Corporate Compliance

CMS edit fails to catch improper transfer claims

Healthcare Auditing Weekly, March 24, 2009

On March 11, the OIG issued a report, which detailed the results of a review of hospital compliance with Medicare’s postacute transfer policy. Based on the sample size used in the report, the OIG estimates hospitals nationwide submitted 15,051 improperly coded claims and received $24.8 million in overpayments for Medicare within a three-year period, which ended September 30, 2005, according to the report

One of the objectives of the review was to determine whether a system edit, which was implemented by CMS in 2004 to detect transfers improperly coded as discharges, was working properly. The OIG found most of the overpayments occurred because CMS lacked adequate payment system controls before implementing the system edit. However, even after implementation, the edit did not detect all overpayments.

The OIG is recommending CMS:
  • Instruct the fiscal intermediaries to:
    • Recover the overpayments identified in the sample
    • Review the remaining claims in the sampling frame and identify and recover additional overpayments estimated at $24,693,630
  • Determine why the system edit did not detect all overpayments and amend the edit as appropriate


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