Recent OIG Billing Audits Are Reflective of Risk Areas for Hospital Billing

The Office of Inspector General Audit Division has released the results of a billing audit that it performed relative to Norwood Hospital, a 264-bed acute care facility located in Norwood, Massachusetts. The audit included certain identified claims for inpatient and outpatient services provided to beneficiaries from July 2008 through June 2010.  The OIG  audit covered $1,204,371 in Medicare payments for 198 claims (123 inpatient and 75 outpatient) that were judgmentally selected by the OIG as potentially at risk for billing errors.  A complete report of the Norwood audit can be found at: Norwood OIG Audit Report

The audit found that the Hospital complied with Medicare billing requirements for 99 of the 198 claims. However, 99 claims had errors, resulting in overpayments totaling $206,836. The OIG determined that the overpayments occurred primarily because the Hospital did not have adequate controls to prevent incorrect billing of Medicare claims and did not fully understand the Medicare billing requirements.

The audit of Norwood was part of the OIG’s routine process to identify certain billing areas that are at a high risk of error.  The OIG has announced that it plans to conduct more of this type of review on an ongoing basis.  As such, the nature and outcome of this review process can be instructive to hospitals who may find themselves on the receiving end of one of these audits.
The OIG has outlined the general areas where it will focus its audits and has identified these areas as “risk areas.”  Risk areas identified by the OIG includ claims billed for:

• inpatient short stays,
• inpatient same-day discharges and re-admissions,
• inpatient claims billed with high severity level DRG codes,
• inpatient claims paid in excess of charges,
• outpatient claims billed with modifier -59,
• outpatient claims billed during inpatient stays,
• outpatient evaluation and management services billed with surgical services,
• outpatient claims paid in excess of charges, and
• outpatient dental services.

The report from the OIG identified more specific errors that the Hospital was found to have made and wich led to the overpayment determination.  These specific findings are quite instructive.  Facilities should consider including these areas as potential risk areas for targeted internal review.  In some cases, these areas a facility may wish to provide focused training and instruction to billing staff of other relevant employees in order to reduce the risk of inaccurate claims being made.

Some of the specific areas that were a problem in the Norwood audit included:

• Incorrect billing of Medicare Part A for beneficiary stays that should have been billed as outpatient or outpatient with observation services.
• One claim did not have a valid physician order to admit the beneficiary for inpatient care
• Incorrect billing for inpatient claims with same-day discharges and re-admissions.
• Billing with incorrect DRG codes for several cases with high severity level DRG codes.

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Tags: Billing and Coding, Billing Risk Areas, Compliance, Medicare Reimbursement, OIG Audits

This entry was posted on Monday, December 19th, 2011 at 7:21 am and is filed under Billing and Coding, Compliance Programs, Medicare Reimbursement Rules. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.