Medicare Compliance & Reimbursement

Why the OIG wants CMS to collect millions in potential overpayments.

Warning: Inaccurate discharge status codes could cost acute care hospitals a bundle.

The Department of Health and Human Services Office of Inspector General conducted a nationwide review of acute care hospitals' compliance with Medicare's postacute care transfer policy during fiscal years 2001 and 2002, according to a recent report.

The OIG sampled 400 claims in its audit, 381 of which were improperly coded as patient discharges to homes instead of transfers to postacute care facilities. Medicare pays the full diagnosis-related group payment for a discharge, but only pays a per diem rate for transfers, which cannot exceed the discharge payment rate.

Some hospitals didn't have necessary controls to ensure the discharge status codes' accuracy, and the Centers for Medicare and Medicaid Services didn't have adequate payment system edits to prevent overpayments, the OIG says. Medicare overpaid hospitals $72.4 million for improperly coded discharges during the two years, the OIG estimates.

Result: CMS should instruct fiscal intermediaries to recover more than $1 million in potential overpayments identified in the sample, the OIG recommends. FIs should review remaining claims in the sample and recover the additional $71.3 million in overpayments.

The OIG also wants CMS to monitor hospitals with a high volume of adjusted claims resulting from recent system edits and perform follow-up reviews. CMS agreed to carry out the OIG's recommendations.

To read the audit, go to http://www.oig.hhs.gov/oas/reports/region4/40403000.htm.