The Medicare Contractors for Jurisdiction E Overpaid Claims for Replaced Cardiac Medical Devices When Hospitals Had Not Reported Manufacturer Credits

Payments that the Medicare contractors for Jurisdiction E (which covers California, Hawaii, Nevada, and three Pacific territories) made to hospitals for 191 inpatient and outpatient claims for replaced cardiac medical devices did not comply with Medicare requirements for reporting manufacturer credits. The hospitals' incorrect billing of these claims resulted in overpayments of $2.1 million that the hospitals had not identified, refunded, or adjusted by the beginning of our audit. The Medicare contractors overpaid the hospitals because they had no specific controls to ensure that hospitals complied with Medicare requirements for reporting manufacturer credits.