Medicare Compliance Review of Northwestern Memorial Hospital for 2011 and 2012

Northwestern Memorial Hospital (the Hospital) complied with Medicare billing requirements for 86 of the 171 inpatient and outpatient claims we reviewed. However, the Hospital did not fully comply with Medicare billing requirements for the remaining 85 claims, resulting in net overpayments of $272,000 for calendar years 2011 and 2012 (audit period). On the basis of our sample results, we estimated that the Hospital received net overpayments totaling at least $6.4 million for the audit period. Overpayments occurred primarily because the Hospital did not have adequate controls to prevent the incorrect billing of Medicare claims within the selected risk areas that contained errors.

We recommended that the Hospital (1) refund to the Medicare contractor $6.4 million (of which $272,000 was net overpayments identified in our sample) in estimated net overpayments for incorrectly billed services and (2) strengthen controls to ensure full compliance with Medicare requirements. The Hospital partially disagreed with our first recommendation and discussed steps it had taken or planned to take in regards to our second recommendation.