Medicare Incorrectly Paid Hospitals for Beneficiaries Who Had Not Received 96 or More Hours of Mechanical Ventilation

For inpatient claims with certain Medicare Severity Diagnosis-Related Groups (MS-DRGs), Medicare requires that beneficiaries have received 96 or more hours of mechanical ventilation. For 14 of the 377 claims reviewed, Medicare payments to hospitals were correct. However, for the 363 remaining claims, Medicare payments to hospitals were incorrect. Specifically, the hospitals incorrectly used procedure code 96.72 when the beneficiaries had not received 96 or more hours of mechanical ventilation. Consequently, the claims were assigned incorrectly to MS-DRGs 207 and 870, resulting in $7.7 million of overpayments. The hospitals confirmed that these claims were incorrectly billed and generally attributed the errors to incorrectly counting the number of hours that beneficiaries had received mechanical ventilation or clerical errors in selecting the appropriate procedure code. At the time of our audit, the Centers for Medicare & Medicaid Services (CMS) did not have controls to identify these erroneous claims.

We recommended that CMS (1) ensure that the Medicare contractors recover the $7.7 million in identified overpayments and (2) direct the Medicare contractors to review any claims where procedure code 96.72 was used with a length of stay of 4 days or fewer and recover any overpayments after our audit period and before implementation of CMS's new length-of-stay edit. CMS partially concurred with our first recommendation and concurred with our second recommendation.