Important deadlines for hospitals to report cardiac medical device-related overpayments are fast approaching. Based on an audit by the Office of Inspector General (OIG), the Centers for Medicare & Medicaid Services (CMS), required hospitals to investigate and report any overpayments from the last six years related to manufacturing credits for replaced cardiac medical device implants. CMS’s deadlines to file these reports begin in August 2021.
Generally, where the manufacturer of a cardiac medical device implant, such as a pacemaker or defibrillator, replaces a recalls or defective device that is still under warranty, it will provide a replacement to the hospital without charge or issue a full or credit to the hospital for the cost of the device. Where the service involves a Medicare beneficiary and a hospital receives a discount or credit that is 50% or more of the cost, Medicare regulations generally require the hospital to report the credit to Medicare and accept reduced payment.
In November 2020, OIG issued a report regarding a review it conducted of 6,558 Medicare claims dated between January 1, 2015 and June 30, 2017. In its review, OIG obtained data on reportable warranty credits from the top three cardiac device manufacturers and compared this data to Medicare billing records to see whether the hospital had reported the credit to Medicare. As a result of its review, OIG alleged that over 900 hospitals had not properly reported manufacturing credits for recalled or defective cardiac medical device implants. OIG alleged that these hospitals had received approximately $33 million in Medicare overpayments and recommended that CMS recover these overpayments.
In response to OIG’s report, CMS sent letters to hospitals directing that the hospitals perform an internal assessment of whether they received an overpayment due to cardiac medical device discounts or credits over the previous six years and report the results to CMS. CMS generally gave hospitals eight months from the date of the hospital’s letter to make this report, six months to investigate plus the 60-day window for self-reporting an overpayment. As CMS sent these letters in late 2020 and early 2021, these deadlines are quickly approaching. Hospitals should be aware that OIG already has data on device credits from three manufacturers (OIG did not specify which three) and may have shared this data with CMS.
OIG also recommended that CMS consider eliminating the Medicare requirement to report device credits and simply reduce the payment for all cardiac device replacement procedures. CMS concurred with the recommendation and indicated it would consider alternatives. Consequently, this topic may come up again in future rulemaking.
For over 35 years, Wachler & Associates has represented healthcare providers and suppliers nationwide in a variety of health law matters, and our attorneys can assist providers and suppliers in understanding OIG audits and overpayment allegations. If you or your healthcare entity has any questions pertaining to healthcare compliance, please contact an experienced healthcare attorney at 248-544-0888 or firstname.lastname@example.org.