Medicare Compliance & Reimbursement

Outlier behavior can prove problematic for providers, but also for the federal programs that govern them.

Context: After uncovering issues with the Centers for Medicare & Medicaid Services’ (CMS) reconciliation policies for hospitals that received outlier claims payments, the HHS Office of Inspector General (OIG) conducted a study to pinpoint the problem. “Our objective was to determine whether CMS paid hospitals more for Medicare outlier payments than the hospitals would have been paid if their outlier payments had been reconciled,” notes the OIG brief.

Findings: As a sampling, OIG pulled claims data for 60 hospitals for the fiscal years 2011 to 2014. CMS paid these “60 hospitals a net of $502 million more in outlier payments than the hospitals would have been paid if their outlier payments had been reconciled,” says the brief.

According to OIG, the discrepancy was due to a policy that cost reports must meet a 10-percentage point threshold for reconciliation.

After sifting through the results of the audit, the federal watchdog recommended that CMS revamp its reconciliation rules and drop the threshold limits. According to the report, if CMS had required reconciliations of all hospital cost reports with outlier payments over the four-year span of the study, it would have saved “approximately $125 million per year,” OIG purports.

Result: CMS agrees with OIG and is in the process of “reevaluating the current outlier payment reconciliation criteria and will consider whether to propose any appropriate modifications to the outlier reconciliation policy in future rulemaking,” the report says.

Read the report at  https://oig.hhs.gov/oas/reports/region5/51600060.asp.