Methodist Hospital in San Antonio, Texas, received at least $12.4 million in Medicare overpayments during 2020 and 2021, federal auditors said in a report posted September 17. The Department of Health and Human Services Office of Inspector General (HHS-OIG) found that 27 of 100 sampled inpatient and outpatient claims did not fully meet Medicare billing rules, with the largest problems in inpatient rehabilitation stays. Auditors recommended that the 1,976-bed hospital refund the estimated amount to the federal government, and the hospital disputed the core findings.
What auditors found in Methodist Hospital’s Medicare claims
The audit, report number A-09-23-03001, was issued September 14 and posted three days later on the HHS-OIG website. It examined claims from January 1, 2020, through December 31, 2021. During that period, Medicare paid the hospital roughly $621 million for 40,110 inpatient and 97,557 outpatient claims, according to the auditors.
Investigators did not review all of those claims. Using data analysis, they focused on 6,625 claims worth about $62 million that fell into categories the inspector general considers high-risk for billing mistakes. From that group, they drew a stratified random sample of 100 claims: 20 inpatient rehabilitation claims, 60 standard inpatient claims and 20 outpatient claims, together worth about $1.4 million.
Of those 100 claims, 73 complied with Medicare requirements. The remaining 27 produced net overpayments of $256,926. Auditors then projected that error rate across the full $62 million pool and estimated the hospital received a net overpayment of at least $12.4 million. The precise projection was $12,499,714. The inspector general said it uses the lower limit of a statistical confidence range to be conservative, meaning the true figure is designed to be higher than the estimate most of the time.
Inside the kit: The auditors’ sample included a rehabilitation stay after a fall and a CT scan billed without clear symptoms, the kinds of charges that also show up on a Medicare Summary Notice. Matching each hospital charge against the medication and cost tracker and the prior-authorization appeal steps in The Medicare Cost & Coverage Protection Kit turns a stack of hospital paperwork into a list of questions worth asking.
Rehabilitation stays drove most of the errors
Inpatient rehabilitation facility claims accounted for nearly all of the money. For 16 of the 20 rehabilitation claims reviewed, an independent medical review contractor concluded the hospital billed Medicare Part A for stays that did not meet Medicare’s criteria for intensive inpatient rehabilitation. Overpayments on those claims totaled $247,457, almost the entire sample overpayment.
Federal rules require a reasonable expectation at admission that a patient needs active therapy from multiple disciplines, can take part in an intensive program and needs supervision by a rehabilitation physician. For 12 of the 20 claims, the reviewers found patients did not reasonably require that physician supervision. One example in the audit involved a patient admitted for rehabilitation after a fall caused pelvic fractures that did not need surgery. The reviewer concluded a non-rehabilitation physician could have overseen that recovery and the patient did not require a rehabilitation stay.
Auditors also found that for 10 of the 20 rehabilitation claims, the hospital’s records did not show a required discharge assessment was completed within five calendar days. That requirement is not a condition of payment, so those amounts remained allowable, but the inspector general counted them as compliance errors.
Coding and outpatient mistakes added smaller amounts
Among 60 standard inpatient claims, eight were billed incorrectly, producing net overpayments of $8,850. Four had diagnosis or procedure codes not supported by medical records. In one case, a patient’s principal diagnosis was coded as atrial fibrillation, an irregular and rapid heart rhythm, when the actual reason for admission was cancer-related leg pain. Correcting the code would have moved the stay into a lower-paying category. Three claims had unsupported outlier payments, and one listed a patient as discharged home when the patient actually went home with home health services.
Three of the 20 outpatient claims were also in error, totaling $619. In one, the hospital billed a CT scan of the abdomen and an intravenous antibiotic for a patient whose medical record showed no abdominal complaints or signs of infection. The auditors said the errors happened mainly because staff did not always follow the hospital’s own written billing and admission policies.
The hospital disputes the findings
The inspector general made three recommendations: refund the estimated $12.4 million, consider internal audits of claims after 2021 and train clinical and billing staff. According to the full audit report, Methodist Hospital did not agree with the first two recommendations and said it was willing to provide staff education.
The hospital told auditors it strongly maintains the 12 rehabilitation claims met Medicare criteria and submitted its own independent medical reviewer’s conclusion that the admissions were appropriate. It argued that the review misunderstood the role of rehabilitation physicians, took an overly technical reading of the rules and improperly relied on extrapolation. It also said it had already found and refunded 11 incorrectly billed claims through its own review. After considering those comments, the inspector general removed two claims tied to Medicare’s Two-Midnight Rule and lowered its recommended refund from $13,455,341 to $12,499,714.
The recommendation is not the last word. The audit notes that OIG findings are not final Medicare determinations. CMS, through its regional contractor, Novitas Solutions, will decide whether overpayments exist and whether to collect them, and the hospital can appeal through Medicare’s five-level appeals process. Estimates based on extrapolation can be recalculated depending on those decisions.
What the audit means for Medicare patients and taxpayers
The audit is a dispute between a hospital and the Medicare program, not a bill for patients. Nothing in the findings asks former Methodist Hospital patients to repay anything or signals that individual beneficiaries owe money. Still, money paid for claims that should not have been billed comes out of the Medicare trust funds that older Americans depend on, and inpatient rehabilitation stays often carry their own costs for patients, including Part A deductibles and coinsurance on longer stays.
The inspector general noted that hospitals received $182 billion from Medicare in 2021, about 46 percent of all fee-for-service payments, which is why it runs a continuing series of hospital compliance audits. For beneficiaries, the practical takeaway is to review each Medicare Summary Notice after a hospital or rehabilitation stay and compare dates, services and codes with what actually happened. Charges that do not match can be raised with the hospital’s billing office, and suspected fraud can be reported to the HHS-OIG hotline at 1-800-HHS-TIPS.
When a hospital stay leaves questions about what Medicare paid for
A federal audit can flag a hospital’s billing, but it does not tell any one patient whether a rehabilitation stay, scan or medication charge on their own statement was right. That check still falls to the beneficiary and family, one notice at a time.
The Medicare Cost & Coverage Protection Kit includes a medication and cost tracker for logging each service and charge, the prior-authorization appeal steps for challenging a denied service, and 51 state Medicare cost-help packs for sorting out who to call about out-of-pocket costs.
Start the next statement review with The Medicare Cost & Coverage Protection Kit.
This article was prepared with AI assistance and reviewed against the linked official sources.
Warren Cohen is a finance writer based in Phoenix, Arizona, covering personal finance topics including credit, banking, and beginner investing. He earned his degree in business administration from Arizona State University and began his career working in consumer finance, where he gained direct experience with lending and credit systems. He now writes for personal finance websites and fintech platforms, focusing on clear, practical content that helps readers make informed financial decisions.
