- The Department of Health and Human Services' Office of the Inspector General discovered that hospitals routinely get Medicare to reimburse the cost of pacemakers and defibrillators that they got for free, and has ordered the Centers for Medicare and Medicaid Services to recover $548,000 in overpayments.
- In auditing at 641 out of 1,859 total inpatient and outpatient claims related to mechanical complications of an implantable cardiac device in Kentucky, Ohio and West Virginia from 2011, investigators discovered hospitals charged Medicare the full price for devices they received for free or at a discount.
- Medicare contractors in charge of determining reimbursement amounts and paying claims have not been successful in preventing fraud and abuse, and CMS also apparently failed to provide proper oversight. However, the audit could not determine whether incompetent accounting or intentional wrongdoing on the hospitals' part was to blame for the hundreds of thousands of dollars in incorrect payments.
Hospitals have attributed the financial issue to inadequate internal policies and a lack of awareness of warranties and credit availability. As a result, CGS Administrators, now the sole contractor for Medicare claims in Kentucky, Ohio, and West Virginia, said it would take "aggressive and extensive steps" to address the issue of overpayments for replacement cardiac medical devices.
While it's easy to see how a lack of internal policies could lead to mistakes when hospitals—supposedly unintentionally—take advantage of warranty or exchange programs and receive free replacements, the fact that CMS and its contractors didn't catch the problem sooner is alarming. If hospitals across the nation are reflective of the ones in these states, and are receiving incorrect payments for recalled or defective cardiac devices, American taxpayers could be shelling out an estimated $14 million a year.