OIG report could lead to additional inspection of hospitals’ Provider Relief Fund usage

Some hospitals that received funding support from HHS during the COVID-19 pandemic may need to prepare for additional auditing based on findings of a report by the department’s Office of Inspector General (OIG).

The report examined a small sampling of Provider Relief Fund (PRF) recipients and found that 17 of 25 hospitals did not comply or may not have complied with requirements to avoid balance-billing COVID-19 patients.

The PRF distributed nearly $146 billion between 2020 and 2023, with funding eligible to be used to cover healthcare-related expenses or lost revenue attributable to COVID-19. One of the conditions was to ensure out-of-network patients were not billed for more than they would have owed for in-network care.

What may follow

In response to the findings, the HHS agency that oversaw PRF allocations said it would conduct post-payment reviews of hospitals to assess compliance with the requirement.

The Health Resources and Services Administration (HRSA) “will determine if hospital providers selected for a PRF programmatic audit met the [PRF] Terms and Conditions, including the prohibition of balance billing,” the agency wrote.

Programmatic audits have been underway for at least two years, and now hospitals in that pool potentially face additional scrutiny.

For the 17 hospitals that the OIG report says were or might have been noncompliant, HRSA intends to request that they refund patients as appropriate. OIG found billings of more than $637,000 that were linked to instances of documented or potential noncompliance.

Report methodology

The 25 hospitals constituted a nonstatistical sampling from among a group of more than 3,400 that received at least $10,000 in PRF money during the 2020 initial general distribution from the fund.

For each facility, billing documentation was requested for four out-of-network patients who either had a positive COVID-19 test result or were assigned a COVID-19 diagnosis code (the PRF’s balance-billing clause still applied if a COVID-19 diagnosis was incidental to the care episode). The billing windows examined were Q1 2021 and Q1 2022.

For care episodes when the patient’s in-network cost-sharing amount could not be determined, HRSA established the annual out-of-pocket cap in Affordable Care Act (ACA) marketplace plans as the allowable limit. That threshold was set in April 2022, after the windows covered in the OIG report.

Thus, during the audited period, hospitals might have lacked a point of reference to gauge whether their billing was in compliance if they could not ascertain the patient’s in-network cost-sharing amount.

Key findings

Among the 25 audited hospitals, according to OIG:

• Eight hospitals complied with the requirements.
• Nine hospitals improperly billed 18 patients a total of $601,585, meaning either the insurer had waived cost-sharing for COVID-19 services, the hospital bill was for the out-of-network rate, or the bill was for more than the ACA’s annual out-of-pocket limit.
• Thirteen hospitals (including five of the nine from the prior category) billed 24 patients at amounts that may have been noncompliant, meaning the hospitals did not confirm that the billed amount was in keeping with the requirements or did not check whether the insurer had waived out-of-pocket costs.

In some cases, the hospitals ultimately wrote off the bills, effectively canceling the debt, OIG noted.

The hospitals told OIG that insufficient guidance from HRSA in the early days of the pandemic was behind the lack of compliance: “Due to the limited nature of the guidance, some hospitals developed billing policies and procedures based on their own interpretations of the requirement,” the report states.

Other OIG activity

In a report released in June, OIG examined compliance with PRF requirements for hospitals to apply their payments to healthcare expenses or lost revenue attributable to COVID-19.

According to the findings, 10 hospitals claimed a total of $63 million in impermissible PRF expenditures, while two inaccurately reported more than $645 million in lost revenue (one hospital was flagged in both categories).

“These deficiencies occurred because although hospitals attested to the PRF terms and conditions and HRSA provided continuously updated guidance to PRF recipients, the hospitals made clerical errors in their reporting of expenditures and did not always correctly interpret HRSA guidance, maintain documentation to support reported expenditures, or have procedures to verify the accuracy of lost-revenue calculations,” OIG wrote.

OIG’s recommendations for HRSA in the June report did not extend beyond the 11 hospitals identified for noncompliance. Those hospitals should have to return the money or replace the noncompliant usage with applications that meet the requirements, the report states. HRSA concurred with the recommendations.