Review of High-Dollar Payments for Outpatient Services Processed by Noridian Administrative Services, LLC, for the Period January 1, 2003, Through December 31, 2005

Of the 104 high-dollar Medicare Part B payments ($50,000 or more) that Noridian Administrative Services, LLC (Noridian), made to hospitals for outpatient services for CYs 2003 through 2005, 27 were appropriate. The 77 remaining payments included overpayments totaling $6.1 million. At the start of our audit, hospitals had refunded overpayments totaling $3.9 million but had not refunded overpayments totaling $2.2 million.

The hospitals attributed the incorrect payments to clerical errors or to billing systems that could not prevent or detect the incorrect billing of units of service and other types of billing errors. Noridian made these incorrect payments because neither the Fiscal Intermediary Standard System nor the Common Working File had sufficient edits in place during CYs 2003 through 2005 to prevent or detect the overpayments.

We recommended that Noridian recover the $2.2 million in identified overpayments and use the results of this audit in its provider education activities. Noridian concurred with our recommendations and described corrective actions that it had taken or planned to take.