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Department of Health and Human Services

Office of Inspector General -- AUDIT

"Review of Potentially Excessive Medicare Payments for Outpatient Services," (A-01-00-00502)

May 16, 2001

Complete Text of Report is available in PDF format (4.3 MB). Copies can also be obtained by contacting the Office of Public Affairs at 202-619-1343.


This final report points out fundamental flaws in fiscal intermediaries systems for paying outpatient claims to institutional providers. We found, for example, that simple clerical provider billing errors generated $12 million in Medicare overpayments to institutional providers for outpatient services. For example, overpayments of $11.1 million resulted from providers entering dates of service in the "Units of Service" field on the claim form. In these cases the fiscal intermediary had inadvertently turned off edit checks designed to detect such errors. In other instances, overpayments were not precluded because edits for total charges were established at unreasonably high amounts. Although providers returned the overpayments in these instances, the Medicare trust fund lost as much as $106,000 of interest because the overpayments remained outstanding for various periods ranging from 10 to 431 days. To help assure detection of such errors, we recommended that the Health Care Financing Administration (HCFA) implement edits in the Common Working File to reject potentially excessive Medicare claims for pre-payment review. We also recommended that HCFA identify and collect any additional overpayments made on other outpatient claims that have the potential for excessive payments and stress the importance of standard Medicare claims processing system edits to the fiscal intermediaries. The HCFA concurred with our recommendations.