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Northwestern Memorial Hospital ordered to repay $6.4 million to Medicare

The audit, for years 2011 and 2012, covered $48 million in Medicare payments to the hospital for 7,506 claims potentially at risk for billing errors.

Susan Morse, Senior Editor

Northwestern University Memorial Hospital <em>(Google image)</em>Northwestern University Memorial Hospital (Google image)

Northwestern Memorial Hospital in Chicago will have to refund $6.4 million in Medicare overpayments after an audit of the hospital released this month by the Department of Health and Human Services discovered the discrepancies.

The Office of Inspector General has also recommended the hospital tighten its controls to ensure full compliance with Medicare requirements.

After considering the hospital’s comments, we continue to recommend that the hospital refund to the Medicare contractor $6,389,095 in estimated overpayments and strengthen controls to ensure full compliance with Medicare requirements,” according to the report by Assistant Inspector General Brian Ritchie.

In a January letter to DHHS, Jennifer Wooten Ierardi, the hospital’s chief integrity executive, said Northwestern Memorial respectfully disagreed with the Office of Inspector General in some of the audit’s findings and procedural aspects.

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Also, she said, the hospital had already received a letter from the National Government Service demanding the $6 million, even though the audit report was still in an incomplete, draft form.

The audit, for years 2011 and 2012, covered $48 million in Medicare payments to the hospital for 7,506 claims potentially at risk for billing errors, according to the report.

Auditors selected a random sample of 171 claims, consisting of 98 inpatient and 73 outpatient claims, totaling $1 million. The hospital complied with Medicare billing requirements for 86 of the 171 inpatient and outpatient claims reviewed, according to the report. However, the hospital did not fully comply with Medicare billing requirements for the remaining 85 claims, resulting in net overpayments of $272,000, the report stated.

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Based on the sample results, Northwestern Memorial received net overpayments totaling at least $6,389,095 for the audit period, it stated.

The 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, he said.

“NMH respectfully disagrees with OIG's findings for 28 of the 85 claims which OIG determined to not be fully compliant with Medicare billing requirements,” Wooten Ierardi said in the letter. “In addition to disagreement on the merits of these 28 claims, NMH has concerns with procedural aspects of this audit, including the application and accuracy of extrapolation, and the fact that NMH has already received a demand letter for $6,389,095 from National Government Services based on the draft, incomplete, report from OIG.”

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She continued, “OIG's ‘Incorrectly Billed as Inpatient’ overpayment calculation completely ignores the substantial amount of Part B payment NMH would be entitled to receive if OIG's conclusion that these claims should be treated as outpatient were true. Neither the outside medical reviewer nor the OIG question that these patients received medically necessary services. The only controversy is whether payment should have been made under Part A or Part B.”

Northwestern Memorial Hospital is an 894-bed acute care teaching hospital.

Here is the full audit:


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