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Audit (A-04-10-03059)

05-18-2012
Obstacles to Collection of Millions in Medicare Overpayments

Executive Summary

Our review focused on overpayments that CMS had made and that OIG had recommended for collection. CMS agreed to collect, or "sustained" these overpayments. We selected OIG audit reports on Medicare with recommendations to collect overpayments greater than $1,000 that were issued during fiscal years (FY) 2007 and 2008 and the first 6 months of FY 2009 to CMS, CMS contractors, or Medicare providers.

As of October 8, 2010, CMS had not collected the majority of overpayment amounts identified in OIG audit reports. Of the 154 OIG audit reports with sustained overpayment amounts totaling $416.3 million, CMS reported collecting $84.2 million. Of the $84.2 million, CMS reported collecting the full sustained amounts totaling $83.3 million for 113 reports and partial amounts totaling $896,000 for 8 reports. However, for various reasons, CMS did not collect the remaining $332.1 million. CMS's collections were limited because of time constraints imposed by the statute of limitations on overpayment collections. In addition, it did not provide its contractors with adequate guidance for collecting overpayments and did not have an effective system for monitoring its contractors' collection efforts.

Furthermore, we could not verify the $84.2 million that CMS reported collecting, and we identified inaccuracies in the reported amount. These issues arose because CMS did not have adequate systems for (1) documenting overpayment collections identified in OIG audit reports or (2) detecting data entry errors. Therefore, CMS had no assurance that the overpayment collections information that it reported to other parties was accurate.

We recommended that CMS (1) pursue legislation to extend the statute of limitations so that the recovery period exceeds the reopening period for Medicare payments; (2) ensure that its Audit Tracking and Reporting System (ATARS) is updated to accurately reflect the status of audit report recommendations; (3) ensure that CMS staff record collections information consistently in ATARS; (4) collect sustained amounts related to OIG recommendations made after our audit period to the extent allowed under the law; (5) verify that the $84.2 million reported as collected has actually been collected; and (6) provide specific guidance to its contractors concerning the timeframe in which the contractor must take action to collect an overpayment, how to report collections, the type of documentation that the contractor must maintain to substantiate an overpayment collection, and how to report reasons for not collecting overpayments.

In response to our first recommendation, CMS said that it would explore the possibility of pursuing legislative proposals. CMS concurred with our second, third, and sixth recommendations and discussed actions it had taken or planned to take to implement them. CMS partially concurred with our fourth recommendation and did not concur with our fifth recommendation.

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