Health System Dinged $3M by OIG for Incorrect Billing

Peoples Health Network received an estimated $3.3 million in overpayments between 2015 and 2016 for incorrectly billing diagnosis codes from high-risk groups.

In the recent audit, the OIG focused on seven groups of high-risk diagnosis codes, aiming to determine whether selected diagnosis codes submitted by Peoples Heath Network—a Medicare Advantage organization (MAO)—for use in CMS’ risk adjustment program complied with federal requirements.

Using data mining techniques and discussions with medical professionals, the OIG identified various diagnoses that were at higher risk for being miscoded and consolidated those diagnoses into specific groups.

The OIG selected 242 unique enrollee-years with the high-risk diagnosis codes that Peoples Health Network received higher payments for through the audit period. The review was limited to the portions of the payments that were associated with these high-risk diagnosis codes, totaling $712,200.

The OIG found that 144 of the 242 enrollee-years selected did not comply with federal requirements as they were not supported in the medical record. This resulted in a net overpayment of $412,938.

Based on these findings, the OIG recommends that Peoples Health Network, refund to Medicare the $3.3 million in overpayments, identify similar instances of noncompliance, and enhance its compliance procedures. Peoples Health did not agree with any of the OIG’s recommendations. 

This is just another instance where a MAO has been under scrutiny from the OIG. The OIG recently released a study covered by HealthLeaders that stated MAOs often delay or deny services for medically necessary care, even when prior authorization requests meet coverage rules.

A concern with the Medicare Advantage payment model is the potential incentive for organizations to deny services in an attempt to increase profits, the study stated. As more and more people enroll in Medicare Advantage, the issue of inappropriate prior authorization denials can have a widespread effect.

"Denied requests that meet Medicare coverage rules may prevent or delay beneficiaries from receiving medically necessary care and can burden providers," the report said. "Although some of the denials that we reviewed were ultimately reversed by the MAOs, avoidable delays and extra steps create friction in the program and may create an administrative burden for beneficiaries, providers, and MAOs."