OIG audit pinpoints billing risks for inpatient stays and rehabilitation services

A September audit by the Office of Inspector General (OIG) said Alta Bates Summit Medical Center in Oakland, California, incorrectly billed Medicare for inpatient and outpatient services between 2017 and 2019, resulting in overpayments of $1.5 million.

The OIG focused its audit on 11 risk areas, including billing for inpatient rehabilitation facility (IRF) services and comprehensive error rate testing DRGs, and outpatient reporting of bypass modifiers.

The agency reviewed a stratified sample of 85 inpatient and 15 outpatient claims billed to Medicare from January 1, 2017, through December 31, 2018.

According to the report, 45 of the 85 reviewed inpatient claims contained billing errors. Specifically:

• 37 claims were for IRF services that did not comply with Medicare documentation requirements
• 4 claims were incorrectly coded, resulting in incorrect DRG payments
• 4 claims did not meet Medicare criteria for inpatient status

As a result of these errors, the hospital received overpayments of $1,467,725.

In addition, the OIG found that Alta Bates Summit Medical Center incorrectly billed Medicare for one of the 15 reviewed outpatient claims. The error was due to the incorrect reporting of HCPCS modifier -XU (unusual non-overlapping service), which resulted in an overpayment of $203.

On the basis of its sample results, the OIG estimates that the hospital received overpayments of at least $16,395,489 for the audit period.

The OIG recommends that Alta Bates Summit Medical Center refund to its Medicare contractor the $16,395,489 in estimated overpayments for the audit period for claims that it incorrectly billed. In addition, it recommends that the hospital:

• Exercise reasonable diligence to identify, report, and return any additional overpayments in accordance with the 60-day rule
• Improve staff training
• Strengthen controls to ensure that:
  • Diagnosis and procedural codes are supported by documentation
  • Inpatient beneficiaries meet Medicare requirements for inpatient hospital services
  • IRF beneficiaries meet Medicare criteria for acute inpatient rehabilitation
  • The use of bypass modifiers is supported in the medical records

In written comments on the report, Alta Bates Summit Medical Center disagreed with most of the OIG’s findings and recommendations.