Medicare Hospital Provider Compliance Audit: St Francis Hospital

Why OIG Did This Audit

This audit is part of a series of hospital compliance audits. Using computer matching, data mining, and other data analysis techniques, we identified hospital claims that were at risk for noncompliance with Medicare billing requirements. For calendar year (CY) 2017, Medicare paid hospitals $206 billion, which represents 55 percent of all fee-for-service payments; accordingly, it is important to ensure that hospital payments comply with requirements.

Our objective was to determine whether St. Francis Hospital (the Hospital) complied with Medicare requirements for billing inpatient and outpatient services on selected types of claims.

How OIG Did This Audit

Our audit covered about $44 million in Medicare payments to the Hospital for 3,192 claims that were potentially at risk for billing errors.

We selected for review a stratified random sample of 100 claims with payments totaling $1.6 million. Medicare paid these 100 claims, which consisted of 95 inpatient and 5 outpatient claims, during CYs 2016 and 2017.

What OIG Found

The Hospital complied with Medicare billing requirements for 86 of the 100 inpatient and outpatient claims we reviewed. However, the Hospital did not fully comply with Medicare billing requirements for the remaining 14 claims, resulting in overpayments of $204,265 for CYs 2016 and 2017.

On the basis of our sample results, we estimated that the Hospital received overpayments of at least $1.6 million for the audit period.

What OIG Recommends and Hospital Comments

We recommend that the Hospital (1) refund to the Medicare contractor $1.6 million in estimated overpayments for the audit period for incorrectly billed claims that are within the reopening period; (2) based upon the results of this audit, exercise reasonable diligence to identify, report, and return any overpayments in accordance with the 60-day rule and identify any returned overpayments as having been made in accordance with this recommendation; and (3) strengthen its controls to ensure full compliance with Medicare requirements; specifically ensure that all IRF beneficiaries meet Medicare criteria for acute inpatient rehabilitation, all inpatient beneficiaries meet Medicare requirements for inpatient hospital services, procedure and diagnosis codes are supported in the medical records and staff are properly trained, and medical records accurately document distinct procedural services and staff are properly trained.

In written comments on our draft report, the Hospital disagreed with most of our findings and recommendations. The Hospital agreed with 6 of the 14 payment errors identified in the sample. However, the Hospital disagreed with: OIG's determination of eight IRF payment errors in the sample; OIG's extrapolation methodology; and the application of the 60-day rule.

After review and consideration of the Hospital's comments, we maintain that our findings and the associated recommendations are valid. The use of statistical sampling to determine overpayment amounts in Medicare is well established and has repeatedly been upheld on appeal in Federal courts. An independent medical review contractor, employing licensed health professionals with appropriate medical expertise, including physicians with training and expertise in rehabilitation, determined whether the medical records supported Medicare payments. We also maintain that the 60-day repayment rule is applicable.