Kusserow’s Corner: OIG Report on Provider Overpayment Recoveries

The HHS Office of Inspector General (OIG) released a report in July 2013 regarding overpayments not collected from providers. It recommended that CMS step up efforts to collect Medicare overpayments to providers currently considered uncollectable because the provider has failed to repay overpayments identified and demanded by CMS six or more months after CMS demands repayment. The OIG recommended CMS take steps to ensure the Healthcare Integrated General Ledger Accounting System (HIGLAS) variable for provider type is populated for all overpayments, with CMS only partially concurring with this.  The second significant recommendation to CMS was that demand letters be mailed to the contacts and addresses identified by the provider.  CMS did not agree to this.  Third, the OIG recommended the use of tax identification numbers and provider transaction access numbers in addition to national provider numbers for the collection of overpayments; CMS concurred with this.  

The OIG surveyed CMS and all its claims processing contractors to identify hindrances to debt collection and strategies to reduce the number and dollar amount of overpayments that become “currently not collectible” (CNC).  Overpayments for which the provider has not made a repayment for at least 6 months after the due date on the Medicare demand letter are classified as CNC and are not reported on CMS’s annual financial statements because they are not likely to be recovered.  The OIG noted that CMS has identified billions of dollars in Medicare overpayments to health care providers each year and in 2010 alone they amounted to $9.6 billion.  This report provided information about CNC overpayments.

For 2010, CMS reported $543 million in new CNC overpayments across all contractors. It provided detailed information to the OIG on $69 million in CNC overpayments for only seven contractors and found that in 54 percent of CNC overpayments, the provider type was missing in the HIGLAS; ninety-seven percent of CNC overpayments were not recovered. The contractors’ excuse was inaccurate provider contact information that delayed some overpayment demand letters from reaching providers.

Though CMS did not agree with all of the OIG’s recommendations, providers can expect CMS to further tighten its overpayment processes in response to these and other OIG recommendations.  This certainly is not the end of this story.  It is advisable for providers to take steps to identify and repay any overpayments they have received; failure to do so and to have the OIG find them, instead, would result in huge penalties  They are on notice that this is an issue area that is at the forefront for the OIG. 

Richard P. Kusserow served as DHHS Inspector General for 11 years.  He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters.  The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

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Copyright © 2013 Strategic Management Services, LLC.  Published with permission.