Medicare Did Not Pay Selected Inpatient Claims for Bone Marrow and Stem Cell Transplant Procedures in Accordance With Medicare Requirements

Medicare paid 10 of 143 selected inpatient claims for bone marrow and stem cell transplant procedures in accordance with Medicare requirements. However, 133 claims did not comply with those requirements. For 120 of these claims, the hospitals incorrectly billed Medicare Part A for beneficiary stays that should have been billed as outpatient or outpatient with observation services. These claims did not have clinical evidence supporting that an inpatient level of care was required before, during, or after the transplant procedures were performed. For the remaining 13 claims, the hospitals billed incorrect Medicare Severity Diagnosis-Related Groups (MS DRGs). As a result of the 133 errors, Medicare overpaid the hospitals by $6.3 million. Medicare overpaid the hospitals because existing controls were not effective in preventing the overpayments.

We recommended that the Centers for Medicare & Medicaid Services (CMS) (1) direct the Medicare contractors to recover the $4.6 million in identified overpayments for incorrectly billed claims that are within the 3-year recovery period; (2) work with the Medicare contractors to notify providers of potential overpayments outside of the 3-year recovery period, which we estimate to be as much as $1.7 million for our audit period (January 2010 through September 2013); (3) review the 58 inpatient claims from October 2013 through April 2015 for stem cell transplants with lengths of stays of 1 to 2 days, which could save as much as $2 million; (4) strengthen controls related to MS-DRGs for stem cell transplants; and (5) educate hospitals on the appropriate billing of stem cell transplants.

CMS partially concurred with our first recommendation and provided information on actions that it planned to take with respect to our second recommendation. CMS concurred with our remaining recommendations and provided information on actions that it planned to take or would consider taking to address our recommendations.