AHA Seeks Metamorphosis of OIG’s ‘Kafkaesque’ Overpayment Burden

On August 21, 2014, the American Hospital Association (AHA) sent a second strongly worded letter to the HHS Secretary complaining of the HHS Office of Inspector General’s practice of improperly using extrapolation to determine a hospital system’s estimated Medicare overpayment, as well as its misconstruction and misapplication of a number of other Medicare regulations and policies. Rick Pollack, Executive Vice President of the AHA, told Secretary Burwell that he had hoped the OIG’s extrapolation approach, which “grossly exaggerates” overpayments and “leads to excessive recoveries” had been halted after the AHA submitted a June 2, 2014 letter to former Secretary Sebelius. In the earlier letter, Pollack complained, “The Kafkaesque burden of imposing duplicative audits on hospitals and recouping payments from them without correcting the OIG’s manifold and glaring errors is abusive and unfair to hospitals and a waste of government resources.” (See Hospitals claim OIG compliance audits are redundant and not following the law, June 5, 2014.)

Recent Audit

The August letter states that the recent audit report calculated overpayments due for erroneously paid inpatient claims because patients’ medical records did not include admission orders signed by physicians. However, the letter argues that the claims were made prior to 2013 and that regulations did not require such an order until October 1, 2013. In Pollack’s prior words, “The OIG invented a physician order requirement that . . . did not exist.” Furthermore, the OIG failed to offset the hospital system’s alleged Medicare overpayments due for inpatient claims that should have been billed as outpatient claims by the amount of Part B payments that the hospital would be entitled to receive.

Other Complaints

In addition to the issues discussed above, the AHA’s earlier letter accused the OIG of misinterpreting section 1870 of the Social Security Act (the Act), which presumes that hospitals are “without fault,” absent contrary evidence, when overpayment determinations are made after the third year following the year in which the Part A payment was originally made. The AHA stated that hospitals could not be at fault after 2012 for payments made in 2009, but the OIG interpretation deemed hospitals to be at fault for any incorrect application of Medicare manual provisions. The AHA also accused the OIG of basing audits on claims made more than four years ago, which could not be reopened, and conducting audits redundant to recovery audit contractor (RAC) audits.