OIG Audit of Abbott Northwestern Hospital Turns Up $8 Million in Medicare Overpayments

The Department of Health and Human Services’ Office of Inspector General (OIG) recently released the report of its findings from an audit conducted at Abbott Northwestern Hospital in Minneapolis, MN.  Based on a review of 162 claims from 2013 and 2014, the OIG found a potential of $933,991 in over payments.  Extrapolated over the 2-year period, the OIG estimates that it overpaid Abbott Northwestern by over $8 million for the review period.  The over payment represents nearly 2% of the total $410 million received by Abbott Northwestern from Medicare over the 2-year period.

According to the OIG, a majority of the errors found were around:

  • Inpatient procedures incorrectly billed as inpatient procedures
  • Incorrectly billed DRGs
  • Incorrectly billed outpatient services modifier
  • Manufacturer credits for replacement devices that should have been claimed from device manufacturers instead of billed to Medicare

This audit is just one in a series of reviews conducted by OIG across the country at hospitals receiving payment from Medicare.  The OIG uses a combination of computer matching, data mining, and data analysis techniques to uncover potential over- and under-payments.  As is typical for these reviews, the hospital disagreed with a majority of the findings and challenged OIG’s methodology.

While there is no silver bullet to overcome challenges to claims such as these, hospitals must take a multi-pronged approach to shore up their documentation and billing practices.  Clinical documentation must be approached from multiple angles to improve revenue and minimize denials.  Potential areas for improvement include improving clinical documentation at the point of entry to minimize confusion down the line, increasing case-mix index, improving the discharge disposition code accuracy, reducing readmission denials, and improving quality metrics to reduce penalties.

The original OIG report can be found here: Medicare Compliance Review of Abbott Northwestern Hospital for 2013 and 2014


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