Vulnerabilities Remain in Medicare Hospital Outlier Payments

The summarized results of our individual Medicare contractor reviews (issued between June 2014 and September 2015) revealed that for the period October 2003 through March 2011, Medicare contractors did not always refer Medicare cost reports that qualified for reconciliation, and the Centers for Medicare & Medicaid Services (CMS) did not always ensure that Medicare contractors reconciled the outlier payments associated with cost reports that had been referred. CMS relies on Medicare contractors to reconcile outlier payments, which compensate hospitals for high-cost cases. These reconciliations ensure that outlier payments reflect hospitals' actual costs.