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CMS Bristles at Criticism It’s Not Recovering Medicare Overpayments

by | Aug 11, 2022 | Essential, National Lab Reporter, Reimbursement-nir

According to a recent OIG report, CMS is not doing a good job collecting the Medicare overpayments OIG auditors are uncovering. However, CMS recently rejected almost all of the recommendations in that report, suggesting all is not well between the two federal agencies.

The Centers for Medicare & Medicaid Services (CMS) is doing a lackluster job of recovering the Medicare overpayments that our auditors are uncovering. That’s the frustrated conclusion of a new OIG report finding that the agency has collected only 55 percent of overpayments identified over a review period running from October 1, 2014, to December 31, 2016. However, CMS’ rejection of almost all of the report’s recommendations suggest that there is significant dissension within the ranks.

The OIG’s Findings

CMS reported to the Office of Inspector General (OIG) for the United States Department of Health and Human Services (HHS) that it had collected only $272 million (55 percent) of the $498 million in Medicare overpayments identified in the HHS-OIG audit reports issued during the review period. In effect, CMS left $226 million (45 percent) in overpayments on the table. And even the $272 million reportedly collected was a bit shaky, given that the records CMS provided the OIG documented collection of only $120 million. CMS didn’t provide adequate documentation to support collection of the remaining $152 million.

This is hardly the first time the OIG has called out CMS for doing a poor job of recovering identified Medicare overpayments. A May 2012 OIG report found that CMS had failed to collect $332 million of the $416 million worth of overpayments identified in audit reports issued during the 30-month period ending March 31, 2009. To make matters worse, the OIG concluded that it couldn’t verify the $84.2 million that CMS reported that it did collect and that it found inaccuracies in the reported amount.

Adding insult to injury, the OIG chided CMS for not taking corrective action in response to the May 2012 report. Of the six recommendations contained in the previous report, CMS agreed to implement four but wound up actually implementing only two, taking only partial action on one and no action on the other.

What Went Wrong?

Just as it did in 2012, OIG concluded that CMS didn’t have one of the primary components of an effective internal control system, namely, “adequate policies and procedures to address certain collection issues” identified by OIG audits. And without such policies and procedures, CMS can’t ensure that Medicare overpayments will be collected to the maximum extent possible.

CMS also failed to provide specific guidance to its Medicare Administrative Contractors (MACs) as to what would constitute appropriate documentation to support overpayment collections, the OIG continues. Debt Collection Manual and Technical Directions Letters (TDLs) call on MACs to recover overpayments but don’t offer much in the way of specifics. Thus, for example, while one TDL says the MAC should “review the [OIG] identified overpayments[,] adjust the claims and issue demand letters, as appropriate,” it doesn’t specify the types of documentation required to support overpayment collections. Too often, collection matters are left to be handled on a case-by-case basis.

The OIG’s Recommendations

The real takeaway of the report comes from the OIG’s recommendations, more precisely, CMS’ response to them. In a rare public display of disharmony between federal agencies, CMS indicated its non-concurrence with seven of the nine measures the OIG called on it to do to improve collections of overpayments uncovered by OIG audits. The response suggests significant philosophical differences about the adequacy of current overpayment recovery systems, policies, and procedures, with CMS pooh-poohing many of OIG’s recommended measures as either unnecessary, redundant, or unrealistic. Even the two recommendations that CMS did accept came with grumbles.

OIG RecommendationCMS Response
1.Keep going after the $226 million in uncollected overpayments and keep us apprisedWe concur and you told us that already in the audit reports; and we’ve never stopped seeking to collect
2.Set policies to define and require retention of documentation needed for independent verification of collection of overpaymentsWe don’t concur; we already have documented performance expectations for the MACs in their Statements of Work, the Medicare Financial Management Manual, and TDLs
3.Determine what portion of the $154,631,632 was collected and recorded in its accounting system based
on policies established in response to our recommendation in the previous bullet
We don’t concur; MACs process over one billion claims per year and we don’t believe it’s operationally efficient or cost-effective to centrally oversee and retain copious documentation…for every claim processed and overpayment collected
4.Set policies and procedures requiring staff to clearly describe reasons for non-collection of an overpayment, maintain documentation to support those reasons, and obtain approval from an authorized individual not to collect the overpaymentWe don’t concur; we already have detailed policies and procedures for documenting
collections and providing updates to OIG
5.Set policies and procedures that include specific steps to verify that collection information is accurately and consistently recorded in SWIFT or replacement tracking system such as AMSWe don’t concur; we’ve made significant improvements in the way we track
recommendations and nothing in the OIG report cites any issues with the consistency of reporting overpayment recoveries
6.Give MACs specific guidance on documentation needed to support collection of an overpaymentWe don’t concur; all claim adjustments/denials and overpayment collection transactions are recorded in CMS’ internal systems; there are documented expectations for MACs in their Statements of Work, the Medicare Financial Management Manual, and TDL
7.Revise the parts of the regulations and manual instructions related to the reopening period for claims to be consistent with Sec. 1870 of the Social Security Act allowing Medicare contractors to determine if overpayments were made and begin collecting them for 5 years after payment was madeWe don’t concur because Sec. 1870 doesn’t affect claims reopening rules
8.Establish a mechanism to reopen claims when the OIG starts an audit so that CMS can collect overpayments consistent with the 5-year timeframe contained in Sec. 1870 of the Social Security ActWe’ll explore operationally feasible and cost-effective ways to establish a mechanism to notify providers of the reopening of their claims based on OIG audits, once OIG has identified specific claims it intends to audit, but we still disagree with your interpretation of Sec. 1870
9.Develop a plan, with milestones, for resolving cost reports applicable to 9 audit reports cited in this reportWe don’t concur because we already provide OIG regular updates on the status of collections

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