OIG study faults carrier edits for violating HCFA instructions

An OIG audit finds that some carriers are violating HCFA's instructions. Investigators found that at least one carrier overpaid for outpatient psychiatric services, to the tune of an estimated $1 million in 1996. OIG recommends HCFA ensure that carriers fix their edits and, more important, start recovering overpayments from providers.

The study examined 1996 claims in four New England states serviced by Massachusetts Blue Shield to ascertain whether carriers are applying a percentage limitation to those claims. The value of each claim is supposed to be cut by 37.5%, followed by subtracting any outstanding beneficiary deductibles. In turn, that figure is cut by another 20% to determine what Medicare will pay.

However, Massachusetts Blue Shield had simply paid 80% of each claim, OIG found. Auditors then examined claims for January through March 1998 filed with National Heritage, the current New England carrier. Psychiatric providers submitted 4,772 claims that also had been mishandled.

OIG also found that while the New York and Texas carriers had installed edits that correctly subtracted the 37.5%, the Florida carrier had problems that will be disclosed in a later report.