Providers improperly collected $784M from a fund for uninsured COVID patients. Now, the government wants it back

By Dave Muoio / July 23, 2023

A pandemic program that distributed funds for uninsured patients’ COVID-19 testing and treatment made nearly $784 million in improper payments to healthcare providers, money the government should begin recouping from the industry, a federal watchdog reported.

The Department of Health and Human Services (HHS) Office of Inspector General (OIG) reviewed a subset of the almost $4.2 billion paid out by HHS’ Health Resources and Services Administration (HRSA) through the COVID-19 Uninsured Program (UIP) in 2020, which covered testing and treatment for 19.2 million patients.  

From its subset sample, OIG estimated that nearly a fifth of the money HRSA paid for about 3.7 million patients was improper due to those patients either having health insurance coverage, receiving services that were not related to COVID-19 or never receiving the services at all, according to a recently published audit.

“We understand that HRSA’s operational objective for the UIP was to rapidly disburse funds for COVID-19 testing and treatment to ensure uninsured individuals were receiving vital health care services and to prevent the spread of COVID 19,” OIG wrote in the audit report (PDF). “However, if HRSA or another HHS agency administers any programs of a similar nature in the future, the agency should consider the information included in this report.”

OIG’s audit sampled 300 patients for whom the office reviewed medical documentation, billing documentation and any associated Medicare and Medicaid insurance coverage information. Among these, the auditor spotted $294,294 in payments for 58 patients that were improper.

Alongside recovering the improper funds spotted among the 300-person sample, OIG recommended that HRSA identify the remaining hundreds of millions of improper payments “and take remedial action.”

In written comments, HRSA either fully or partially concurred with OIG’s findings and recommendations. Of note, HRSA said it “has already taken action to address the issue” of identifying and recouping improper payments from providers. Starting in March 2022, HRSA said it began obtaining and reviewing relevant information from providers as part of a broader assessment strategy and will pursue repayments when improper payments are identified.

“If HRSA determines a provider submitted claims for insured individuals or services that were not medically necessary in accordance with authorizing statute and [COVID-19 Uninsured Program] Terms and Conditions, the agency will take remedial action including seeking repayment,” HRSA wrote in its response letter to the audit.

HRSA also concurred with recommendations from OIG to strengthen its procedures should any future programs similar to the COVID-19 UIP be implemented.

The government’s hasty implementation of pandemic relief funding programs has received plenty of scrutiny as of late from OIG and outside policy researchers alike.

A day prior to the uninsured payments audit, OIG released a review of targeted Provider Relief Fund distributions that highlighted payout disparities correlated with hospital communities’ race and ethnicity composition.

Another analysis of hospitals’ net operating margins published last week in JAMA Health Forum by Rand Corporation researchers suggested that relief payments “may have been larger than was necessary” to keep most hospitals from financial distress.