Multimillion-dollar mistake: Medicare says providers were overpaid

The federal Medicare agency, citing contractor errors, is seeking to recoup nearly $55 million from hospitals and other medical providers in Georgia and other states.

The Centers for Medicare and Medicaid Services told GHN on Wednesday that the agency found 268,000 claims from hospitals, rural health clinics and other providers that were erroneously paid through the traditional fee-for-service Medicare program.

The agency said the patients served in these instances were members of a Medicare Advantage program, run by private insurers, and that hospitals should have been paid by those health plans instead.

The states affected are mainly Georgia, Tennessee and Alabama. Georgia providers owe $19.1 million, followed by $15.4 million in Tennessee, and $11.9 million in Alabama. Another $8.3 million comes from other states.

Cahaba GBA — the previous Medicare Administrative Contractor (MAC) in the region of Georgia, Tennessee and Alabama  — “made errors that led to significant overpayments,’’ CMS said.

MACs process and pay claims for the Medicare fee-for-service program, which covers most Medicare beneficiaries. They typically pay billions of dollars in Medicare claims every year.

The new contractor, Palmetto GBA, a subsidiary of BlueCross BlueShield of South Carolina, has contacted the hospitals and other providers this month about their overpayments.

Among the providers getting a repayment letter was Upson Regional Medical Center in Thomaston. Its amount due to the feds is $254,000.

Upson County

The notification came as a surprise, said hospital executive Sallie Barker. “We’ve been asking how this happened.”

The recoupment involves more than 1,400 claims from May 2014 to May 2018, Barker told GHN. “Hospitals are being penalized for someone else’s mistake,’’ she said. “We’re asking questions, but aren’t getting answers.”

The CMS statement appeared to indicate the hospitals essentially were paid twice — through the mistaken Medicare reimbursements, and also by the Medicare Advantage insurers.

The Alabama Hospital Association said Thursday that it had not heard that affected hospitals were paid twice.

A hospital consultant who works with several facilities told GHN that they say they received only the erroneous payments, and not the Advantage reimbursements. The consultant requested anonymity.

The hospitals billed Medicare “in good faith,’’ and should have been alerted, when their claims were submitted, that the patients were actually Medicare Advantage members, the consultant told GHN.

The overpayments appear to involve mainly hospital outpatient claims.

The medical providers that were contacted initially faced a tight deadline for repayment: July 1.

Hospital Outpatient Entrance Sign

But CMS said Wednesday that it extended the planned repayment schedule by two weeks to allow providers time to research the issue and provide documentation showing they do not owe the funds.

It did not disclose the names of the hospitals or other providers that received the overpayment letters.

The hospitals include large facilities as well as smaller rural hospitals, which already face cash-flow problems. None of the three states primarily affected has expanded its Medicaid program as outlined under the Affordable Care Act, a step that can provide struggling hospitals with more paying patients.

“Any time there’s an unexpected takeback or payback, it hurts,’’ Barker added. “We will have to absorb the cut in some way.”

HomeTown Health, an association of rural hospitals in Georgia, said the repayments for its members range from as little as $3,000 to the $254,000 that Upson Regional faces.

“For hospitals struggling with cash flow, a takeback can create a big problem,’’ said HomeTown’s CEO, Jimmy Lewis. “When you’re given a mandate, you’ve got to figure out how to pay it.”

The Alabama Hospital Association said repayments could be difficult for some hospitals. Rosemary Blackmon, vice president of the Alabama organization, said 75 percent of hospitals in the state are currently operating in the red.

“To our knowledge, Alabama’s hospitals appropriately billed Medicare based on the information presented by patients,’’ said Blackmon. “This week, Palmetto provided information to hospitals to review and verify, so we are encouraging hospitals to review the information and then contact Palmetto.”

The federal agency said in its statement, “CMS is committed to ensuring the sustainability of the Medicare program so our nation can protect the health of older Americans and people with disabilities into the future. We are accountable to the American people and serve as stewards of their tax dollars.”

Just last week, Republican members of the U.S. Senate Budget Committee asked the Department of Health and Human Services about its plan to address the $89 billion of improper payments made within the Medicare and Medicaid programs each year.

CMS said Wednesday that the providers affected by the MAC payments can qualify for extended repayment schedules, and that most do not have to write checks to compensate for the overpayments.

“CMS will simply deduct the funds from their current payments. CMS and Palmetto GBA stand ready to respond to any provider concerns. In the meantime, we are continuing to audit for issues and correct problems to ensure the integrity of the Medicare program,” the agency statement said.

A spokesman for BlueCross of South Carolina, representing Palmetto, declined to comment to GHN on the number of hospitals affected or the estimated amount that’s owed.

The Georgia Hospital Association (GHA) said it had heard from all types of hospitals that are facing the repayments. Hospitals are not always provided the correct Medicare information for patients, GHA said.

“While there may be many claims for various patients over the course of those six years, many would be for very low dollar amounts and some of them may have already been refunded by the hospital,’’ said GHA executive Ethan James. “There is no indication of fraudulent intent on behalf of the hospitals, who bill for payment based on information provided by the patient.”

James said he could envision different scenarios that would involve the payment problem.

These include a hospital getting paid once by traditional Medicare when the claim should have been paid by Medicare Advantage. Other possibilities, James said, are a hospital getting paid by traditional Medicare, but then refunding the erroneous payment and billing Medicare Advantage instead; and a hospital getting paid twice, then refunding the overpayment.

Cahaba GBA, the former contractor that CMS linked to the erroneous payments, is a subsidiary of Blue Cross and Blue Shield of Alabama. The latter company said Thursday that Cahaba is not processing claims for Medicare or other insurers at this time.