Providers Owe CMS Millions and May Not Know It

It is the definition of irony: The Office of Inspector General reports there are thousands of healthcare providers who owe CMS for an overpayment that they likely know nothing about.

A common complaint by patients about the hospital billing process is regarding debts for medical services that they didn’t know they owned until they were contacted by a collection agency. According to the OIG, there are tens of thousands of providers across the nation who one day may receive a demand from CMS for a previously unknown Medicare overpayment that has been declared delinquent and has been accruing interest for months and even years.

The Office of Inspector General this week issued a report that found that in Fiscal 2010 more than 5 percent of overpayments (more than 70,000, averaging more than $7,000 each) identified by Centers for Medicare and Medicaid Services (CMS) contractors are never collected. In that year CMS’s contractors identified more than $9.6 billion in overpayments, but another $543 million was determined to be “currently not collectable” (CNC).

In many cases, the healthcare provider had been removed from Medicare or had gone out of business. But in more than 50 percent of the cases analyzed, the demand letters seeking repayment never reached the provider or the correct person or department within the provider organization. Thirty days after a demand letter is mailed the account is declared delinquent and interest begins to accrue, regardless whether the provider received it or not.

Contractors send demand letters using addresses from CMS’s Healthcare Integrated General Ledger Accounting System (HIGLAS). The OIG found that HIGLAS may have incorrect contact information for a variety of reasons, the most common being that the provider might have a special dedicated address to an individual or department for managing Medicare claims, denials, and/or overpayments, and that address (if not the primary facility address) does not appear in HIGLAS. The Inspector General’s recommendation to CMS was to make certain addresses were up-to-date.

In its response to the report, CMS Administrator Marilyn Tavenner said her agency “non-concurs with this recommendation.” Contrary to the OIG’s asserting, HIGLAS has the correct address, she asserted. If the address is incorrect (and this is a critical point all providers need to know) CMS considers it the provider’s fault. ”The letter generation process relies on a provider listing the correct billing address and contact person, and keeping that information updated,” Tavenner wrote.