AHA to Sebelius: Stop “Kafkaesque” OIG audits of hospital claims

Whether it is the heights of hyperbole or an accurate description may depend on your perspective, but Rick Pollack, executive vice president of the American Hospital Association (AHA) did not mince words in his 10-page letter to outgoing U.S. Department of Health and Human Services Secretary Kathleen Sebelius about the many problems with the Office of Inspector General (OIG) getting into the act of reviewing Medicare Part A payment claims for short-stay hospital admissions.

According to Pollack and the AHA, the OIG Office of Audit Services has not only made a mess of the audit reports it has issued so far — including forgetting simple math when extrapolating overpayments and making up rules — but it also has no business conducting these audits in the first place because that task was already being done by the Medicare Recovery Audit Contractors (RACs).

Pollack urged Sebelius to stop the OIG’s audits and reports to CMS now because as flawed as the reports are, they are none the less being acted on by the Medicare Administrative Contractors (MACs) and hospitals cannot even appeal the recoupments sought by the MACs because the backlog of disputed claims is now so long that there is a two-year moratorium on having these claims reviewed by an administrative law judge. (The AHA filed suit about this moratorium just last week.)

Among the many problems Pollack noted were these gems.

• The OIG forgot to subtract the amount of a part B observation stay from the cost of a short inpatient stay that should have been billed as an outpatient service and instead took the full Medicare Part A amount and extrapolated that. This multiplied its subtraction error many times.
• It took the new rule that an inpatient stay must be signed off on by a physician and then applied that to claims filed before the new rule came into being, effectively inventing a rule that didn’t exist when the claim was filed.
• By the time the OIG published its reports, some of the claims it had reviewed were more than four years old, past the date when CMS’s rules say a recoupment can be made.
• Despite many articles and news reports about RACs concentrating on inappropriate short inpatient claims, the OIG decided to focus its audits on exactly the same type of claims. “Surely the OIG has better use for its resources than re-reviewing the very same claims that are being reviewed by one or more Medicare contractors,” Pollack noted.

Is the AHA’s many strongly-worded letters, lawsuits and efforts to track the auditing of claims working? Perhaps. Recently, Becky Reeves of the American Coalition for Healthcare Claims Integrity wrote on Forbes.com that “intense pressure from the hospital industry, healthcare officials and lawmakers have brought Medicare oversight to a grinding halt.”

In addition, the OIG semi-annual report to Congress noted that the recovery amounts of the RACs was just $3.1 billion for the first half of the fiscal year, which is nearly $1 billion less than what was recovered during the same time period in 2013.