OIG Audits Find More Providers Overcharging Medicare

Cheryl Clark, for HealthLeaders Media , August 19, 2009

Five federal audits on behalf of Medicare found $12 million in erroneous claims filed by dialysis centers in West Virginia and Delaware, two hospitals in the Altoona Regional Health System in Pennsylvania, Blue Cross Blue Shield of Kansas and duplicate billings for the same Medicare patients.

The audits by the Office of Inspector General included recommendations that the money be repaid to the federal government and that the responsible agencies and providers make sure such mistakes are not repeated.

The case details are summarized as follows:

Blue Cross and Blue Shield of Kansas wrongfully billed the Center for Medicare and Medicaid Services $11.2 million for post-retirement benefits (PRB) for its employees, who worked to administer Medicare Part A and B operations. The contract was terminated Feb. 29, 2008.

According to the OIG, "Kansas's entire termination claim of $11,200,000 in PRB costs for the Medicare Part A and B contacts was unallowable" because it was calculated based on a retroactive change in accounting practice "without CMS approval. Therefore . . . none of the costs claimed were allowable."

According to the audit, BCBS Kansas sought reimbursement for future PRB benefits that it had not incurred prior to the contract's termination. The audit noted that under the contract, BCBS Kansas used accounting practices based on a "pay-as-you-go" method, so it was to be reimbursed only for actual paid claims.

The reason for the contract termination was not specified in the OIG's audit.

In a letter, BCBS of Kansas protested the OIG's findings, but "did not provide any additional information that would cause us to revise our finding or recommendation. We maintain that Kansas should withdraw the full claim amount."

According to a sample audit for the 27-month period between January 2006 and March 2008, the CMS overpaid $300,894 in 373 claims submitted twice for the same patient. Under Medicare rules, an individual may be enrolled in only one Medicare Advantage or PACE (Programs of All-Inclusive Care for the Elderly) for comprehensive medical and social services.

In fact, the OIG wrote, of the approximately 218 million in capitated payments totaling $158 billion made by CMS during that period, only these 373 payments were duplicate payments for one month of healthcare coverage. "Although CMS had correctly paid organizations for the vast majority of enrollees, the validation process that CMS used to ensure the accuracy of payments did not identify and prevent these improper payments," the OIG wrote.

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