Report Materials
EXECUTIVE SUMMARY:
The objective of this report was to assess the impact that the Centers for Medicare and Medicaid Services's (CMS) practice of not retroactively adjusting outpatient outlier payments has on the integrity of the outpatient outlier program. In a series of reviews, we identified significant outpatient outlier overpayments to community mental health centers (CMHC).
CMS's practice of not retroactively adjusting outpatient outlier payments creates significant vulnerabilities in the outpatient outlier program. The practice is also inconsistent with CMS's policy of retroactively adjusting inpatient prospective payment system (PPS) outlier payments. Prior audits showed that some CMHCs received significant outpatient outlier overpayments as a result of fiscal intermediaries' and CMHCs' mathematical and clerical errors and CMHCs' manipulation of charge data to their advantage. Other CMHCs received underpayments as a result of fiscal intermediaries' errors. Following its current practice, CMS did not adjust these erroneous payments, resulting in substantial net losses to the Medicare trust fund and payment inequities among CMHCs. CMS's practice also does not allow for retroactive adjustments when a fiscal intermediary's final cost report settlement identifies errors that caused previous erroneous outlier payments. Although our work was specific to CMHCs, similar vulnerabilities may exist in the entire outpatient outlier program.
We recommended that CMS issue regulations to require retroactive adjustments of outpatient outlier payments within appropriately established thresholds. Specifically, we recommend that CMS require (1) adjustments of outpatient outlier payments at final cost report settlement, retroactive to the beginning of the cost report period, and (2) retroactive adjustments of outpatient outlier payments when an error caused by the fiscal intermediary or provider is identified after the cost report is settled. In written comments, CMS stated that it would explore the feasibility and cost effectiveness of implementing our recommendations.Notice
This report may be subject to section 5274 of the National Defense Authorization Act Fiscal Year 2023, 117 Pub. L. 263.