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OIG finds vulnerabilities in CMS’ outpatient outlier program

Compliance Monitor, July 4, 2007

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CMS' practice of not retroactively adjusting outlier payments has a significant impact on the integrity of the outpatient outlier program, according to the latest report from the OIG.

"CMS' practice of not retroactively adjusting outpatient outlier payments creates significant vulnerabilities in the outpatient outlier program," the OIG stated in its report. "The practice is also inconsistent with CMS' policy of retroactively adjusting inpatient prospective payment system outlier payments."

After a series of reviews, the OIG said it identified significant outpatient outlier payments to community mental health centers (CMHCs).

Prior audits showed that some CMHCs received significant outpatient outlier overpayments as a result of fiscal intermediaries' and CMHCs' mathematical and clerical errors and CMHCs' manipulation of charge data to their advantage. Other CMHCs received underpayments as a result of fiscal intermediaries' errors.

Following its current practice, CMS did not adjust these erroneous payments, resulting in substantial net losses to the Medicare trust fund and payment inequities among CMHCs.

The OIG recommended that CMS issue regulations to require retroactive adjustments of outpatient outlier payments within appropriately established thresholds. CMS said that it would explore the feasibility and cost effectiveness of implementing our recommendations.

View the full OIG report here.

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