U.S. flag

An official website of the United States government

Dot gov

The .gov means it's official.
Federal government websites often end in .gov or .mil. Before sharing sensitive information, make sure you're on a federal government site.


The site is secure.
The https:// ensures that you are connecting to the official website and that any information you provide is encrypted and transmitted securely.

Department of Health and Human Services

Office of Inspector General -- AUDIT

"Medicare Inpatient Hospital Prospective Payment System Transfers Incorrectly Reported as Discharges," (A-06-00-00041)

November 13, 2001

Complete Text of Report is available in PDF format (788 kb). Copies can also be obtained by contacting the Office of Public Affairs at 202-619-1343.


This final report points out a continuing significant problem with hospitals incorrectly reporting prospective payment system (PPS) transfers as discharges. Since 1992 the number of incorrectly reported transfers has trended downward, but remains too high.  Hospitals incorrectly reported an average of 1,132 PPS transfers per month in 1992 with this average decreasing to about 495 per month in 1999.  We identified over 153,000 claims for incorrectly reported transfers during the period January 1992 through June 2000.  The potential overpayments related to these transfers totaled nearly $233 million. Causes which have contributed to this ongoing problem include misapplication of the PPS transfer policy by the Centers for Medicare and Medicaid Services (CMS) regional offices and the fiscal intermediaries (FIs), problems with computer systems interfaces at hospitals, and breakdowns in communication between hospitals' medical and billing staffs.  We recommended that CMS (1) issue instructions to and work with FIs to initiate the collection of the overpayments identified to date, (2) issue clarifying instructions or bulletins to the FIs and hospitals, and (3) instruct FIs and hospitals to review all internal procedures and processes related to claims submission and payment to assure that PPS transfers are properly reported. The CMS generally concurred with our recommendations.