Department of Health and Human Services

Office of Inspector General -- AUDIT

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EXECUTIVE SUMMARY:

For calendar years (CY) 2001 and 2002, Medicare Part B made a total of $106.9 million in potential overpayments to suppliers of outpatient hospital, laboratory, and radiology services on behalf of beneficiaries in Part A-covered skilled nursing facility stays.  These potential overpayments occurred because CMS did not have Common Working File (CWF) edits in place during most of this period.  For CY 2003, when the edits were fully implemented, potential overpayments were reduced to $22.7 million.  We estimated that the fiscal intermediaries and carriers had not recovered $17.9 million of these potential overpayments.

We recommended that CMS (1) direct the fiscal intermediaries and carriers to review the $106.9 million in potential overpayments for CYs 2001 and 2002 and make appropriate recoveries, (2) direct the fiscal intermediaries and carriers to initiate recovery of the estimated $17.9 million in unrecovered overpayments for CY 2003, (3) continue to test and refine the CWF edits to ensure that they properly identify claims subject to consolidated billing, and (4) ensure that all fiscal intermediaries and carriers have established proper controls to recover overpayments that the CWF edits identify.  CMS agreed with the recommendations.