State miscalculates Medicaid incentive payments, must repay feds almost $1.8M

Louisiana's Medicaid incentive payment program has made numerous errors in determining what incentive payments providers are entitled to and made net overpayments of $1.8 million in the first year of the program, according to a new audit by the U.S. Department of Health and Human Services' Office of Inspector General (OIG).  

The audit report, released Sept. 8, reviewed the payments made by the Louisiana Department of Health and Hospitals in 2011 as well as additional review of the 25 hospitals that received $1 million or more that year. The state paid more than $93 million in Medicaid incentive payments in 2011.

OIG previously has expressed concern about the wrong incentive payment amounts being paid to providers. The Government Accountability Office has identified improper incentive payments as the primary risk of the incentive programs.

OIG found that the state agency made incorrect electronic health record incentive payments to 20 hospitals totaling $4.4 million, overpaying 13 of them and underpaying six (with one returning an overpayment during the audit), with a net overpayment of $1.8 million. OIG also found that the state had overpaid a number of eligible professionals.

"These programs may be at greater risk of improper payments than other programs because they are new and have complex requirements," OIG warned in its report.

The errors were caused by several problems, including using the wrong calculation formula, mistakes in the calculation instructions, use of incorrect cost reports, clerical errors, lack of system edits, and failure to reconcile quarterly Medicaid expenditure reports (the CMS-64 report) with the National Level Repository, the Meaningful Use program's registration and verification system.

Louisiana has agreed to refund the federal government for the overpayments, adjust the providers' payments and correct the other problems.

Meaningful Use audits, which include both pre- and post-payment audits, began in 2012. The Medicare audits are being conducted by Garden City, New York-based Figliozzi and Company on behalf of CMS; Medicaid payment audits are conducted by each state. 

To learn more:
- read the report (.pdf)

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