Obstacles to Overpayments Loom Large, OIG Reveals

The Office of Inspector General (OIG) recently revealed some of the difficulties CMS has been having with collecting $332 million in overpayments left from between 2007 and early 2009. OIG’s report, entitled “Obstacles to Collection of Millions in Medicare Overpayments,” is the result of its performance of audits on CMS and contractor operations analyzing efforts to collect $416 million in Medicare overpayments.

According to the report, as of October 8, 2010, CMS had not collected the majority of overpayment amounts, upwards of 80 percent, as identified in OIG audit reports. Of the 154 OIG audit reports with sustained overpayment amounts totaling $416,287,546, CMS reported collecting only 20 percent, $84,168,502. Even that number remains questionable, as the report noted that CMS could not provide verification for the $84 million in overpayments the agency claimed to have collected.

OIG had previously recommended collections on overpayments greater than $1,000 that were issued during fiscal years (FY) 2007 and 2008 and the first six months of FY 2009 to CMS, CMS contractors or Medicare providers. Several obstacles impeded CMS’ ability to collect on those overpayments, however. OIG noted that CMS did not have adequate systems for documenting collections or detecting data entry errors. “Therefore, CMS had no assurance that the overpayment collections information that it reported to other parties was accurate,” OIG said.

CMS did not provide its contractors with adequate guidance for collecting overpayments and did not have an effective system for monitoring its contractors’ collection efforts. CMS’ records did not contain explanations regarding why an overpayment was or was not collected. OIG found that CMS did not require supporting documentation from the contractors to verify how much they had actually collected or to determine whether they had made reasonable efforts to collect the overpayments.

The Audit Tracking and Reporting System (ATARS) system which is used by CMS to track audits, must be updated to accurately reflect the status of audit report recommendations, according to OIG. Currently, information entered into the system may not be accurate, as CMS staff in inconsistent as to how they use it. Because of these inaccuracies in ATARS, CMS had no assurance that the information about overpayment collections that it reported to other parties during this study was accurate. OIG noted that, because multiple parties use Medicare payment data for various payment calculations and analyses, it is important that the data be accurate.

Although CMS reported that $268,243,863 remained in open collection status, OIG determined that the reopening and recovery periods imposed by the statute of limitations had now expired for these overpayments. Therefore, OIG recommended that CMS “pursue legislation to extend the statute of limitations so that the recovery period exceeds the reopening period for Medicare payments” and “provide specific guidance to its contractors concerning . . . the time frame in which the contractor must take action to collect an overpayment . . . [and] the type of documentation that the contractor must maintain to substantiate an overpayment collection.” CMS has agreed to “explore the possibility of legislative proposals that would extend the [referenced] statute of limitations.” The current statute of limitations on such collections from a hospital or any other provider is currently three years.

Clearly, CMS has its work cut out. OIG has made it obvious that for CMS to comply with the the Presidential Memorandum entitled “Finding and Recapturing Improper Payments,” which directs agencies to use every tool available to identify and reclaim the funds associated with improper payments that the Federal government has made, CMS must be more diligent and expect more from its contractors.