AHA Requests CMS to Address Flawed OIG Audits.

Date posted: November 3, 2017

The American Hospital Association (AHA) recently drafted a letter requesting that the Centers for Medicare and Medicaid Services (CMS) address the Department of Health and Human Services (HHS) Office of Inspector General’s (OIG) flawed compliance review methodology.  In particular, the AHA sought amendment of the compliance reviews as they relate to the OIG’s use of extrapolated data.   The AHA asserts the OIG’s methods are flawed in their extrapolation, frequently going beyond statistical limitations.  Specifically, the AHA stated that the OIG’s audits “regularly include fundamental flaws and inaccuracies both in the OIG’s understanding and application of Medicare payment rules and in the procedures the OIG uses to conduct the audits.”  Moreover, the AHA asserts that these flaws result in “vastly overstated repayment demands, unwarranted reputational harm, and diversion of hospital and physician leaders’ time from their core mission of caring for patients.”   According to the AHA, the OIG applies uneven or outdated and obsolete application of Medicare payment rules in their compliance reviews.

The AHA also stated that “[w]hen hospitals object to the numerous errors in the audits, the OIG and CMS tell the hospitals that they can appeal the repayment demand.”  The OIG frequently includes claims already adjudicated in a hospital’s favor when reporting its extrapolated findings.  The AHA also takes issue with the level of consistency in the appeals process.  Specifically, the OIG’s flawed findings inflate repayment demands up to millions of dollars, forcing hospitals to engage in appeals.  Appeals consume vast amounts of time and money for both the hospital and the government, which the AHA contends could be better spent on patient care or solving “actual” fraud, waste, and abuse in the Medicare program.  The AHA cited the OIG’s high turnover rate in appeals cases.  They believe costs are needlessly high for appeals of avoidable and correctable OIG mistakes; essentially, the AHA believes that CMS’s repayments are premature when based upon the OIG’s extrapolated findings.

The AHA recommended that CMS:

  1. Only extrapolate if there is a significant error rate;
  2. Extrapolate only when the appeals process is complete;
  3. Permit rebilling of denied inpatient claims regardless of the usual timely filing period;
  4. Provide feedback to the OIG to facilitate issuance and improvement of an amended audit report and audits, generally; and
  5. Review and address legal issues raised by hospitals before an audit is performed or before a repayment demand is issued.

The AHA letter is available at:


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