Northwestern Memorial Hospital in Chicago owes Medicare $6.4 million in alleged overpayments caused by billing errors, according to an audit by the Office of Inspector General (OIG) in the Department of Health and Human Services.
Hospital administrators aren’t reaching for the checkbook quite yet, and they are calling into question the methodology used to determine what is owed.
“OIG’s report in no way challenges the quality and medical necessity of the care provided,” Northwestern said in a statement. “Rather, OIG concluded that most of these errors were because the claims should have been billed in an outpatient setting rather than an inpatient setting. Northwestern Memorial intends to appeal these findings, as it is our belief that OIG’s claims review process and statistical methodologies are flawed, resulting in a grossly overstated repayment amount.”
Jennifer Wooten Ierardi, JD, MPH, Northwestern chief integrity executive, wrote in a response to the OIG that many of the findings “reflect the vague and ambiguous CMS standards for inpatient Part A reimbursement and then extrapolates such findings in a manner that creates the appearance of abuse, when this is not the case.”
The OIG’s audit determined that the 885-bed teaching hospital incorrectly billed Medicare Part A for patient stays that did not meet Medicare criteria for inpatient status and should have been billed instead as outpatient or outpatient with observation services. OIG also contends that the hospital incorrectly billed Medicare for observation hours that resulted in incorrect outlier payments, among other issues.
The $6.4 million bill was the result when OIG audited 171 sample inpatient and outpatient claims with payments totaling nearly $1.5 million submitted in 2011 and 2012. The OIG found that the hospital did not fully comply with Medicare billing requirements for 85 of the claims, which resulted in overpayments to the hospital totaling $272,181. The agency then extrapolated those results to estimate that the hospital was overpaid by $6.4 million in 2011 and 2012.
The OIG attributed the errors to the hospital’s lack of adequate controls to prevent them.