OIG Blames Hospitals For CMS Overpayments

By Greg Bengel, contributing writer

Report from OIG estimates that CMS overpaid hospitals $38.2 million for unnecessary short-stay claims related to cancelled elective surgeries

According to a recently released report from the Office of the Inspector General (OIG) in the Department of HHS, CMS overpaid hospitals $38.2 million over a two-year period for short-stay claims. The payments were for elective surgeries that were cancelled and never took place.

Health Leaders Media breaks down the OIG report, noting “no clinical conditions existed to justify the admissions. So when the elective surgery failed to take place for one reason or another, the inpatient claim did not meet Medicare’s requirement that the admission be reasonable and necessary.”

As part of their Work Plan for FY 2013, OIG reviewed 100 sample short-stay claims and surgery cancellations from 2009-2010 in order to come up with its estimate of $38.2 million. In their review, 80 of the 100 claims did not meet the Medicare payment requirement. “Among the unacceptable reasons for the surgery cancellations after a short stay: hospital equipment failures, lack of operating rooms, and staff scheduling conflicts,” reports Health Leaders Media.

The blame, according to OIG, lies with CMS as well as with hospitals. The Health Leaders Media article bullet-points OIG’s grievances. First, OIG says, hospitals do not have an adequate understanding of Medicare requirements for billing cancelled elective surgeries. Second, due to CMS’s requirements for changing status from inpatient to outpatient, physicians “cannot unilaterally change an admission decision after an admission for an elective surgery that has been canceled—even if the physician determined that the stay was no longer medically necessary. To change a physician's admission order, the hospital's utilization review committee must determine that the inpatient admission was not reasonable and necessary before the beneficiary's discharge.” Third, a lot of hospitals don’t even have adequate utilization review controls in place to make these sorts of determinations.

To fix the problem, OIG says CMS and hospitals need to better explain the rule that in order for a hospital to bill payments for cancelled elective surgeries, clinical conditions requiring inpatient admission must be in place. Also, says OIG, CMS and hospitals need to put stronger utilization review controls into place for claims including admissions for cancelled elective surgeries.