Inpatient rehabilitation facilities (IRFs) were overpaid by Medicare by $8.4 million between calendar year 2009 and 2010, a government report reveals.

Under Medicare’s prospective payment system, IRFs must submit a patient assessment instrument (PAI) when it is submitting claims more than 27 after a beneficiary’s discharge. If a PAI is submitted after the 27-day window, Medicare is supposed to cut a facility’s reimbursement by 25%. However, a report released Sept. 13 by the Health and Human Services’ Office of the Inspector General found that of the 108 claims that were sampled, Medicare administrative contractors did not cut reimbursement for 88 of them.

“Based on our sample results, we estimated that for services provided in CYs 2009 and 2010, MACs made a total of $8.4 million in overpayments to IRFs for claims that should have been reduced by the 25% penalty because the associated PAIs were transmitted to the Database after the 27-day deadline,” the report stated.

Report authors recommended several corrective measures to the Centers for Medicare & Medicaid Services, including collecting the known over payments and auditing others, which CMS has agreed to.

Click here to read the full report.