OIG: Failure to implement Medicaid claims safeguards leads to improper payments

Most states have not complied with the Affordable Care Act's requirement to implement automated claims safeguards known as coding edits, leaving Medicaid susceptible to billions in improper payments, according to the Office of Inspector General (OIG).  

Under the ACA, each state Medicaid agency was required to implement Medicaid National Correct Coding Initiative (NCCI) edits by Oct. 1, 2010, allowing the Centers for Medicare & Medicaid Services (CMS) to prevent improper payments for claims that don't meet basic medical or billing standards. However, the OIG found that 10 states still had not implemented the NCCI edits for all six categories, and the vast majority of states did not use the edits correctly. In fact, only two states, Indiana and Montana, used the edits correctly on test claims.

Many states did not program medically unlikely edits into their claims processing system to appropriately deny specific claims. Twenty-nine states used incorrect procedure-to-procedure modifiers that resulted in Medicaid paying for services that should have been denied and denying payment to services that should have been paid.

The OIG recommended CMS confirm NCCI edits were fully implemented in each state, provide technical guidance to ensure edits are implemented correctly, and issue guidance on how to estimate NCCI cost savings.

Between 2014 and 2015, Medicaid's improper payment rate jumped from 6.7 percent to 9.8 percent, and the Department of Health and Human Services believes it could hit 11.53 percent his year. A report from the Government Accountability Office found that the Medicare and Medicaid accounted for nearly $75 billion in improper payments in 2014, leading to a Senate hearing, and follow up reports indicating Medicaid sustainability depends on the government's ability to eliminate improper payments.

For more
- read the OIG report

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