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Audit (A-02-10-01008)

10-05-2011
Review of Select Medicare Payments Exceeding Charges for Outpatient Services Processed by National Government Services in Jurisdiction 13 for the Period January 1, 2006, Through June 30, 2009

Executive Summary

Our audit found that 1,311 of the 1,841 selected line items for which National Government Services (NGS) made Medicare payments to providers for outpatient services for the period January 2006 through June 2009 were incorrect and included overpayments totaling $7.7 million. The remaining 530 line items were correct.

Medicare uses an outpatient prospective payment system to pay certain outpatient providers. In this method of reimbursement, the Medicare payment is not based on the amount that the provider charges. Billed charges generally exceed the amount that Medicare pays the provider. Therefore, a Medicare payment that significantly exceeds the billed charges is likely to be an overpayment.

The deficiencies in the 1,311 incorrect line items included (1) incorrect units of service, (2) Healthcare Common Procedure Coding System (HCPCS) codes that did not reflect the procedures performed, (3) a combination of incorrect units of service and incorrect HCPCS codes, (4) services not supported by documentation, and (5) services with an incorrect payment rate.

We recommended that NGS (1) recover the $7.7 million in identified overpayments, (2) implement system edits that identify line item payments that exceed billed charges by a prescribed amount, and (3) use the results of this audit in its provider education activities. NGS generally agreed with our recommendations.

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