Federal auditors say Abbott Northwestern Hospital should refund $8 million in estimated overpayments for services that the Minneapolis-based medical center wrongly billed to the federal Medicare program, according to a report released Thursday.

Auditors looked at a sample of billing records during 2013-14 and alleged a variety of errors, including bills to Medicare for patients who didn’t meet the program’s criteria for acute inpatient rehabilitation services.

Abbott Northwestern’s parent company, Allina Health System, disputed the audit findings, which next go to the federal Centers for Medicare and Medicaid Services (CMS) for a final ruling. In a letter that also was released Thursday, an Allina official said the report includes numerous factual and legal errors that “combine to overstate significantly the amount of overpayments.”

Auditors, however, said they stood by their conclusions.

“The hospital did not have adequate controls to prevent the incorrect billing of Medicare claims,” the report states. “On the basis of our sample results, we estimated that the hospital received overpayments of at least $8,038,356 for the audit period.”

The audit from the Office of the Inspector General (OIG) at the U.S. Department of Health and Human Services is part of an ongoing series of hospital compliance reviews being conducted at medical centers across the country. The federal Medicare program typically is the single largest source of payments for hospitals.

Over the past year, OIG has released 15 compliance reports that use computer matching, data mining and analysis techniques to identify certain types of hospital claims that could be out of compliance with Medicare billing rules.

Among the 15 reports, the largest overpayment alleged was $14.2 million at a hospital in New York; the smallest was $41,771 at a hospital in Tennessee.

Three of the 15 recent reports have involved Minneapolis hospitals. Last year, auditors called for a $3.2 million repayment at the University of Minnesota Medical Center and a $1.6 million repayment at Hennepin County Medical Center.

HCMC concurred with some audit findings while disputing others. That was also true at Fairview Health Services, which is the parent company of the U hospital. On Thursday, Fairview said it has successfully appealed some findings and continues to appeal others.

The report released Thursday shows that Medicare paid Abbott Northwestern about $410 million for 25,190 inpatient and 328,174 outpatient claims for beneficiary services during 2013 and 2014.

The audit covered about $27.6 million in Medicare payments for claims that were potentially at risk for billing errors, auditors said. They selected a sample of 162 claims with payments totaling $2.5 million for review. Auditors found that 88 of the 162 payment claims complied with Medicare billing requirements.

“However, the hospital did not fully comply with Medicare billing requirements for the remaining 74 claims, resulting in overpayments of $933,991 for the audit period,” the report states.

Auditors said there were 30 billing errors for patients receiving inpatient rehabilitation services. In 25 of the cases, the hospital disagreed that claims were incorrectly billed, the report states, but acknowledged human error in five cases. The rehabilitation claims generated about $530,045 in overpayments, according to the audit, which was more than half the total value of overpayments identified.

In a letter released Thursday as part of the report, an Allina official argued that most of the claims were, in fact, supported by data in medical records, despite the audit’s conclusion. The official added: “The OIG improperly refused to consider some of this evidence.”

On Thursday, Allina Health System said in a statement that it “respectfully disagrees” with the overall findings.

“We stand by the care provided to our patients,” the health system said. “Allina Health has sound procedures in place to ensure that Medicare beneficiaries, and all patients, receive appropriate care and that those services are billed in accordance with all applicable Medicare billing requirements.”


Twitter: @chrissnowbeck