Health Information Management

OIG report finds that FI overpaid $1.2 million for high-dollar outpatient claims

JustCoding News: Outpatient, October 7, 2009

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The Office of Inspector General (OIG) recently issued a report on high-dollar claims paid by CareFirst of Maryland, previously a Medicare fiscal intermediary (FI). The OIG found that between January 1, 2003, and September 30, 2005, CareFirst overpaid $1.2 million for 24 high-dollar payments it made for hospital outpatient claims in Maryland and the District of Columbia.

In the OIG report, which was dated August 26, the agency stated that 24 of the 32 high-dollar payments (i.e., any payments more than $50,000) that CareFirst made to 15 providers were inappropriate. For these 24 high-dollar payments, overpayments totaled $1,208,485.

“That’s a 75% error rate. Providers might be relying on their FI or their Medicare Administrative Contractor [MAC] to catch those edits and not pay them,” says Debbie Mackaman, RHIA, CHCO, regulatory specialist for HCPro, Inc., in Marblehead, MA, and an instructor for HCPro’s Medicare Boot Camp®—Hospital Version. “Providers need to put their own thresholds in place to audit claims internally before they are billed.”

According to the report, providers refunded $381,110 of this amount prior to the OIG audit and $716,517 as a result of the audit, leaving a remaining $110,858 in overpayments for six claims.

“It doesn’t take a lot of resources for providers to audit these claims before they go out the door,” says Mackaman. “Put procedures in place to look at any outpatient claims over $50,000. The volume should be low, and the pre-billing review would be worth the effort.”

Double-check units of service on claims
The majority of the overpayments resulted from billing for excessive units of service or from billing for the wrong service or procedure. CareFirst made these incorrect payments because both the FI Standard System and the Common Working File lacked sufficient edits from January 1, 2003 through September 30, 2005, to detect and prevent the overpayments, according to the report.

This is the breakdown of the remaining six overpayments totaling $110,858:

  • A provider billed for 200 units of rituximab, a cancer treatment drug, instead of four units. As a result, CareFirst overpaid the provider $57,924.
  • A provider billed for 300 units of filgrastim, a chemotherapeutic drug, instead of one unit and 80 units of epoetin alpha, an anemia treatment drug, instead of two units. As a result, CareFirst overpaid the provider $51,549.
  • A provider billed for 31 units of medical-surgical supplies, instead of 29 units. As a result CareFirst overpaid the provider $491.
  • A provider billed for 50 units of pharmacy services, instead of 38 units. As a result CareFirst overpaid the provider $399.
  • A provider billed for three units of medical-surgical supplies that it did not provide. As a result CareFirst overpaid the provider $355.
  • A provider billed for 13 units of medical-surgical supplies, instead of seven units. As a result, CareFirst overpaid the provider $140.

The providers attributed the incorrect payments to clerical errors made by their billing staff members and to problems with incorrect data in their billing systems, according to the report. 

To prevent these errors, educate your staff members to double check the units of service reported on these high-dollar claims. Mistakes on just one claim can have a huge financial impact on facilities, Mackaman says.

Review payments for more than $50,000
Incidentally, a separate OIG report from March 2009 also examined high-dollar outpatient claims. Out of the 16 high-dollar payments that FI TriSpan Health Services made to providers from January 1 through December 31, 2004, 15 were identified as inappropriate. TriSpan overpaid two providers a total of $766,929 because the providers incorrectly billed excessive units of service. Also neither the FI Standard System nor the Common Working File had sufficient edits in place in calendar year 2004 to detect billing errors related to units of service.

Mackaman suggests providers review claims before they go out the door, as well as payments received in excess of $50,000, to make sure those high-dollar payments are valid.

“Medicare is not known for making high-dollar payments, even when the case qualifies for an additional outlier payment. It’s better to be proactive than reactive,” she says. “If you get into a ‘wait and see’ routine, keep in mind that you may have to pay back interest as well. We have a fiscal responsibility to our facility and also to our patients because co-pays are calculated on the procedure codes and units that are submitted.”

Highmark Medicare Services, which assumed CareFirst’s business operations as Medicare FI for Maryland and the District of Columbia on October 1, 2005, said in its response to the report that it will initiate action to recover the $110,858 in identified overpayments and will include the results of this audit in its analysis of provider education activities.

“Do not rely on your FI or MAC to be your claims scrubber,” Mackaman says. “It’s your responsibility to make sure those claims going out the door correct.”

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