U.S. taxpayers lost about $7.5 million in Medicare overpayments to two hospitals in a year and half.

The Department of Health and Human Services erroneously paid a New Jersey hospital at least $1.5 million, and a Tennessee hospital at least $5.8 million in Medicare payments between April 2011 and September 2012, the HHS Inspector General reported Wednesday.

The IG identified a large pool of payments most likely to be incorrect — based on its experience auditing other hospitals — then examined a smaller sample. Many of the improper payments were because the hospital either charged for something not covered by Medicare, or it incorrectly identified the services it had offered and then overcharged Medicare.

Hackensack University Center billed Medicare for removing teeth, which isn't covered by Medicare, and charged Medicare to replace a device in a patient that it was later reimbursed for. Methodist Healthcare sometimes charged for the wrong service, as in some cases where it charged someone as an inpatient rather than an outpatient.

In a review covering 7.6 million in Medicare payments to Hackensack University Medical Center for 1,553 patients, the IG identified $352,000 in specific overpayments for 62 claims, and estimates it received $1.5 million total.

In a similar review covering $29 million in Medicare payments to Methodist Healthcare – Memphis Hospitals for 3,590 patients, the IG identified $353,000 specific overpayments for 48 claims, and estimates it received $5.8 million total.

"The truth of the matter is that this is so common within the Medicare program it's not even funny," Bob Moffit, a senior fellow in the Heritage Foundation's Center for Health Policy Studies, told The Daily Caller News Foundation.

Moffit, who served as a senior official at HHS and the Office of Personnel Management during the Reagan administration, noted he was briefed when he first took office in 1986 and has seen it every year since. "The complexity of the system enables very clever fraud artists to hide in this big paperwork jungle, while honest doctors and hospitals get caught up in paperwork errors," he said.

The government sets the price of certain procedures and defines under what conditions certain procedures are given — Medicare Part B specifies 8,000 codes for procedures for doctors.

Rather than increase the staff of the IG's office and increase fines and conduct more audits in response to the problem, Moffit believes patients should be given the ability to pick and choose plans, so that hospitals' and insurance companies' bottom lines are directly affected by mismanagement and fraud.

"Congress has got to come to grips with the Medicare bureaucracy," he said. "This is the best IG office I've seen, but they're dealing with a system of explosive complexity fraught with the potential for mistakes."

HHS reported it misspent close to $50 billion on Medicare beneficiaries in 2013.

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