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Audit (A-05-10-00025)

Review of Medicare Payments Exceeding Charges for Outpatient Services Processed by National Government Services, Inc., in Jurisdiction 6 - Illinois and Wisconsin for the Period January 1, 2006, Through June 30, 2009

Executive Summary

Our audit found that 927 of the 1,547 selected line items for which National Government Services, Inc. (NGS), made Medicare payments to providers for outpatient services during the period January 2006 through June 2009 were incorrect. The line items included overpayments totaling approximately $6.3 million that the providers had not refunded by the beginning of our audit. Providers refunded overpayments on 96 line items totaling $1.7 million before our fieldwork. As of February 1, 2011, the amount of overpayment for 26 line items had not been determined because the items had not been reprocessed and the correct line payment amounts identified. The remaining 524 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 927 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 claimed and incorrect HCPCS codes, (4) billing for unallowable services, and (5) lack of supporting documentation.

We recommended that NGS (1) recover $6.3 million in identified overpayments, (2) determine the amount of overpayment for the 26 incorrect line item payments and recover that amount, (3) implement system edits that identify line item payments that exceed billed charges by a prescribed amount, and (4) use the results of this audit in its provider education activities. NGS generally agreed with our recommendations.

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Office of Inspector General, U.S. Department of Health and Human Services | 330 Independence Avenue, SW, Washington, DC 20201