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Note from Hugh

Medicare Weekly Update, February 19, 2008

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Hospitals should pay careful attention to the OIG report discussed below relating to hospital claims for services furnished to SNF patients. The OIG found that in 2001 and 2002, hospitals (and certain other "suppliers") inappropriately billed Medicare for, and were paid for, $106.9 million worth of services furnished by hospitals to SNF patients. These billings were inappropriate because the services were covered under the SNF prospective payment system. Consequently, these services should have been billed to the SNF rather than Medicare. During 2001 and 2002, CMS did not have edits in the Common Working File (CWF) that prevented payment for these services.

Now here is the interesting part. The OIG also looked at 2003 claims. By 2003, CMS had completed implementing CWF edits designed to prevented payments to other providers and suppliers for services covered under the SNF prospective payment system. However, the OIG identified about $23 million of claims that were still paid inappropriately even with the new CWF edits in place. The OIG concluded that these inappropriate payments were made because, among other reasons, "the edits did not identify all overpayments."

What does this mean for hospitals? It means that hospitals need to be sure that they have systems in place to identify claims for services furnished to SNF patients that should be billed to the SNF rather than Medicare. Hospitals should not assume that the CWF will identify and edit out such claims. This is an issue that seems ripe for enforcement action by the government under the Civil False Claims Act.

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