A hospital compliance auditor noticed during a routine audit that an unusually high number pressure ulcers submitted on claims over the last six months were coded as stage 3 or 4. A deeper analysis of the medical records revealed that an upgrade in the computer-assisted ling software had resulted in a glitch whereby the system was automatically assigning codes for either a stage 3 or 4 pressure ulcer regardless of the stage identified in the clinical documentation. While the coders were supposed to review auto-assigned codes, they had missed the errors in the pressure ulcer codes. Since a stage 3 or 4 pressure ulcer t major complication/comorbidity in the Medicare MS-ORG system, the coding error had to inappropriate higher-paying MS-DRGs in some cases.

1. What should the auditor do?

2. What should be the next step to confirm whether incorrect codes were submitted and resulted in overpayment/

3. If overpayments did occur, should the hospital just keep quiet about it and assume that other errors likely resulted in underpayments, so the overpayments and underpayments would probably balance each other out? If not, what actions should be taken?

4. Failure to report overpayments may result in liability under what federal statues) or law(s)?