OIG audit: Regional health network incorrectly billed for 86% of outpatient outlier payments

Findings from an Office of Inspector General (OIG) audit show that CHI St. Vincent Infirmary (St. Vincent), a regional health network in Arkansas, improperly billed for 103 of 120 sampled claims related to outlier payments, which resulted in the improper billing of outliers totaling $581,136.

Medicare makes supplemental payments to hospitals known as outlier payments to protect hospitals from significant financial losses resulting from cases that incur extraordinarily high costs. These supplemental payments are directly influenced by hospital charges.

The OIG decided to perform an audit of outpatient outlier payments billed by St. Vincent after discovering that the network’s outlier payments for outpatient services increased from $216,484 in 2013 to $1.4 million in 2014.

The audit covered 593 outpatient outlier payments totaling $1.7 million to St. Vincent for services rendered between July 1, 2014 and June 30, 2016. The OIG selected a sample of 120 outlier payments totaling $622,742 for review.

The OIG found that St. Vincent properly billed claims for 17 of the 120 sampled outlier payments, totaling $41,606. However, St. Vincent improperly billed claims related to the remaining 103 outlier payments. These 103 claims contained 173 billing errors.

According to the report, billing errors included:

• Overcharging for time: Of the reviewed claims, 32 claims overcharged for time. Specifically, the claims overcharged for time spent in the OR, anesthesia administration, time spent in the recovery room, and time spent in observation.
• Other charging errors: Of the reviewed claims, 24 had incorrect billing codes and charges. Some contained billing codes that didn’t follow St. Vincent’s pricing policies, and others contained incorrect or inconsistent charges.
• Coding errors: Of the reviewed claims, 87 had coding errors. A total of 102 coding errors were identified. Most coding errors were due to missing or inaccurate codes, as well as incorrect coding for conscious sedation.

Based on the OIG’s findings, St. Vincent has since amended 80 of the erroneously billed claims. According to the OIG, of the 80 amended claims, 70 were amended correctly and 10 were only partially corrected.

The OIG recommends that St. Vincent:

• Return the $362,999 in improper outlier payments for the 70 claims that have been appropriately amended.
• Appropriately amend the remaining 33 claims to identify and return any improper outlier payments that are within the four-year claims reopening period.
• For any of the 33 claims that are outside of the four-year claims reopening period, exercise reasonable diligence to identify and return overpayments.
• Exercise reasonable diligence to identify and return any additional overpayments.