GAO says HCFA lacks ability to track overpayments from HHAs
GAO says HCFA lacks ability to track overpayments from HHAs
By MATTHEW HAY
HHBR Washington Correspondent
WASHINGTON The Health Care Financing Administration (HCFA; Baltimore) is slow to identify overpayments that home health agencies owe Medicare, and the agency often winds up holding the bag for many of these payments, the General Accounting Office (GAO; Washington) concluded in a report released last week.
While the GAO examination was for overpayments made to agencies in Texas that have been closed, the GAO’s findings may have ramifications for existing home health agencies throughout the country.
"I would be hard pressed to believe that they are treating overpayments for closed agencies differently than they are overpayments to open agencies," said veteran home healthcare attorney Elizabeth Hogue. "I can well imagine that there is some spillover, and I know, based on my own experience, that there are often issues about whether overpayments are handled appropriately."
Because these agencies receive interim payments based on estimates of their allowable costs, Medicare contractors adjust these payments based on cost reports. But since contractors take 18 months to make final determinations, little of this money is ever collected, reported the GAO.
Since passage of the Balanced Budget Act of 1997 and the implementation of the interim payment system, the GAO notes, HCFA estimates that 650 home health agencies have left the Medicare program in Texas alone, saddling the program with sizable overpayments. HCFA’s original estimate of the collective amount owed by closed Texas home health agencies was $627 million.
But the GAO said its estimate of overpayments from the 15 closed home health agencies it examined in Texas differs substantially from estimates initially reported by HCFA. In fact, using the same definition of overpayment as HCFA, the GAO estimated that these agencies only owe about one-third or $68 million of the $209 million HCFA originally estimated.
According to the GAO, two factors account for nearly all of the difference. The first is simply that errors were made by the contractor in entering data into one of HCFA’s overpayment recording and tracking systems, such as a $4.6 million duplicate entry. The second is that HCFA’s initial examination of the overpayment tracking system did not specify that superceded transactions be excluded from the reported overpayments. The GAO said that HCFA overstated one agency’s overpayment by as much as $4 million.
In all, the GAO reported that about $43 million of the $68 million overpayment estimate stems primarily from unfiled cost reports. "Although it is likely that most of Medicare’s payments were allowable, to provide agencies an incentive to file cost reports on time, HCFA deems the entire amount paid to an agency during the reporting period to be an overpayment when no cost report is filed," the GAO reported.
According to the GAO, HCFA’s inability to accurately record and track overpayments has been a consistent weakness documented in its financial statement audits dating back to 1996. In FY98, the audit found that HCFA lacked an integrated financial management system to track overpayments and their collection, and that its procedures to ensure that overpayments were valid and supported were inadequate, the GAO noted.
"HCFA’s contractors record and track overpayment activity for home health agencies and other providers using a variety of fragmented and overlapping computer systems, but do not always reconcile the data from these various systems," the GAO concluded. For example, the GAO said one contractor incorrectly keyed data into a HCFA system that erroneously reported $77 million in overpayments from one Texas home health agency alone in 1998.
"No edits are in place to identify such errors," the GAO said, adding that while HCFA implemented several interim measures last year to improve the reliability of its overpayment information, those measures could take years to implement.
Notably, HCFA generally concurred with the GAO’s findings, as well as its conclusions. HCFA Administrator Nancy-Ann DeParle said that as a practical matter, agencies that decide to leave the Medicare program often do so without notifying the agency until it is too late for HCFA to act. Once that happens, she said, intermediaries quickly determine overpayments and begin withholding any future payments to recover that money.
But the GAO said that is "a more positive picture" than its examination uncovered. The GAO said contractors generally do not make final determinations until almost two years after agencies close. Moreover, there are seldom any interim reviews conducted.
DeParle responded that the Medicare Accounts Receivable System (MARS) system that HCFA plans to implement in 2001 should address the inflated figures reported by the GAO. She added that until a cost report is received, contractors are required to see to it that all payments made during the fiscal year are overpayments. When the cost report is submitted, HCFA’s current system does not make a correction. But she said the new MARS system will include these edits and improve overpayment reporting.
Perhaps more important, DeParle said, moving to a prospective payment system for home health will resolve most of the overpayment problems. "Moving to a prospective payment system should eliminate the time delays associated with a cost reimbursement system and will increase certainty regarding Medicare payments," she told the GAO.
Subscribe Now for Access
You have reached your article limit for the month. We hope you found our articles both enjoyable and insightful. For information on new subscriptions, product trials, alternative billing arrangements or group and site discounts please call 800-688-2421. We look forward to having you as a long-term member of the Relias Media community.