Feds ding 3 states for Medicaid performance deficiencies

In a trio of recent audit reports, the Office of Inspector General announced enforcement actions against Medicaid agencies in Texas, Nebraska and Kansas for different operational slip-ups.      

Texas Medicaid, for example, didn't enforce orthodontic precertification requirements and therefore may have allowed payment for unnecessary care, the OIG found.

The volume of Medicaid orthodontic services has climbed in Texas, leading OIG to flag them as vulnerable to health insurance fraud, waste and abuse. Moreover, performing unnecessary dental procedures may cause safety risks, especially for children, as Assistant U.S Attorney Ted Radway told FierceHealthPayer: Anti-Fraud. Several U.S. attorneys' offices have prosecuted these cases.

The OIG recommended that Texas improve its oversight of orthodontic preauthorization and ensure that staff responsible for it follow applicable guidelines.               

OIG auditors found different problems in Nebraska, where the state's Medicaid agency didn't always invoice drug manufacturers for rebates on physician-administered drugs. This resulted in $2.5 million in unallowable federal payments in three years and an additional $869,000 that may not have been appropriate.

To collect these rebates, states send manufacturers national drug codes (NDCs) for selected drugs. If states don't capture data to bill and collect rebates, then federal reimbursement isn't available for covered outpatient drugs administered by doctors.

Nebraska's Medicaid agency didn't collect the necessary NDCs, the audit found. Further, the state didn't gather utilization and coding data needed to bill manufacturers for rebates on all physician-administered drugs. The OIG recommended that Nebraska repay the federal government and update claims system edits to require NDCs for payment of Medicaid drug claims.

Finally, the OIG assessed an overpayment to the Kansas Medicaid agency after finding that not all the state's Medicaid costs for school-based health services were reasonable, documented or otherwise allowable. Kansas didn't have adequate procedures to monitor these services and collected $10.7 million inappropriately, the OIG found. The agency recommended that the state refund the federal government and strengthen internal controls.

To learn more:
- read the OIG audit reports for Texas, Nebraska and Kansas (.pdf files)