The OIG attributed the Medicare payment errors to CMS as well as to the hospitals, pointing to:
- A lack of hospital understanding of Medicare requirements for billing cancelled elective surgeries. The report notes that "although regulations clearly state that Medicare will not pay for items or services that are not reasonable and necessary, Medicare manuals did not specifically address the billing for claims in which the reason for the inpatient admission was an elective surgery that did not occur...As a result, hospitals nationwide have billed the same types of claims differently."
- Restrictive CMS requirements for changing a beneficiary status from inpatient to outpatient after discharge. "Physicians cannot unilaterally change an admission decision after an admission for an elective surgery that has been canceled—even if the physician determined that the stay was no longer medically necessary. To change a physician's admission order, the hospital's utilization review committee must determine that the inpatient admission was not reasonable and necessary before the beneficiary's discharge."
- Inadequate utilization review controls to determine if an admission met Medicare requirements when an elective surgery was canceled. "Many hospitals had not established utilization review controls to confirm whether inpatient admissions remained reasonable and necessary after an elective surgery was canceled…these hospitals did not perform concurrent utilization reviews because of the short stays (in some cases, only a few hours), and the hospitals did not perform utilization review after discharges because the opportunity to change the beneficiary's status from inpatient to outpatient was not available."