Are Medicare Contractors Properly Handling Outlier Payments?


Medicare contractors have many jobs, ranging from processing standard Medicare claims to recovering improper payments, and they generally perform them well. However one job, reconciling outlier payments, is tripping them up, according to a recent Health and Human Services Office of Inspector General report. The OIG said contractor mistakes with outlier payments may have cost the program $426 million between 2003 and 2011.

The report identified 465 hospital cost reports that should have been referred for outlier reconciliation or were referred but never reconciled. Failing to reconcile outlier payments before reaching a final settlement on a hospital’s cost report can lead to Medicare overpayments.

Contractors and the Centers for Medicare & Medicaid Services share the blame for the outlier troubles, Judith Waltz, a health-care attorney with Foley & Lardner LLP in San Francisco, told me. The CMS’s lack of systems to process outlier reconciliations is at least as much to blame as are contractors failing to refer hospital cost reports, Waltz said.

The OIG said the CMS should take several steps to improve oversight of the Medicare outlier payments, including ensuring that contractors review all hospital cost reports submitted after March 2011. However, the CMS may not have enough resources to do the job, Katie Pawlitz, a health-care attorney with Reed Smith in Washington, told me.

For example, the CMS has previously said that system limitations have prevented it from reconciling outlier payments, and it will need upgraded resources to improve the process, Pawlitz said.

Read my full article here.

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