Latest OIG Audit Results Announcements Find Overpayments In High-Dollar Payments For Services Processed By Wisconsin Physicians Service and Interrupted Stays At Inpatient Rehabilitation Facilities

CMS Plans To Seek Recovery

As part of its continuing emphasis on audit and enforcement of federal health care program reimbursement and fraud rules, the Department of Health and Human Services Office of Inspector General (OIG) announced results of two regional audits.  In both cases, OIG reported finding substantial overpayments, which it recommended should be recovered from billing providers.

In its Review of High-Dollar Payments For Services Processed By Wisconsin Physicians Service for Period January 1, 2004 Through December 31, 2006;  where OIG found of the 100 sampled high-dollar payments that Wisconsin Physicians Service (WPS) made to Medicare Part B providers for services provided during calendar years (CY) 2004 through 2006, 77 were appropriate.  The 23 remaining payments included net overpayments totaling $118,000, of which $96,000 for 20 payments had not been refunded at the start of our audit.  Based on the sample results for our 3-year audit period, we estimated that WPS made 402 overpayments totaling $2.06 million to providers in Illinois, Michigan, Minnesota, and Wisconsin for Part B services.  Based on these findings, OIG recommended that WPS (1) recover the $96,000 in identified overpayments, (2) review the 1,647 remaining high-dollar payments with potential overpayments estimated at $1.9 million ($2.06 million less $118,000 overpaid) and work with the providers that claimed these services to recover any overpayments, (3) consider reviewing high-dollar payments made for services provided after CY 2006 and recover any additional overpayments, and (4) improve internal controls related to manual claim processing.  In written comments on our draft report, WPS described corrective actions that it had taken or planned to take to implement our recommendations.

In its Review of Interrupted Stays At Inpatient Rehabilitation Facilities For Calendar Years 2004 and 2005, OIG reported finding inpatient rehabilitation facilities (IRF) did not always bill correctly for interrupted stays with discharge dates during calendar years 2004 and 2005.  OIG reports its nationwide computer match showed that 448 IRFs billed incorrectly for 986 interrupted stays during that period.  If a Medicare inpatient is discharged from an IRF and returns to the same IRF within 3 consecutive calendar days, OIG reported the IRF should combine the interrupted stay into a single claim and receive a single discharge payment. 

According to OIG, the correct value of the stays was $17.5 million, rather than the $21.7 million that the IRFs billed.  As a result, OIG concluded Medicare made net overpayments of $4.2 million to the IRFs.  The payment errors occurred because the IRFs did not have the necessary controls to identify or correctly bill interrupted stays.  Additionally, until April 2005, the Common Working File did not have an edit designed to identify all interrupted stays billed as two or more claims.  After its adoption, the new Common Working File edit effectively detected incorrectly billed interrupted stays and prevented overpayments to IRFs.

OIG recommended CMS direct its fiscal intermediaries to recover the $4.2 million in net overpayments that our review identified.  In its written comments on our draft report, CMS concurred with our recommendation.

Health care providers should evaluate the implications of these and other audit findings and enforcement actions by OIG and CMS on their existing and past billing practices and take corrective acting as appropriate. For assistance with these or other health care compliance and risk management policies, practices or programs, assessing the strength of your controls in addressing these laws or other healthcare laws and regulations, or in addressing other compliance or health care concerns, please contact Cynthia Marcotte Stamer at or (214) 270- 2402.

You can find more information about health care fraud and other health industry risk management concerns at

For More Information

We hope that this information is useful to you. If you need assistance responding to concerns about the matters discussed in this publication or other health care concerns, wish to obtain information about arranging for training or presentations by Ms. Stamer, wish to suggest a topic for a future program or update, or wish to request other information or materials, please contact Ms. Stamer via telephone at (214) 270-2402 or via e-mail to


You can review other recent updates and other publications by Ms. Stamer and other helpful health care resources and additional information about Ms. Stamer and her experience, see Stamer Health Industry Experience. If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information – including your preferred e-mail- by creating or updating your profile at here or by registering to participate in the Solutions Law Press Health Care Update blog at Health Care Update Blog or by joining the join the SLP Health Care Risk Management & Operations Group on For important information concerning this communication click here.    If you do not wish to receive these updates in the future, send an e-mail with the word “Remove” in the Subject to

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