Last week, HHS OIG released a report finding that Medicare inappropriately paid acute-care hospitals for outpatient services provided to beneficiaries who were inpatients of other facilities, such as long-term care hospitals, inpatient rehabilitation facilities, inpatient psychiatric facilities, and critical access hospitals.

Generally, Medicare does not pay an acute-care hospital for outpatient services provided to an inpatient of another facility. Instead, the services should be provided under coordinated arrangements between the acute-care hospital and facility, and Medicare should pay the other facility for all services provided to a beneficiary (as part of the facility’s inpatient payment rate).

OIG found that from January 1, 2013, through August 31, 2016, Medicare paid acute-care hospitals $51.6 million for outpatient services they provided to beneficiaries who were inpatients of certain other facilities. In addition, OIG found that beneficiaries were held responsible for deductibles and coinsurance of $14.4 million paid to the acute-care hospitals for outpatient services. OIG claims Medicare overpaid the acute-care hospitals because system edits that should have prevented or detected the overpayments were not working properly.

As a result, OIG recommended that CMS direct its contractors to (1) recover the $51.6 million in identified improper payments to acute-care hospitals; (2) instruct the acute-care hospitals to refund beneficiaries up to $14.4 million in deductible and coinsurance amounts that may have been incorrectly collected; (3) identify and recover any improper payments to acute-care hospitals after the OIG report audit period, which ended on August 31, 2016; and (4) more effectively educate hospitals on this issue. OIG also recommended that CMS correct system edits to prevent such overpayments in the future. CMS concurred with all of OIG’s recommendations.

The OIG report is available here.