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Audit: Hospital billing not properly investigated

ANNAPOLIS — A Maryland commission did not adequately investigate the impact of hospital overbilling identified through annual reviews, a state audit released Friday found, noting overcharges of at least $13.2 million at four hospitals.

The Office of Legislative Audits found that the Health Services Cost Review Commission did not determine how long overcharges had been occurring. The commission also did not discover the extent of prior year overcharges or the patients or payers that may have been overcharged, according to the audit.

“Rather, HSCRC only requested that the hospitals correct their billing systems for identified errors going forward,” the audit said.

The commission establishes, reviews and approves hospital rates and publicly discloses information on the costs and financial performance of Maryland’s 53 regulated hospitals. It sets hospital-specific and service-specific rates for all inpatients, hospital-based outpatients and emergency services based on various data, such as revenue, volume and cost.

Auditors examined the results of procedure reviews for all hospitals for fiscal year 2009. That was the most recent year reviewed by HSCRC at the time of the audit. The audit found four hospitals that charged for a procedure at rates ranging from 67 to 1,880 percent higher than allowed by the commission.

“As of June 30, 2011, we estimated that hospital overcharges totaling at least $13.2 million occurred, of which at least $3.7 million was overcharged to the State’s Medicaid program,” the audit said.

The Maryland Department of Health and Mental Hygiene said in a response to the audit that the commission will require the hospitals to repay overcharges dating back to when the error occurred by adjusting for future rates. The hospitals also will be fined for reporting inaccurate data on their reports to the commission, the health department said.

“It is important to note that the Commission discovered these errors, and hospitals will be required to repay overcharge amounts in addition to penalties,” the health department said in a response to the audit. “This will ensure that hospitals do not financially benefit from overcharges at any point.”