CMS made more than $100 million in improper payments to providers for healthcare services on behalf of incarcerated and unlawfully present individuals between 2009 and 2011, according to a pair of reports issued on January 24, 2013 by the HHS OIG.  As a result, OIG is recommending that CMS recoup those overpayments and implement policies and procedures to prevent any such overpayments in the future.

Because “CMS did not have policies and procedures to review incarceration information on a postpayment basis,” OIG concluded, $33,587,634 in improper payments was made to providers for services rendered to 11,619 incarcerated beneficiaries during 2009 through 2011.  Medicare generally does not pay for services rendered to incarcerated beneficiaries, including “individuals who are under arrest, incarcerated, imprisoned, escaped from confinement, under supervised release, on medical furlough, required to reside in mental health facilities, required to reside in halfway houses, required to live under home detention, or confined completely or partially in any way under a penal statute or rule.”  42 C.F.R. § 411.4(b).  Although in some limited instances federal regulations permit Medicare to pay for services rendered to these individuals, a special “exception code” must be used to bill for the services.

Similarly, OIG concluded that because CMS did not conduct postpayment review of unlawful presence information, improper payments totaling $91,620,548 were made to providers for services rendered to 2,575 unlawfully present individuals during the same time period.  Federal law provides that Medicare benefits are not payable to any alien in the United States for any month during which the alien is not lawfully present in the United States as determined by the Attorney General.  See 8 U.S.C. § 1611.

As a result of these findings, OIG made several recommendations to CMS, including:

  • CMS should ensure that Medicare contractors recoup these improper payments;
  • CMS should implement policies and procedures to detect and recoup improper payments made for Medicare services rendered to incarcerated and unlawfully present individuals;
  • CMS should identify improper payments made on behalf of incarcerated and unlawfully present beneficiaries outside of the 2009–2011 audit period;
  • CMS should work with other entities, including the Social Security Administration, to improve the timeliness with which CMS receives incarceration information; and
  • CMS should work with Medicare contractors to ensure that all claims with exception codes are processed consistently and pursuant to Federal requirements.

Although CMS generally concurred with OIG’s recommendations and stated that in April 2013 it plans to implement a process for detecting and recouping improper payments for previously paid Medicare claims, CMS also noted that it must take into account the “cost benefit of recoupment activities” with respect to the specific improper payments identified in the OIG reports.

OIG’s reports are available by clicking here and here.