Improper Medicare Payments to Hospitals for Nonphysician Outpatient Services Under the Prospective Payment System

EXECUTIVE SUMMARY:

Under current Medicare regulations, separate payment for nonphysician outpatient services rendered within the diagnosis-related group (DRG) payment window are not allowed. Our audit report identifies, however, over $27 million in potential improper billings and subsequent payments for nonphysician outpatient services rendered within the DRG payment window for the period January 1992 through December 1994. This is a continuing problem. As a result of prior reviews on this subject the Health Care Financing Administration has recovered over $100 million in improper payments. Our office has initiated a joint project with the Department of Justice to recover overpayments and to assess penalties and interest. The Health Care Financing Administration has also agreed with our procedural recommendations designed to address this problem.

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