Two OIG Audits, Plus Outpatient Colectomies

Audits reveal recurring problems in which there is room for improvement.

Last week was a busy week for the Office of the Inspector General (OIG). They released two interesting reports. The first audit looked at care provided in critical access hospitals (CAH). As most know, CAHs have a different payment structure and one of the ways they differ from other hospitals is that they are permitted to bill for professional services of physicians if the provider assigns the rights to the hospital to bill for them. When that happens, the hospital gets paid a higher rate than if the physician billed independently.

In this audit, the U.S. Department of Health and Human Services (HHS) OIG audited 20,000 claims for physician services submitted by the physician themselves and then searched the CAH claims for a claim submitted for that same service and found 20,000 matching claims. In other words, it appears that the Centers for Medicare & Medicaid Services (CMS) paid the physician for their services and paid the hospital for that same service. In some cases, the physician was at fault, having assigned their billing rights to the CAH but then went ahead and billed separately and in some cases the CAH was at fault, billing for physician services where the physician had not signed over their billing rights.

To add to the confusion, when a CAH bills for a professional service on their Part A claim, there is no requirement for them to indicate the name or NPI of the provider so, theoretically, these claims may have been for other providers. It is unclear how the OIG confirmed their findings. Nonetheless, it appears that communication between CAHs and providers as it relates to billing has room for improvement in some instances.

The second audit looked at outpatient billing for services provided to patients who were admitted as an inpatient at another facility. In other words, the patient was an inpatient at hospital A and underwent a procedure at facility B with facility B billing Medicare for the service.

When a patient is an inpatient and needs a service that cannot be provided at that facility, the patient may be sent to another facility for the procedure and then return to continue their inpatient stay. But the cost of that service, and the transportation costs, are the responsibility of the inpatient hospital and the facility that does the procedure should not be billing Medicare.

As the OIG has found in previous audits, that issue continues to happen, this time at a cost to the Medicare Trust Fund of $39 million. But to get technical, that amount not totally correct. If the hospital that billed the admission had included the service on their claim, that service may have changed the DRG or resulted in additional payment to the hospital. This would lessen the overall financial impact of these billing errors.

But it is still a common error that should not be happening. The “under arrangement” billing rules are well known but the problem is often that the billing staff is never informed that the patient went somewhere else for a test or procedure amid their inpatient stay, so the claim of course does not include the procedure. Likewise, the performing facility most likely takes the patient’s face sheet information, registers the patient as an outpatient and an outpatient claim is generated. It is certainly a process with a lot of moving parts, but it must be done right.

Changing topics, last week I had the privilege to speak at the annual Revenue Integrity Symposium sponsored by the National Association of Healthcare Revenue Integrity, led by executive director Nicole Votta. My talk was about observation billing. It is clear from my discussion with attendees that the problem of custodial patients occupying hospital beds is a growing problem nationwide. Now I wish I had a solution but what I have discussed here on RACmonitor and presented at the conference is that once the necessary care is done, one should stop billing observation hours and start billing custodial care hours with code A9270 and revenue code 0760. As is often said, “Without data you are just another person with an opinion” so start to quantify the amount of free care you are providing and then maybe you can get the resources to start addressing it.

Finally, medical advances are amazing. But reading Twitter this weekend I became aware of a new advance. Short stay colon resection. Yes, have part of your colon removed and go home the same or next day. Can you just imagine the insurance companies drooling to now demand that all colectomies be done as outpatient?


Ronald Hirsch, MD, FACP, CHCQM, CHRI

Ronald Hirsch, MD, is vice president of the Regulations and Education Group at R1 Physician Advisory Services. Dr. Hirsch’s career in medicine includes many clinical leadership roles at healthcare organizations ranging from acute-care hospitals and home health agencies to long-term care facilities and group medical practices. In addition to serving as a medical director of case management and medical necessity reviewer throughout his career, Dr. Hirsch has delivered numerous peer lectures on case management best practices and is a published author on the topic. He is a member of the Advisory Board of the American College of Physician Advisors, a member of the American Case Management Association, and a Fellow of the American College of Physicians. Dr. Hirsch is a member of the RACmonitor editorial board and is regular panelist on Monitor Mondays. The opinions expressed are those of the author and do not necessarily reflect the views, policies, or opinions of R1 RCM, Inc. or R1 Physician Advisory Services (R1 PAS).

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