CMS should drop belated attempts to collect overpayments

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Had the University of Illinois Hospital & Health Sciences System and Mount Sinai Hospital in Chicago cheated on their taxes in 2000 and the Internal Revenue Service never followed up, they would already be off the hook. If they had committed armed robbery or a number of violent felonies back in the day and hadn't been prosecuted, they could get on with their lives.

Instead,the Office of the Inspector General of the U.S. Department of Health & Human Services wants the hospitals or the state of Illinois to pay up nearly $145 million in disproportionate share Medicaid overpayments because they had overcharged poor patients.

The problem is, these overcharges took place some 13 years ago--which, if my memory serves, is a while back.

Despite this, the OIG is exhorting the Centers for Medicare & Medicaid Services to collect these old debts in Illinois, Indiana and elsewhere--more than $220 million in all, accordingg to a highly critical report released last week. OIG said the money should be recouped even though it acknowledged CMS "had not always proceeded with the collection process in a timely manner."

CMS maintained it had not collected the balances, in part, because the states involved had disagreed with the findings, requiring further reviews, the agency said in a formal response to the audit. CMS added that it's close to resolving the matter involving the two Chicago hospitals.

But should CMS be able to collect a dime at this point? I certainly hope not.

In the real world, if an agency or bill collector claims you owe them money, and you follow whatever legal processes for objecting, the onus is on the agency or collector to respond in a timely fashion. If more than a dozen years later it still hasn't responded, common sense--and pretty much the contract laws and statute of limitations in virtually every state--suggest the collecting entity no longer considers the debt to be on the books.

When I bought my first car many years ago, I erred by not closely reading the paperwork. That meant I was paying more than 16 percent interest on a car loan even though my credit was good.

In the years and car transactions since, my negotiating skills steadily refined. A few weeks ago, as I was loading personal items into a new car,  for which I was able to negotiate terms to 90 percent of my satisfaction, the sales manager called me into the office and said because of a paperwork "glitch" my monthly payment would have to increase.

I have a contract with both of our signatures on it, I replied.

You may get charged later.

For what?

Apparently this glitch wasn't enough to keep me from driving off the lot.

CMS's negotiation with providers has been similarly refined over the years. That's why recovery auditors (RACs) are driving providers throughout the country batty with their tough audits. Farming out such work on a contingency basis was a logical step the feds took to keep costs in line and make sure a mostly understaffed agency doesn't get bogged down in collection battles that drag on for years.

However, allowing the feds to collect on overpayments made more than a dozen years ago because it was slow to respond is a dangerous precedent. It's not likely CMS will be clawing back chickens given to country doctors in lieu of payment a century ago (although that's a spectacle I'd enjoy seeing).

However, if it gets money out of Illinois and elsewhere, the agency could be empowered to ignore its own errors of commission and turn back the clock at its leisure. That would be a dangerous financial precedent for U.S. hospitals. - Ron (@FierceHealth)

Related Articles: 
Millions of Medicaid overpayments remain uncollected
HHS wants $145M from Illinois for hospital overpayments
RACs recoup $745M in overpayments
OIG: Weak Medicaid claims data fails to recover overpayments