Kusserow on Compliance: OIG Defends its Hospital Compliance Reviews

The HHS Office of Inspector General (OIG) began the year by defending its hospital compliance reviews in response to issues raised by the American Hospital Association (AHA) in a November 20, 2014 letter. The AHA raised five main concerns regarding the OIG’s application of CMS’ Medicare rules and policies:

  • need for a physician order;
  • treatment of canceled surgeries;
  • rebilling of Medicare Part A claims under Part B;
  • review of claims beyond the statute of limitations; and
  • sampling and extrapolation in determining overpayments.

The OIG defended its position on each of these concerns:

  1. Physician Orders. Legal authority supports the physician-order requirement because CMS regulations in effect during audit periods stated that Medicare paid for inpatient hospital services only if a physician certified and recertified the reasons for continued hospitalization.
  1. Treatment of Cancelled Surgeries. Medicare requires that services be reasonable and necessary in order to be payable. During the audit period, CMS found that hospitals billed canceled surgeries as inpatient stays where the hospital admitted a patient for a scheduled non-emergency procedure but a surgery room was not available, or a preoperative exam before admission showed the patient no longer qualified for the procedure. The OIG determined that these inpatient admissions were not “reasonable and necessary for the treatment of illness or injury” under Medicare.
  1. Rebilling Medicare Part A Claims under Part B. CMS is ultimately responsible for administering Medicare and contracts with Medicare Administrative Contractors (MACs) to process and pay claims. The OIG scope of review did not include providing an offset to the Part A overpayment with Part B reimbursement figures. The OIG “has assured hospitals that it will work with CMS to determine the offset Part A overpayments should CMS determine the Part B offset is a viable option.”
  1. Review of Claims beyond the Statute of Limitations. CMS allows for reopening of claims whenever there is reliable evidence that the initial determination was “procured by fraud or similar fault.”
  1. Sampling and Extrapolation in Determining Overpayments. The use of statistical sampling in Medicare is not only well established but has been upheld on administrative appeal within HHS and by federal courts. Determining the overpayment through these methods rather than reviewing each claim individually is both economical and in the best interest of the provider and the government.

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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