OIG Compliance Audits

The U.S. Department of Health and Human Services’ Office of Inspector General (“OIG”) recently announced a determination that the University of Cincinnati Medical Center owed more than $9.8 million in Medicare repayments. OIG’s determination was based on an audit it conducted using extrapolation. OIG audited 228 claims and determined that 56% of the claims had errors, then applied the 56% error rate to all 2,700 claims billed during the same time period. Critics of extrapolation argue the method does not accurately reflect the number of problematic claims submitted by a provider. Further, according to critics, extrapolation often results in far higher overpayment amounts then what is truly owed.

In light of these and other concerns, last month the American Hospital Association (“AHA”) sent OIG a letter requesting that the hospital compliance reviews cease immediately. In its letter, AHA states that the reviews are unduly burdensome to hospitals and duplicative of compliance audits conducted by the Medicare Recovery Audit Contractors. Moreover, according to AHA, OIG is misapplying Medicare regulations and policies, which results in incorrect overpayment estimates. For example, when OIG determines a provider billed Medicare Part A for an unnecessary inpatient admission, it does not permit the provider to offset the overpayment against the Medicare Part B payment that should have been received for outpatient care. Rather, OIG’s position is that the provider must repay the entire Part A amount. AHA’s letter concludes that the compliance reviews are “a process run amok, frustrating hospitals at every turn and costing them dearly in lost Medicare reimbursement and unnecessary administrative expenses.”

OIG has not publicly responded to the AHA letter. Currently, OIG continues to perform hospital compliance reviews at an increasing pace, often resulting in high repayment amounts as evidenced by the University of Cincinnati audit. As such, for the foreseeable future, OIG’s compliance audits will continue.

The law firm of Dressman Benzinger LaVelle has offices in Cincinnati, Ohio, Crestview Hills, Kentucky, and Louisville, Kentucky.