Hospitals fight Medicare audit clawbacks

The American Hospital Association is asking federal Medicare leaders to stem the practice of using sample hospital audit data to extrapolate overpayments eligible for recovery.

In a letter to outgoing Health and Human Services Secretary Kathleen Sebelius, the AHA warns of an increasing number of hospital compliance reviews performed by the Office of Inspector General being used as a justification for clawbacks at the hands of Medicare Administrative Contractors, or MACs.

Over the last four years, a number of hospitals have been evaluated under the OIG's Medicare compliance review specifically for inpatient stays, including Duke University Hospital, University of Miami Hospital and St. Vincent's Medical Center.

[See also: Medicare claims crisis pits hospitals against feds, auditors.]

The OIG reviews can be "redundant," focusing on the same type of claims as MACs, notably short inpatient stays, argued AHA executive vice president, Rick Pollack. Pollack also argued that the OIG's methods have "misconstrued" certain policies and based overpayment estimates on "flawed sampling" of claims data.

At St. Vincent's, in Bridgeport, Conn., an OIG audit of the 2009-2010 fiscal years found compliance with 157 of the 198 Medicare claims reviewed, along with 41 billing errors, estimated to translate into $284,000 in overpayments mostly from inpatient claims.

The hospital concurred with the OIG and agreed to pay back the $284,000 and said it would properly resubmit the claims.

At the University of Miami Hospital -- the first hospital to have audited cases used to estimate total Medicare payments for recommended readjustments -- administrators challenged the OIG's recommendation that $3.7 million should be refunded.

That total was based on estimates from a stratified sampling that found 68 claims errors worth $524,000 in 2009-2010, but the hospital's CFO Darryl Caulton disputed whether five claims were actually erroneous, and noted that if those were taken into account the $3.7 million total overpayment estimate would be lower.

[See also: Two-midnight delay means Medicare overpays for observation stays.]

Some of the problem has stemmed from gray areas, Caulton added. There has been "lack of clarity regarding the standards for short stays," he wrote.

Short patient stays are an issue that have plagued many Medicare claims disputes and appeals, and is trying to be addressed with a rule that pays hospitals for observation status instead of inpatient admission for cases under two nights -- a change Medicare has said will significantly reduce recovery audits.

Many of the OIG audits have focused on short inpatient stays, "and specifically whether the patient's medical record adequately documented that the inpatient admission was reasonable and necessary," a standard has has been interpreted inconsistently, argued the AHA's Pollack.