OIG: CMS made $93.6M in faulty Medicare EHR incentive payments

The Centers for Medicare and Medicaid Services made $93.6 million in incorrect Medicare electronic health record incentive payments to acute-care hospitals.

That’s the finding of an audit by the Department of Health and Human Services’ Office of the Inspector General, which focused on Medicare EHR incentive payments from Jan.1, 2013, through Sept. 30, 2017.


In particular, the OIG reviewed a statistical sample of 99 net incentive payments—totaling $152.2 million—of which 53 were final and 46 were non-final payments.

“CMS did not always make Medicare EHR incentive payments to acute-care hospitals in accordance with federal requirements,” according to the OIG’s audit. “Specifically, of 99 sampled net incentive payments, 50 net incentive payments were incorrect (totaling $1.3 million, or less than 1 percent of $152.2 million reviewed).”

Auditors blamed the incorrect net incentive payments on the fact that:

· Medicare administrative contractors did not review the supporting documentation for all hospitals to identify errors in the hospitals' cost-report numbers used to calculate the incentive payments.

· CMS did not include labor and delivery services in the incentive payment calculations, which resulted in hospitals receiving inflated incentive payments.

While CMS made incorrect net incentive payments of $93.6 million, OIG also pointed out that this figure represents less than 1 percent of the $10.8 billion in total incentive payments during the audit period.

Nonetheless, to attempt recovery of the $93.6 million in incorrect net incentive payments, auditors made two recommendations to CMS:

· Instruct the Medicare administrative contractors to review all hospitals’ supporting documentation to identify errors in the hospitals’ cost-report numbers used to calculate the incentive payments.

· Revise the incentive payment calculations to include labor and delivery inpatient bed-days reported.

CMS concurred with the OIG’s recommendations. A separate OIG audit is planned that will focus on Medicare EHR incentive payments made to critical access hospitals.