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American Hospital Association (AHA) Renews Objections to OIG Hospital Compliance Reviews

In a move that could affect all hospitals reimbursed by Medicare, the American Hospital Association (AHA) this week renewed strenuous objections to various aspects of ongoing hospital compliance reviews conducted by the Department of Health and Human Services (HHS) Office of Inspector General (OIG).

AHA’s most recent correspondence references the “numerous legal defects” it had previously identified in OIG’s hospital audits. These defects include claims that OIG audits (1) waste HHS resources and are unduly burdensome to hospitals, (2) use extrapolation in a manner that compounds OIG’s erroneous interpretations of Medicare rules and policies and (3) allow Medicare Administrative Contractors to collect overpayments in violation of the Medicare statute and agency rules. This blog post focuses on the AHA’s extrapolation-related objections, which form the bulk of its previous and recent correspondence concerning OIG hospital compliance reviews.

After the OIG Office of Audit Services determines that a submitted claim or claims were improperly high, it extrapolates the difference over all similarly situated claims to calculate the total amount overpaid by the government. According to the OIG, extrapolation allows it to police hospital overpayments without reviewing each claim, which it feels is both “economical and in the best interest of the provider and the Government.”

The AHA, however, is less enthusiastic about OIG’s usage of extrapolation and raises several objections. First, AHA argues that by refusing to pay for inpatient claims that were not supported with a “valid order signed by a physician,” OIG is improperly applying a post-October 2013 policy to pre-October 2013 claims. Second, AHA opines that OIG is attempting to recoup old overpayments despite its failure to overcome the no-fault presumption that attaches to claims paid under Part A more than 3 years ago. Third, the AHA takes issue with OIG’s attempt to recoup overpayments for inpatient admissions not “reasonable and necessary” (as required by the Social Security Act), arguing that hospitals are entitled to appellate review before overpayments are recouped on this basis. Finally, AHA disagrees with OIG’s failure to account for the Part B payments hospitals should have received even if they improperly received payment under Part A, arguing that these Part B payments should be offset when the Part A overpayments are recouped.

While OIG has responded to several concerns regarding extrapolation, AHA’s May 23rd letter makes clear that the matter is far from resolved, as the group indicates it remains “very troubled” by the practice. In fact, the AHA has asked to be present at a meeting between the OIG and Mount Sinai Hospital to discuss the audit process.   Hospitals facing OIG scrutiny should ensure that any recoupment efforts are conducted in a legally sound manner, since extrapolation can cost hospitals hundreds of thousands of dollars in improper recoupments.

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About this Author

Thomas E. Zeno, Squire Patton Boggs, Healthcare Fraud Lawyer, Economic Crimes Attorney
Of Counsel

Thomas Zeno has more than 25 years of experience in the US Attorney’s Office for the District of Columbia. During that time, Tom investigated and prosecuted economic crimes involving healthcare, financial institutions, credit cards, computers, identity theft and copyrighted materials. As the office’s Healthcare Fraud Coordinator for the last eight years, Tom supervised investigation strategies of agents from the Federal Bureau of Investigation, the Department of Health and Human Services, the Drug Enforcement Administration and the Medicaid Fraud Control Unit regarding...

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James Hafner Health Care Lawyer Squire Patton Boggs Cleveland

James Hafner advises clients in industries ranging from manufacturing and medical technology to financial services, healthcare and insurance on a variety of corporate matters, including mergers and acquisitions, governance, contracts, securities and related matters. In addition to his work as a corporate lawyer, he previously worked as in-house counsel for one of the world’s leading hospital systems.

His transactional and regulatory experience includes negotiating physician practice acquisitions and employment contracts, providing guidance on insurance-related matters, advocating for clients with external audits, and performing due diligence in connection with mergers and acquisitions. His litigation practice includes advising hospitals on the impact of Medicare reimbursement decisions in federal courts and before administrative agencies. Outside of the healthcare industry, James has attended to corporate governance matters and assisted clients with internal investigations by collecting, reviewing and synthesizing electronic documents. 

Prior to joining Squire Patton Boggs, James worked in the legal department of one of the world’s leading hospital systems. He assisted in-house counsel and internal clients with navigating provider scope-of-practice issues, provided guidance on fraud and abuse matters, prepared board documents to facilitate realignment, ensured compliance with labor and employment regulations related to a hospital acquisition, and drafted Business Associate Agreements and other HIPAA-related materials. 

While attending law school, James was a member of the Ohio State Law Journal and received CALI Awards for Excellence in Constitutional Law and Advanced Constitutional Law. He is the author of a 2015 article in the Sixth Circuit Review, a publication dedicated to analyzing major legal developments in the US Court of Appeals for the Sixth Circuit.

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