Review of Medicare Payments Exceeding Charges for Outpatient Services Processed by TriSpan but Transitioned to Pinnacle in Jurisdiction 7 for the Period January 1,2006, Through June 30, 2009

Our audit found that 768 of 1,157 selected line items for which TriSpan 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 $2.4 million, which the providers had not refunded by the beginning of our audit. Providers refunded overpayments on 33 line items totaling $556,000 before our fieldwork. The remaining 356 line items were correct.

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 768 incorrect line items included (1) incorrect units of service, (2) unallowable services, (3) Healthcare Common Procedure Coding System (HCPCS) codes that did not reflect the procedure performed, and (5) a lack of supporting documents.

We recommended that Pinnacle (1) ensure that the $2.4 million had been recovered, (2) 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. In its comments, Pinnacle said that all adjustments had been processed and collections completed.

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