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OIG Calls on CMS to Do Better at Medicare Collecting Overpayments

The system Medicare uses to detect and recover overpayments isn’t working as well as it should be, according to a new OIG report.

The Overpayment Collection System
CMS relies on special contractors called program safeguard contractors (PSCs) and six zone program integrity contractors (ZIPCs) to detect overpayments and refer them to Medicare administrative contractors (MACs) for collection. After discovering that most of the overpayment money wasn’t being collected, CMS tinkered with the system. The OIG report looks at how well the PSCs, ZIPCs and MACs performed in FY 2014.

Findings
Not so well, it turns out:

  • $559 million: Total Medicare overpayments PSCs and ZIPCs referred in FY 2014;
  • $482 million: Amount MACs attempted to collect;
  • $96 million: Amount MACs actually did collect;
  • 80%: Amount of overpayments that went uncollected.

Although a 20% collection rate is pretty lousy, it’s still better than the 7% rate of 2010, the report notes.

OIG’s 5 Recommendations
CMS is already transitioning from PSCs and ZIPCs to unified program integrity contractors (UPICs). Other things the OIG recommends that CMS do to improve overpayment collections:

  1. Get the individual PSCs and ZIPCs to share best practices with each other, which would rectify the notable disparity in performance from contractor to contractor;
  1. Work with MACs to come up with effective collection strategies;
  1. Establish standard report formats for both overpayment referral reports and overpayment collection reports;
  1. Require ZPICs, UPICs and MACs to use a unique identifier for each overpayment; and
  1. Implement the surety bond requirement for home health providers and consider the feasibility of doing the same for other providers, which could include labs, based on their level of risk.
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