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Audit (A-07-11-04183)

03-22-2012
Review of Medicare Payments Exceeding Charges for Outpatient Services Processed by Wisconsin Physicians Service Insurance Corporation but Transitioned to TrailBlazer Health Enterprises, LLC, in Jurisdiction 4 for the Period January 1, 2006, Through June 30, 2009

Executive Summary

Our audit found that 267 of the 408 selected line items for which Wisconsin Physicians Service Insurance Corporation (WPS) made Medicare payments to providers for outpatient services during the period January 2006 through June 2009 were incorrect. The line items included items totaling approximately $1.6 million, which the providers had not refunded by the beginning of our audit. Providers refunded overpayments on 13 line items totaling $459,000 before our fieldwork. The remaining 128 line items were correct. Effective October 2010, the claims that were originally processed by WPS in Jurisdiction 4 were transitioned to TrailBlazer Health Enterprises, LLC (TrailBlazer).

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 267 incorrect line items included incorrect units of service, Healthcare Common Procedure Coding System (HCPCS) codes that did not reflect the procedures performed, a combination of incorrect number of units of service claimed and incorrect HCPCS codes, unallowable services, and a lack of supporting documentation.

We recommended that TrailBlazer (1) recover the $1.6 million in identified overpayments, (2) work with CMS to 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. TrailBlazer agreed with our recommendations and described actions that it had taken or planned to take to address them.

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