Knowledge Base Article

The term “argue back” is listed as an idiom in an on-line dictionary, similar to the phrases “answer back”, “talk back” or “back talk”. Parents often reprimand their children for “talking back”. However in the grown-up world, making a persuasive argument to support your opinion is not only acceptable, but often necessary to achieve fair and just outcomes. But then again, sometimes life just isn’t fair.

As of this month, the Office of Inspector General (OIG) is approaching 100 reports on Medicare compliance reviews of hospitals. There are similarities between the reports: the issues are often the same, and the reviews are based on computer matching, data mining and data analysis techniques to identify at-risk claims. There are differences between the reports: some hospitals have a much greater overpayment than others and some refund amounts are extrapolated from the overpayment amounts while others are not. We at MMP have not been able to determine a pattern for which audits result in extrapolation versus those that do not.

Last week, the OIG published the report on Compliance Review of University of Cincinnati Medical Center that is particularly interesting. So what makes this report stand out among all the many compliance reviews?

• The refund amount of $9,818,296 was extrapolated from an overpayment amount of $603,267 (to date refund amounts have been extrapolated on only 10 of 99 compliance reviews).
• The refund amount of almost $10 million is the largest of all the compliance reviews. In fact, only three other reviews topped $2M refund and no other refund amounts prior to this one (even other extrapolated reviews) exceeded $5M.
• The University of Cincinnati Medical Center (UCMC) vehemently argued their case at great length against some of the OIG’s decisions from the audit. They make some interesting points in their arguments as noted below.

UCMC believes the OIG claim selection method contains a judgmental bias toward inclusion of claims likely to have overpayments and exclusion of claims likely to have underpayments. The biased findings are further magnified by the use of extrapolation.

UCMC disagreed with 50 of 57 claims the OIG determined were “incorrectly billed as inpatient.” Some of the reasons for disagreement were:

• Some were for inpatient-only procedures
• Reviewers based review decision on information that was not available to the admitting physician at the time of admission
• The hospital was not allowed to have discussion with the reviewers regarding their decisions or request re-review of the cases
• Extrapolation is not appropriate because decisions are judgmental and case-specific, and the potential effect of Part B rebilling is not considered in the extrapolation amount

It is interesting to note that on the seven cases UCMC concurred with, they cite lack of documentation to support the clinical decision of the physician to admit the patient, physician receptiveness to the involvement of RN Case Managers, and interpretation of third party vendor services as weaknesses in existing internal controls.

UCMC was cited for failing to pursue credits for replaced devices. According to UCMC’s response, the Medicare Claim Processing Manual (CMS Pub. 100-04, Sec. 100.8, Replaced Devices Offered Without Cost or With Credit) does not require hospitals to pursue manufacturers for credits on replaced devices. Medicare policy only requires that hospitals report credits actually received where the credit is more than 50% of the cost of the replacement device. UCMC argues that the prudent buyer principle is applicable to defining allowable costs for Medicare cost reports but does not apply to Medicare claims-based audits.

On June 2, 2014, the American Hospital Association (AHA) submitted a letter to the U.S. Department of Health and Human Services also objecting to the OIG hospital compliance audits. The AHA arguments are similar to those made by UCMC and include:

• OIG audits redundant to RAC reviews thereby being unduly burdensome to hospitals
• The OIG misconstrued and misapplied numerous Medicare regulations and policies
• The OIG used flawed sampling and extrapolation methods to estimate overpayments and refunds
• The OIG audits do not take into consideration Part B payments that may have been appropriate for the hospital to receive by their own admission
• They are in violation of reopening time frames and MAC statutory limits on extrapolation

For complete details, read the AHA's letter.

The “arguing back” of both UCMC and the AHA is well thought out, supported by references, and clearly explained, but whether either will prevail concerning their arguments and/or planned appeals remains to be seen.