News: OIG finds hospital didn’t meet medical necessity on inpatient claims

The Office of Inspector General (OIG) released an audit report for Providence Medical Center that says some of the hospital’s inpatient records did not support the medical necessity for inpatient services. According to the OIG, the hospital received estimated overpayments of at least $325,241 for the two-year audit period, JustCoding reported.

According to the OIG, the hospital complied with Medicare billing requirements for 87 of the 100 inpatient and outpatient claims reviewed. However, the hospital did not fully comply with Medicare billing requirements for the remaining 13 claims, resulting in overpayments of $57,800 for calendar years 2016 and 2017.

For those inpatient claims, the OIG found that the hospital incorrectly billed Medicare Part A for beneficiary stays that did not meet Medicare criteria for inpatient status and should have billed as outpatient or observation. According to the OIG, the medical records did not support the medical necessity for inpatient hospital services.

Based on the sample results, the OIG estimated that the hospital received overpayments of at least $325,241 for the audit period.

The OIG recommends that Providence Medical Center:

• Refund to the Medicare contractor the portion of the $325,241 in estimated overpayments for the audit period for claims that it incorrectly billed that are within the four-year reopening period.
• Exercise reasonable diligence to identify, report, and return any overpayments in accordance with the 60-day rule and identify any of those returned overpayments as having been made in accordance with this recommendation.
• Strengthen controls to ensure full compliance with Medicare requirements.

According to the OIG, the hospital disagreed with all of the OIG’s findings as well as the first two recommendations. The hospital did not agree with the errors identified and use of extrapolation.

Editor’s note: This article originally appeared in JustCoding. To read more about OIG audit activity and data extrapolation, click here.