Industry News

OIG Issues Report Scrutinizing Increased Hospital Outlier Payments.

Jennifer Kirchner | November 2013

The Department of Health and Human Services Office of Inspector General (OIG) issued a report examining an increase in hospital outlier payments.  The OIG found that for 158 hospitals, outlier payments represented 12.8 percent of their Medicare reimbursements under the Inpatient Prospective Payment System (IPPS), compared to an average of 2.2 percent for all other hospitals.  The OIG also found that the high-outlier hospitals charged Medicare substantially more for the same Medical-Severity Diagnostic Related Groups (MS-DRG) despite their patients having similar lengths of stay as those in other hospitals.  The OIG found that 16 specific MS-DRGs accounted for 41 percent of outlier payments. 

The OIG made three recommendations to CMS based on the concern that the routine receipt of outlier payments for certain MS-DRGs at high-outlier hospitals varies substantially from similar patient-care cases at other hospitals.  CMS concurred with the OIG’s recommendations to:

  1. Instruct contractors to increase monitoring of outlier payments.
  2. Include information about the distribution of outlier payments with other publicly reported hospital data.
  3. Examine whether MS-DRGs associated with high billing rates of outlier payments warrant coding changes or other adjustments. 

The OIG report examining outlier payments is available at:

Department of Health and Human Services Office of Inspector General.  “Medicare Hospital Outlier Payments Warrant Increased Scrutiny.”  OEI-06-10-00520.  13 Nov. 2013.

About the Author

Jennifer Kirchner is a licensed attorney in Illinois and Wisconsin. Ms. Kirchner has expertise in assessing provider compliance with the Anti-Kickback Statute, Stark Law, the False Claims Act, HIPAA Privacy and Security Rules and clinical research laws and regulations.