Axios Article on Hospital Audits Tells One Side of Story, Leaves out Key Information

Axios’ recent article on hospital audits conducted by CMS’s Office of Inspector General (OIG) is misleading and only tells one side of the story by leaving out key information that readers deserve to know.

Most important, the article fails to mention that OIG’s hospital audits regularly include fundamental flaws and inaccuracies, both in OIG’s understanding and application of Medicare payment rules and in the procedures the OIG uses to conduct the audits. These flaws result in vastly overstated repayment demands, unwarranted reputational harm, and diversion of hospital and physician leaders’ time from their core mission of caring for patients.

The negative effects of the audits are exacerbated because the OIG regularly (and intends to do so for every future audit) extrapolates its findings to all claims in the audit period, even though many hospitals have a documented history of successfully appealing most or almost all of the virtually identical claim denials in the audit.

One example comes from Mount Sinai Hospital in New York City, which is one of the hospitals cited in the article. Although the OIG initially identified a potential $42 million dollar refund, the government reduced this to $12 million after reviewing some of Mount Sinai’s objections. The majority of current claim denials in the Mount Sinai audit relate to "short stay" admissions prior to October 2013 (when the Medicare rules changed). The OIG reviewers ignored the physicians' judgment to admit the patients, concluding that the patients should have been treated as outpatients under observation. Mount Sinai appealed numerous identical "short stay" denials from Recovery Audit Contractor (RAC) reviews and prevailed at the Administrative Law Judge (ALJ) stage in approximately 85 percent of these cases. The hospital has every reason to believe that this same category of denials in the OIG audit will be reversed on appeal.

Similarly, at the first level of appeal alone, the Medicare Administrative Contractor (MAC) already has reversed 11 of the 29 denials appealed by Mount Sinai and the refund request has now been reduced even further to $9 million. The first level of appeal typically results in relatively few reversals, and we expect many more of the claims to be reversed on further appeal.
However, due to the length of the appeals process, which usually takes three to five years, hospitals are being forced to expend even more resources just to recover money that they never should have had to repay in the first place.

America’s hospitals and health systems understand the need for robust and effective review of Medicare billing and payment practices and have presented CMS with five suggestions to improve the accuracy and fairness of the OIG audits. Those suggested can be found HERE.

The AHA believes it is critical that CMS take action to improve implementation of the OIG audits for the benefit of hospitals, patients and the Medicare program, and we stand ready to work with the agency and other stakeholders to achieve this important goal.