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Medicare asks Community Hospital to refund $22.5 million 

Contributed By: The 411 News

Dept. of Health & Human Services audit finds 2 years of medical billing errors

What started out in 2017 as a Medicare Compliance Review of Munster’s Community Hospital by the U.S. Dept. of Health and Human Services has resulted in HHS asking the hospital to refund $22.5 million for what the agency’s auditors classified as overpayments.

Community Hospital is part of the Community Healthcare System that includes St. Catherine Hospital in East Chicago and St. Mary Medical Center in Hobart. Only Community Hospital was audited. Medicare paid the hospital approximately $275 million for 19,098 inpatient and 169,827 outpatient claims for services provided during 2015 and 2016, the two-year period audited.

HHS issued the final audit report February 4 by its Office of Inspector General. In a statement released Wednesday, February 13, the hospital said it would immediately appeal the audit findings. “We strongly disagree with the OIG’s audit findings, its flawed methodology, incorrect application of the standards for review, its failure to consider Community Hospital’s comprehensive response and independent analysis, and the OIG’s statistically defective extrapolation approach.”

The OIG final report includes details of the audit that began in July 2017 and ended in August 2018. It also includes Community Hospital’s comments on the draft report issued in 2018. In December 2018, Community Hospital CEO Luis Molina wrote a 19-page refutation of the audit findings, also included in the final report.

Auditors did not analyze every Medicare claim. Instead, they sampled 170 claims from a subset of 2,510 claims that provided $40,553,848 in Medicare payments to the hospital during 2015 and 2016.

Those 2,510 claims were selected as being potentially at risk for billing errors. OIG compiled 24 risk areas from previous reviews of other hospitals showing certain categories of inpatient and outpatient diagnoses and treatment procedures do produce Medicare billing errors.

Of those 170 claims, more than half did not comply with rules for Medicare coverage. OIG reported Community Hospital collected $2,824,623 for the 170 claims reviewed, of which $1,266,758 were overpayments.

OIG extrapolated, using statistical modeling methods, that more than half of the $40,553,848 Community Hospital collected during those 2 years were overpayments and asked for the $22.5 million reimbursement.

The next step for the dispute is a hearing before an Administrative Law Judge. “At which we expect to prevail,” Molina wrote. “Across the service sector, IRFs [inpatient rehabilitation facilities] earn favorable decisions in 87% of their appeals.”

Molina warned HHS of the costs the agency could incur because of underpayments. Because of the current appeals backlog, he extrapolated those costs, “The liability to Community at the current interest rate on underpayments of 10.625% would be $26.2 million after three years and $32.1 million after five years. It is short-sighted for the OIG to overlook the ramifications to taxpayers.”

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