Review of Medicare Payments Exceeding Charges for Outpatient Services Processed by Wisconsin Physicians Service Insurance Corporation but Transitioned to Highmark Medicare Services in Jurisdiction 12 for the Period January 1, 2006, Through June 30, 2009

Our audit found that 205 of the 424 selected line items for which Wisconsin Physicians Service Insurance Corporation (WPS) made Medicare payments to providers for outpatient services during the period January 2006 through June 2009 were incorrect. The line items included items totaling $1.5 million, which the providers had not refunded by the beginning of our audit. Providers refunded overpayments on 18 line items totaling $32,000 before our fieldwork. The remaining 201 line items were correct. Effective February 2011, the claims that were originally processed by WPS in Jurisdiction 12 were transitioned to Highmark Medicare Services (Highmark). 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 205 incorrect line items included incorrect units of service, Healthcare Common Procedure Coding System (HCPCS) codes that did not reflect the procedures performed, unallowable services, a lack of supporting documentation, and a combination of incorrect units of service claimed and incorrect HCPCS codes.

We recommended that Highmark (1) recover the $1.5 million in identified overpayments, (2) work with CMS to 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. Highmark will work with the Centers for Medicare & Medicaid Services to ensure the overpayments have been collected. In addition, Highmark described corrective actions that it had taken or planned to take.