March 3, 2021

You’re taking a shortcut through the woods on your way home. All of a sudden you get that uneasy feeling that you’re being watched. Here’s another scenario: you’re sitting at your desk in relative seclusion, going busily about your work, when you get the sense that someone is looking over your shoulder. Many of us have experienced such sensations at certain points in our lives—an inner knowing that you’re not alone, that eyes are following your every move. Sometimes, this phenomenon can be chalked up to pure paranoia. Sometimes, there is someone really there.

You’re Being Followed

In the event you, as a hospital administrator, have been getting that nagging feeling of late that someone is watching from afar, you are not delusional or on the brink of a nervous breakdown. In fact, your instincts have served you well; for, the federal government has just admitted that it has been quietly checking up on hospital billing practices, and it doesn’t like what it sees. Just last month, the Office of Inspector General (OIG), within the U.S. Department of Health and Human Services (HHS), issued a report on hospital charges to Medicare—specifically as they pertain to the inpatient setting. We will get into the substance of the report in just a moment, but it may first be appropriate to reinforce for our readers just what the OIG is and what it has the authority to do.

Essentially, the OIG is empowered by HHS to act as the watchdog for the Medicare program, among other duties. It searches for possible irregularities in billing or financial arrangements and makes recommendations for corrective or punitive action. In other words, employees of this agency are tasked with scrutinizing your practices and monitoring your claims. So, when the OIG admits that they’ve undertaken a multi-year review of hospital billing, that means your facility has been under close observation for some time by individuals who are paid to find any hint of fraud, waste or abuse.

Why, though, are hospitals being subjected to such surveillance? As the OIG report, itself, points out, about 20 percent of Medicare’s budget reflects payments to hospitals for inpatient services. That’s a huge chunk of change; and, some time ago, the OIG began to notice an uptick in charges to Medicare relative to inpatients, in particular. In response, agency officials decided to undertake a narrowly-defined investigative study on the billing practices of hospitals. The result of the study was produced in the February report referenced above. So, again, you have been watched; but, more importantly, what did they see? Let’s jump into the results of the study.

Eyeing the Numbers

The OIG’s study involved an analysis of paid Medicare Part A claims for inpatient hospital stays from FY 2014 through FY 2019. The agency was able to identify certain patterns in billing that pertain to severity levels, which are determined by the Medicare Severity Diagnosis Related Group (MS-DRG). Specifically, the study found the following billing trends:

Hospitals are increasingly billing for inpatient stays at the highest severity level, which is the most expensive one. The number of stays at the highest severity level increased almost 20 percent from FY 2014 through FY 2019, ultimately accounting for nearly half of all Medicare spending on inpatient hospital stays.

The number of stays billed at each of the other severity levels decreased.

The average length of stay decreased for stays at the highest severity level, while the average length of all stays remained largely the same.

Stays at the highest severity level are vulnerable to inappropriate billing practices, such as upcoding—the practice of billing at a level that is higher than warranted.

Nearly a third of the highest severity level stays lasted a particularly short amount of time, and over half of the stays billed at the highest severity level had only one diagnosis qualifying them for payment at that level.

Hospitals varied significantly in their billing of these stays, with some billing much differently than most.
As a result of these findings, the OIG recommended that the Centers for Medicare & Medicaid Services (CMS) conduct targeted reviews of MS-DRGs and stays that are vulnerable to upcoding, as well as the hospitals that frequently bill them. While CMS declined to follow up on the recommendation, the OIG continues to urge action on this matter. Therefore, hospitals engaged in upcoding are not out of the woods just yet.

Nothing to See Here

So, how should hospital administrators and clinical department heads insulate their facilities against prying government eyes and possible government sanctions? Give them nothing to report. That is, ensure your hospital has internal controls and processes in place that make it difficult for anyone to engage in upcoding or any other variation of inappropriate billing. You may want to start by adhering to the OIG’s own recommendations for sniffing out and then snuffing out overbilling. Those recommendations can be found at Supplemental CPG for Hospitals (hhs.gov).

Should CMS eventually follow the OIG’s repeated recommendation of following up on this matter, hospitals that are currently billing high severity level stays outside the normal range will receive further scrutiny from the government, which could then lead to negative action. We, therefore, recommend that you begin the process of performing periodic internal reviews to determine if overbilling of inpatient services is occurring at your facility; and, if so, to implement corrective measures as soon as possible. One of the services that we provide at MiraMed Global Services is hospital coding. If we can assist you in this area, please contact us at info@miramedgs.com.