January 25, 2017

HHS-OIG Continues to Uncover Unfounded Malnutrition Claims in Medicare Data

By the C|C Whistleblower Lawyer Team

Inaccurate medical coding of malnutrition in seniors is a multi-billion dollar problem for Medicare, the federal health insurance program that primarily provides coverage to people aged 65 and older. As obscure as it sounds, it’s also an issue for the average American taxpayer, whose tax dollars are wrongly paid out to hospitals clever—or careless—enough to falsely claim Medicare reimbursement for severe malnutrition cases that simply don’t exist.

We’ve written before about persistent fraudulent schemes in the inpatient context—where the amount of government reimbursement can be based, in addition to procedure costs, on patients’ overall health—one of which is the “upcoding” of inpatient diagnosis-related-group (DRG) codes to make individual patients appear sicker, and therefore more costly to treat, than they actually are.

A December 2016 report issued by the Department of Health and Human Services Office of the Inspector General (HHS-OIG) explains there are three types of severe malnutrition listed in relevant coding guidelines:  kwashiorkor, nutritional marasmus, and other severe protein-calorie malnutrition. Kwashiorkor is rarely seen in the developed world and most often impacts children; nutritional marasmus is also found primarily in children, not seniors. In spite of the rareness of both diagnoses in the Medicare-eligible population, HHS-OIG found that for 2011 through 2014, Medicare paid hospitals over $20 billion for claims that included diagnosis codes for Kwashiorkor and nutritional marasmus, both of which result in more lucrative DRG payments than less extreme—and vastly more common—types of malnutrition.

The December HHS-OIG report provides insight into how Medicare could have paid out so much money related to these rare diagnoses. The report recaps an audit of one particular facility—a 398-bed, university-affiliated Ohio hospital—that between January 2013 and June 2015 received over $11 million in Medicare payments for 699 inpatient hospital claims related to severe malnutrition. HHS-OIG selected a random sample of 100 of the hospital’s claims to determine whether the claims accurately represented each relevant patient’s health. In reviewing the sampled claims, HHS-OIG determined that only two of the 100 claims reviewed were proper. In other words, 98% of the sample was billed inaccurately.

On the basis of its sample results, HHS-OIG estimated the Ohio hospital collected overpayments from Medicare totaling over $1.2 million in the two-and-a-half year audit period. HHS-OIG recommended the hospital—which partially disputed the audit findings—return the amount it was overpaid, exercise reasonable diligence to identify and return any similar overpayments, and strengthen internal controls related to Medicare billing.

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