Federal Reports

Seek link below for the full report, report summary, multimedia or any agency follow-up.

We reviewed CMS's oversight of provider-based billing to ensure that only facilities that met provider-based requirements were receiving higher payments allowed by the provider-based designation. Under Medicare, payments for services performed in provider-based facilities are often more than 50 percent higher than payments for the same services performed in a freestanding facility. This increased cost is borne by both Medicare and its beneficiaries. "Provider based" is a Medicare payment designation established by the Social Security Act that allows facilities owned by and integrated with a hospital to bill Medicare as a hospital outpatient department, resulting in these facilities generally receiving higher payments than freestanding facilities. Provider-based facilities, which may be on or off the main hospital campus, must meet certain requirements (e.g., the facility generally must operate under the same license as the hospital). In addition, under current policy, hospitals may, but are not required to, attest to CMS that their provider-based facilities meet requirements to bill as a hospital outpatient department.

The Vanderbilt University Medical Center (the Hospital), located in Nashville, Tennessee, complied with Medicare billing requirements for 172 of the 245 inpatient and outpatient claims we reviewed. However, the Hospital did not fully comply with Medicare billing requirements for the remaining 73 claims, resulting in net overpayments of $305,000. Specifically, 34 inpatient claims had billing errors resulting in net overpayments of $221,000, and 39 outpatient claims had billing errors resulting in overpayments of $84,000. These errors occurred primarily because the Hospital did not have adequate controls to prevent the incorrect billing of Medicare claims within the selected risk areas that contained errors. On the basis of our sample results, we estimated that the Hospital received overpayments of at least $1.14 million for the audit period. During the course of our audit, the Hospital reprocessed 30 claims with overpayments of $134,000 that we verified as correctly reprocessed. Accordingly, we have reduced the recommended refund by this amount.