CMS Did Not Always Correctly Make Clinic Visit Payments to Hospitals During Calendar Year 2012

The Centers for Medicare & Medicaid Services (CMS) made incorrect outpatient payments to hospitals for established patients' clinic visits. On the basis of our sample results, we estimated that CMS made incorrect payments to hospitals totaling $4.6 million for 2012. The Medicare payment for clinic visits depends on whether the patient is identified as "new" or "established" at a particular hospital. If the patient has a hospital medical record that was created within the past 3 years, that patient is considered an established patient at the hospital.

Of the 110 randomly sampled line items for which CMS made Medicare payments to hospitals for clinic visits during our audit period, 1 was correct. In addition, we treated 16 line items as non-errors (correct) because, for 10 line items, hospitals refunded incorrect payments totaling $276 prior to our fieldwork; for 2 line items, hospitals were under investigation; and for 4 line items, the claims were under review by another entity. CMS overpaid the remaining 93 line items by a total of $2,661. The hospitals had not refunded these overpayments by the beginning of our audit.

The hospitals attributed the incorrect payments to staff making clerical and programing errors, not verifying whether the patient was registered as an inpatient or outpatient of the hospital within the past 3 years, not following hospital procedures, not fully understanding Medicare billing requirements for clinic visits, and relying on the code that the treating physician billed for that visit.

Also, CMS does not have edits in place to identify Medicare payments for patients who were already registered at a facility.

We recommended that CMS work with its Medicare administrative contractors to (1) recover the $2,661 in incorrect payments identified in our sample and (2) resolve the remaining 188,367 line items and recover the remaining overpayments to the extent feasible and allowed under the law. CMS concurred with our first recommendation and partially concurred with our second recommendation.