North Carolina DOC Medical Overpayments Exceed 10% of Total Bills
North Carolina DOC Medical Overpayments Exceed 10% of Total Bills
The North Carolina Department of Public Safety, Division of Corrections (DOC), is in need of the services of a professional recovery audit firm, an audit by the state’s Auditor concluded. The audit uncovered more than $105,000 in overpayments on just 10 bills submitted by eight hospitals for prisoner health care.
The audit covered the period from July 1, 2011, to June 30, 2012. During that period, DOC paid 893 hospital claims worth more than $14 million. The audit focused on the 10 largest claims worth about $1 million. It was found that DOC had overpaid approximately $105,700 on those claims, representing an overpayment of 10.6 percent.
The overpayments occurred because of separate billings that are normally part of a larger service, charges for services provided with no clear patient benefit, and duplicate charges. The DOC did not realize or suspect the claims included excessive billing, so it paid the bills.
“The [DOC] did not previously identify these or other over-billings because it does not perform externally focused recovery audits of hospital charges,” states the report. This contrasts with state law, which requires DOC to explore medical cost containment methods. Large payers of medical claims, such as health insurance companies and Medicare, commonly use externally focused recovery audits to detect and recover overpayments of medical claims.
Had DOC been utilizing this common cost containment method, it would have uncovered the overbilling. The auditors found that half of the 10 claims it examined contained overbilling. The names of the hospitals were not given by the auditors, but two hospitals accounted for over $83,000 of the overbilling. One hospital overbilled by $59,121.94.
The DOC agreed with the auditor’s recommendation that it should contract with a professional recovery audit firm to enhance its existing audit recovery effort. It has put out Requests for Information to vendors who are experts in claims management processing. The February 2013 Department of Public Safety audit is available on PLN’s website.
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