Knowledge Base Article

Add Hospital Provider Compliance Audits to the List of OIG Activities You Need to Know

My oldest nephew is in the midst of his second semester of college life. Academically speaking, he excelled during the first semester. Unfortunately, that is not the case with his Freshman English class this spring. Evidently, the class involves writing several papers and his Professor has been less than impressed with my nephew’s writing efforts. My nephew has met with his Professor to try and understand what he can do to improve his writing skills. Unfortunately, even though his Professor has taken the time to talk with him, my nephew doesn’t seem to be able to pinpoint exactly what he needs to do from this discussion.

The OIG has been conducting Medicare Hospital Provider Compliance Audits as far back as March of 2011. To date, they have completed 190 audits. You can find a table of all these audits on the OIG’s Hospital Compliance Reviews webpage. Unlike my nephew’s English Professor, the OIG is very clear about what their audits focus on. Specifically, they focus on what they describe as “risk areas that we identified as a result of prior OIG audits at other hospitals.”

Two years into their Hospital Provider Compliance Audits, the OIG began to extrapolate audit findings with adverse financial consequences for Providers. In May of 2013, Nashville Tennessee based Saint Thomas Hospital, was the first hospital subject to extrapolation. In the Saint Thomas audit, the OIG identified overpayments of $293,359 and extrapolated this amount over the claims during the audit period. Through extrapolation, the OIG recommended that the Hospital refund to the contractor $1,092,248. In general, every hospital that has been subject to extrapolation during an OIG Hospital Provider Compliance Audit has disagreed with the OIG’s method for extrapolation.

OIG Hospital Provider Compliance Audit: Sunrise Hospital & Medical Center The OIG’s most recent audit was released on April 1, 2021 and details their audit of Sunrise Hospital & Medical Center located in Las Vegas, Nevada. Medicare paid the Hospital approximately $245 million for 15 million inpatient and 25,308 outpatient claims from January 1, 2017, through December 31, 2018 (the audit period).

The OIG’s audit covered about $41 million in Medicare payments to the hospital for 2,117 claims potentially at risk for billing errors. Ultimately, the audit included a stratified random sample of 100 claims (85 inpatient and 15 outpatient) with payments totaling $2.4 million. The at risk areas specific to this audit included:

• Inpatient rehabilitation facility claims,
• Inpatient comprehensive error rate testing (CERT) DRG codes,
• Inpatient high-severity level DRG codes,
• Inpatient mechanical ventilation,
• Inpatient claims paid in excess of $25,000,
• Inpatient same day discharge and readmit,
• Outpatient bypass modifiers,
• Outpatient claims paid in excess of $25,000,
• Outpatient claims paid in excess of charges, and
• Outpatient skilled nursing facility (SNF) consolidated billing.

The OIG found that the hospital complied with Medicare billing requirements for 46 of the 100 inpatient and outpatient claims reviewed. For the remaining 54 claims, the OIG found that the hospital did not fully comply with Medicare billing requirements. Specific claims and monetary impact included:

• 50 Inpatient claims had billing errors resulting in net overpayments of $1,002,049,
• 36 of these claims were Inpatient Rehabilitation Facility admissions where the OIG believed the Hospital had incorrectly billed for stays not meeting Medicare criteria for acute inpatient rehabilitation.
• 4 Outpatient claims had billing errors resulting in net underpayments of $2,099.
• The OIG estimated that the Hospital received overpayments of at least $23,615,809 for the audit period.

Ultimately, the OIG extrapolated the audit findings and recommended that the Hospital refund to the Medicare contractor $23.6 million in net estimated overpayments. The Hospital disagreed with most of the OIG’s findings. However, at the end of the day, the OIG indicated that “after review and consideration of the Hospital’s comments, we maintain that our findings and recommendations are correct.”

Moving Forward

In spite of the COVID-19 pandemic, the OIG managed to publish the results from nine Hospital Provider Compliance Audits in 2020. Given that the OIG has been conducting this type of audit since 2011 and their propensity to extrapolate audit findings, understanding provider compliance “at risk” issues has become as important as knowing what items are on the OIG’s Work Plan.