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Audit (A-05-10-00017)

09-12-2011
Review of Medicare Payments Exceeding Charges for Outpatient Services Processed by National Government Services in Jurisdiction 8 for the Period January 1, 2006, Through June 30, 2009

Executive Summary

Our audit found that 957 of the 1,407 selected line items for which National Government Services made Medicare payments to providers for outpatient services for the period January 2006 through June 2009 were incorrect. The line items included overpayments totaling $7 million, which the providers had not refunded by the beginning of our audit. Providers refunded overpayments on 60 line items totaling $964,000 before our fieldwork. The remaining 390 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 957 incorrect line items included (1) incorrect units of service, (2) a combination of incorrect units of service claimed and incorrect Healthcare Common Procedure Coding System (HCPCS) codes, (3) HCPCS codes that did not reflect the procedures performed, and (4) a lack of supporting documentation.

We recommended that National Government Services (1) recover the $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. National Government Services generally agreed with our recommendations.

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