OIG estimates Medicare overpaid $269M for sleep studies

Dive Brief:

The HHS Office of Inspector General (OIG) estimated in a new report released Wednesday Medicare made overpayments of $269 million for sleep study services in 2014 and 2015.
Of the 200 beneficiaries randomly selected by OIG, 83 received payments for services that did not meet Medicare requirements, resulting in net overpayments of about $57,000 in the sample group.
OIG believes the problems occurred because the CMS failed to provide the oversight needed to stop payments for noncompliant claims.

Dive Insight:

Previous reviews by OIG identified times when Medicare paid for sleep studies, specifically a type known as polysomnography, that failed to meet the payer’s requirements. Polysomnography and other sleep studies are covered by local coverage determinations to enable physicians to gather diagnostic data by using a device to monitor a patient’s brain waves and other health parameters.

However, OIG found Medicare paid polysomnography claims that lacked the required documents, used inappropriate diagnosis codes and to providers that "exhibited patterns of questionable billing."

In total, Medicare paid $755 million for polysomnography services in 2014 and 2015. To assess how much of that was improper, OIG looked at a random sample of 200 beneficiaries that billed for 426 lines of service. The claims cost Medicare $148,000.

OIG found 42% of the beneficiaries received payments for claims that fell short of the requirements. Of all the lines of service in the sample, 35% were noncompliant with Medicare rules, resulting in net overpayments of almost $57,000. If the sample is representative of all payments made in 2014 and 2015, the finding suggests Medicare overpaid by $269 million over that period.

In response to the findings, OIG recommended CMS tell Medicare Administrative Contractors (MACs), the private healthcare insurers that process Medicare claims in defined jurisdictions, to recover the portion of the $57,000 that was billed within the past four years. MACs cannot reopen determinations after four years, meaning it will be impossible to recoup payments made in most of the audited period.

To prevent overpayments happening again, OIG advised CMS to work with MACs. OIG thinks there is value in educating providers on proper billing for polysomnography services and in performing data analysis to support targeted reviews of claims for the sleep studies.