Malnutrition Billing Errors Trigger OIG Audit

Federal officials said the health system received overpayments of at least $2.4 million from 2014 through 2016.

The University of Wisconsin Hospitals and Clinics Authority has found itself the target of an audit by the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) for improperly billing malnutrition.

According to the OIG, the audit covered $9.5 million in Medicare payments for the 497 claims submitted by the health system from 2014 through 2016. The claims contained a severe malnutrition diagnosis code, and removing the code changed the diagnosis-related group (DRG), the OIG reported in a recent statement posted to its website.

The OIG said it reviewed a random sample of 100 claims totaling $1,796,325, evaluating the claims for compliance with selected billing requirements. Officials said they also subjected the 100 claims to a medical and coding review to determine whether the services were medically necessary and properly coded and billed.

“The hospital (University of Wisconsin Hospitals and Clinics Authority) complied with Medicare billing requirements for severe malnutrition diagnosis codes for 10 of the 100 claims that we reviewed,” the OIG wrote in its report. “However, the hospital did not comply with Medicare billing requirements for the remaining 90 claims.”

The OIG explained that for two of those claims, the medical record documentation supported a secondary diagnosis code other than a severe malnutrition diagnosis code, but the error resulted in no change to the DRG or payment. However, according to the OIG, for the remaining 88 claims, the billing errors resulted in net overpayments of $562,361.

“These errors occurred because the hospital used severe malnutrition diagnosis codes when it should have used codes for other forms of malnutrition or no malnutrition diagnosis code at all,” the federal report read. “For these claims, the hospital-provided medical record documentation did not contain evidence that the malnutrition was severe or that it had an effect on the treatment or the length of the hospital stay.”

The OIG estimated that the health system received overpayments of at least $2.4 million from 2014 through 2016.

In accordance with OIG practice, the agency made three recommendations to this provider. These included the following:

1. Refund to the Medicare program $2,412,137 for the incorrectly coded claims;
2. Exercise reasonable diligence to identify and return any additional similar overpayments outside of the audit period, in accordance with the 60-day rule, and identify any returned overpayments as having been made in accordance with this recommendation; and
3. Strengthen controls to ensure full compliance with Medicare billing requirements.

Although the health system offered written comments and disagreed with several of the findings in the OIG draft report, the agency maintained that its findings were valid for all 88 claims.