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Lessons Learned from the OIG After an Audit of Outpatient Outlier Payments

The Office of Inspector General (OIG) recently announced their findings from an audit of outpatient outlier payments. The OIG selected an entity that had an increase of outlier payments from $82,555 in 2015 to $2.6 million in 2016.

According to the OIG's report, the entity properly billed 18 out of 100 samples as outlier payments. However, the entity did not properly bill the claims related to the remaining 82 payments, resulting in improper payments during the selected audit period. OIG identified 174 billing errors in the 82 outlier claims. The OIG confirmed that the billing errors primarily occurred because the entity did not have adequate controls to prevent errors related to overcharged observation time, charge errors, and coding errors.

Outpatient Outlier Payments

Section 1833(t)(5) of the Social Security Act states that a payment adjustment (outlier payment) will be made for covered services whose costs exceed a given threshold. Outpatient outlier payments are said to help mitigate the financial risk associated with high-cost and complex procedures when a very costly service could present a significant loss.

A service or group of services becomes eligible for outlier payments when the cost of the service or group of services is estimated using the most recent overall cost-to-charge ratio separately exceeds each relevant threshold. The current outlier payment is calculated on a service basis using both fixed-dollar and multiple thresholds to determine outlier eligibility.

Identify Risk and Corrective Action

Quite often, the random audits, most commonly used by healthcare organizations are not identifying risk. In other words, are there billing coding practices that could result in the healthcare organization being at risk of an audit? And if errors are identified, are they corrected?

In this particular case, the OIG recommended a refund to the Medical Contractor for $189,276 in estimated overpayments for incorrectly billed claims. Additionally, OCR recommended the entity improve procedures, provide education, and implement changes to their billing system to ensure claims being billed are accurate.

Compliance Risk Analyzer

Healthcare Compliance Pros Compliance Risk Analyzer (CRA) is a powerful tool that analyzes healthcare organizations' critical risk areas. Risk is based on the same algorithms payers use, which helps healthcare providers determine the likelihood of an external audit. By looking at a year's worth of claims data (e.g., audit period), the CRA reports help to identify and address vulnerabilities and allow corrective actions, based on the findings of the CRA and the follow-up analysis from our experienced coding auditors - at a fraction of the cost of an expensive payer audit.

Contact us today for more information about the CRA process. We have several openings for the rest of the year, but they are filling up fast. Let's get your organization scheduled as soon as possible!

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