMS “could improve Medicare program oversight by focusing on services at high risk for improper payment.”

In the majority of the incorrect claims regarding inpatient care, hospitals improperly billed Medicare for stays that did not meet the criteria for acute inpatient rehabilitation, the report said.

In some cases, hospitals incorrectly billed Medicare Part A for stays that did not meet Medicare criteria for inpatient status and should have been billed as outpatient or outpatient with observation services, the report said.

The inspector general recommended that the internal controls should be improved at the 12 hospitals, and CMS acted on most of those recommendations, the report stated.

Ten of the hospitals have taken steps to strengthen their billing procedures. The other two hospitals said they would respond after completing their appeals.

CMS has collected 91% of the $5 million in overpayments identified in the audits, which the inspector general’s office regarded as commendable, but called for continued monitoring throughout the appeals process to ensure all overpaid funds are recouped.

The inspector general asked CMS to consider the results of this audit and future hospital compliance audits in its risk assessment process. CMS asked for the recommendation to be removed, but the watchdog declined and said the recommendation has value.

“We continue to recommend that CMS consider a process to track the results from similar, provider-specific audits and consider what effect the cumulative impact of those audits may have on its oversight of the Medicare program,” the inspector general concluded.