News: AHA urges action to address flawed OIG hospital audits

Last week, the American Hospital Association (AHA) sent a letter urging CMS to take specific actions to address and prevent the problems that flow from hospital compliance reviews conducted by the Office of Inspector General (OIG) and its use of extrapolation, AHA News reported.

The OIG audits “regularly include fundamental flaws and inaccuracies both in the OIG’s understanding and application of Medicare payment rules and in the procedures the OIG uses to conduct the audits,” the letter says. “These flaws result in vastly overstated repayment demands, unwarranted reputational harm, and diversion of hospital and physician leaders' time from their core mission of caring for patients.”

The letter goes on to say that “when hospitals object to the numerous errors in the audits, the OIG and CMS tell the hospitals that they can appeal the repayment demand. But appeals consume vast amounts of time and money for both the hospital and the government, which could be better spent by the hospitals on patient care and by the government on rooting out actual cases of fraud, waste, and abuse in the Medicare program.”

The AHA recommends five actions to address the flawed audits:

1. Extrapolate only if there is a significant error rate
2. Delay extrapolation until the appeals process is complete
3. Allow rebilling of denied inpatient claims regardless of the usual timely filing period
4. Provide feedback to the OIG to facilitate issuance of an amended audit report and improvements in audits
5. Review and address legal issues raised by hospitals before an audit is performed or before a repayment demand is issued

With the revised audit targets and methods largely focused on extrapolation from only 20-40 claims, the AHA believes the time to review the process is now.

“We hope CMS will carefully consider our proposal,” AHA General Counsel Melinda Reid Hatton told AHA News. “The need to do so will increase exponentially as the OIG has indicated it intends to apply extrapolation on all future audits.”

Editor’s note: To read the full letter from the AHA, click here. To read about CMS’ new approach to claim reviews, click here. To read the OIG’s work plan for 2017, click here.