OIG: Texas incorrectly paid $15.3 million in Medicaid MU incentives

The state of Texas has made incorrect Medicaid electronic health record incentive payments to hospitals totaling $15.3 million, according to a recently released report from the Department of Health and Human Services' Office of Inspector General (OIG).

The report audited all 45 hospitals that received an incentive payment of $1.5 million or more from the Texas Health and Human Services Commission. The commission is one of the largest payers of Meaningful Use incentives, with $448 million in Medicaid payments made in 2011 and 2012. Of that amount, about $111 million went to eligible professionals and $337 million went to eligible hospitals.

The OIG found that the commission made incorrect payments to 38 of the 45 hospitals. It overpaid 26 hospitals $13.9 million and underpaid 12 hospitals $1.4 million, with net overpayments of $12.5 million. Because the hospital calculation is computed once and then paid out over three years, payments made after Dec. 31, 2014, will also be incorrect. Adjustments to those payments total $163,201.

According to the report, the errors occurred because "the State agency instructed hospitals not to include inpatient nonacute-care services in the calculation but did not ensure that hospitals removed these services from their calculations."

What's more, while the commission "followed CMS's general guidance on cost report data elements suggested for use when calculating a hospital incentive payment," it failed to follow federal guidance, "which says that certain items [e.g., nursery, rehabilitation, psychiatric, and skilled nursing facility services; unpaid Medicaid services; and bad debts] should be excluded from the data elements when the hospital incentive payment is calculated."

The commission also failed to "review supporting documentation for the numbers provided in the cost reports that were used to calculate incentive payments or use the correct cost report periods."

The OIG recommended that the commission refund to the federal government the $12.5 million in net overpayments that had been paid to the 38 hospitals, review its calculations of the hospitals in Texas that were not audited, and provide guidance to hospitals regarding what should be included in their Meaningful Use calculations.

This is the sixth state agency audited by the OIG. In 2014, the OIG found that Louisiana and Massachusetts made incorrect Medicaid EHR incentive payments, while Florida passed muster. So far in 2015, the OIG found that Arkansas made incorrect payments, while the District of Columbia made payments correctly.   

Payments made pursuant to the Meaningful Use incentive program are a front-burner item for the OIG. At least one other state, Pennsylvania, has been put on notice that its payments will be scrutinized this year.

To learn more:
- here's the report (.pdf)