Medicare Compliance & Reimbursement

 OIG audit deems Illinois payment monitoring inadequate.

Providers beware: If your state uses an out-of-date formula to convert billed Medicaid charges to costs, the  HHS Office of Inspector General may take note.
 
Illinois' hospital cost outlier payments increased at a faster rate than other Medicaid payments from fiscal years 1998 to 2002, according to a May 26 OIG audit that covered three Illinois hospitals.
 
During these years, the state's average cost outlier payment per admission increased more than 60 percent, but its average diagnosis-related group base payment per admission decreased 4.6 percent. Illinois agreed that its outlier payments increased significantly, but wanted the OIG to take into account the current inpatient rate freeze. Illinois should only apply cost outlier payments to hospitals that incurred extraordinarily high costs, not to hospitals that billed high charges, the OIG countered.
 
Recommendations: Illinois should closely monitor hospitals' cost-to-charge ratios and routinely conduct medical reviews of cost outlier claims to identify incorrect charges and possible overpayments, according to the OIG.
 
To read the audit, go to http://www.oig.hhs.gov/oas/reports/region7/70404031.pdf.