Millions of Dollars in Mistaken Payments Not Recovered

HRD-92-26: Published: Oct 21, 1991. Publicly Released: Oct 21, 1991.

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Leslie G. Aronovitz
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Pursuant to a congressional request, GAO reviewed Medicare contractors' claims-processing activities, to identify: (1) Medicare payments mistakenly made to hospitals for inpatient services that resulted in credit balances due Medicare; (2) the reasons for such payments; (3) hospital efforts to refund credit balances; and (4) Medicare contractor actions to recover amounts owed to the program.

GAO found that: (1) each of the 17 hospitals visited owed refunds to Medicare that collectively amounted to over $900,000; (2) the credit balances resulted primarily from Medicare and another insurer mistakenly paying for the same inpatient service or Medicare paying twice for the same service; (3) the five Medicare intermediaries that serviced the 17 hospitals lacked the necessary internal controls to ensure that credit balances were identified and promptly recovered; (4) since intermediaries considered credit balance recovery activities to be a low priority, many of the credit balances remained outstanding for years despite attempts by some hospitals to make repayment; (5) in attempting to make refunds, some hospitals did not correctly complete the required paperwork and the intermediaries did not follow up to ensure that problems were corrected and the amounts owed Medicare were recovered; (6) the Health Care Financing Administration (HCFA) now requires the 48 nationwide intermediaries to establish units responsible for identifying and recovering outstanding credit balances and to instruct hospitals to provide information on their outstanding credit balances and refund any amounts owed to Medicare; and (7) preliminary data from 11 intermediaries indicate that the hospitals they service owe refunds totalling $37 million.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: HCFA has required Medicare contractors to assign the responsibility for credit balance recoveries to a specific unit or person. HCFA plans to monitor contractor compliance with credit balance instructions. Additional guidance was provided to Medicare contractors and providers in June 1992 concerning the recovery of outstanding credit balances.

    Recommendation: The Secretary of Health and Human Services should take the necessary steps to ensure that HCFA monitors intermediaries' compliance with recent credit balance instructions.

    Agency Affected: Department of Health and Human Services

  2. Status: Closed - Implemented

    Comments: OMB approved a request that requires Medicare providers to submit quarterly reports on credit balances. As of March 1994, hospitals and other providers had reported about $494 million in mistaken payments, of which $651 million, or 93 percent, had been recovered.

    Recommendation: The Secretary of Health and Human Services should take the necessary steps to ensure that HCFA requires intermediaries to: (1) identify the causes of Medicare credit balances and, where appropriate, initiate corrective actions; and (2) ensure that hospitals identify and make accurate refunds of all amounts owed to Medicare.

    Agency Affected: Department of Health and Human Services


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