The Office of Inspector General (OIG) at the Department of Health and Human Services allows recovery audit contractors to handle a fair number of hospital auditing work, but OIG nonetheless handles some of the work itself as two recent reports remind. The agency released reports detailing how two hospitals, Massachusetts General (MMGH; Boston) and Yale-New Haven (New Haven, Connecticut), handled their efforts to obtain refunds from manufacturers for explained medical devices and found both organizations lacking in attention to details. The upshot of the reports is that increasing scrutiny of hospital costs could drive more claims from hospitals to manufacturers for device warranties.

In a Dec. 6 report on MGH's efforts for calendar years 2007 and 2008, OIG says that the National Heritage Insurance Company (Hingham, Massachusetts), the Medicare administrative contractor for five states in the U.S. Northeast, paid out $2.8 million for slightly more than 200 outpatient procedures "that included the replacement of medical devices" during those two calendar years. OIG adds that the full review of 34 claims from MGHH indicated "there were no available credits or the credits were partial credits" from the manufacturer. Since those credits "did not represent at least 50% of the cost of the replacement devices," they were "therefore not reportable."

Of the five remaining claims, however, MGH "did not obtain credits that were available under the terms of the manufacturers' warranties" for two of the claims, OIG notes, stating that for the remaining three, the hospital "obtained full credits but did not report" the reduced charges to alert Heritage that a payment adjustment was in order.

OIG states that it performed a more cursory examination of almost 180 other claims and alleges that MGH had captured a full credit for another five device replacements it did not report to Heritage. Hence, OIG states, "the hospital was overpaid" by more than $62,000 and beneficiaries, who are responsible for about 10% of many Medicare claims, were overcharged by about $6,200. OIG recommended MGH resubmit the claims, reexamine the remaining 173 claims to check for erroneous claims, and "resubmit the claims as appropriate." The agency also recommended that the hospital establish procedures "to obtain credits from manufacturers and report . . . the credits obtained for replaced devices" per regulations, a series of recommendations MGH is said to have agreed with.

The report for Yale-New Haven (YNHH) also encompasses the calendar years 2007 and 2008 and involved a review of 36 of 160 claims that entailed device replacements. OIG notes that its field staff did their work at YNHH "and at three medical device manufacturers in St. Paul, Minnesota." YNHH filed claims totaling $2.3 million for the 160 claims in question, the report notes."

OIG says that in one claim, which was for a procedure necessitated by the depletion of a battery, the hospital overpaid more than $15,000 because "the hospital did not follow the manufacturer's procedures, such as returning the devices within a specified number of days after their removal, to obtain the credits." Another two files covered procedures that were also undertaken due to depleted batteries, and OIG says that while NYHH obtained full credits from the manufacturer for these units, the hospital failed to enter the proper code in its filings with its Medicare carrier, National Government Services (Indianapolis).

In sum, OIG says, NYHH was overpaid to the tune of more than $27,000 for the three claims, and the beneficiaries are said to have overpaid more than $1,800. OIG made a similar set of recommendations for NYHH as it made for Massachusetts General.