California Medicaid Meaningful Use overpayments total more than $22 million

Audit with magnifying glass

Photo Credit: Getty/cacaroot

Yet another state has floundered in its calculations of Medicaid Meaningful Use incentive payments, with California making errors resulting in net overpayments of $22,043,234, according to the Department of Health and Human Services Office of Inspector General.

The state made $971 million in Medicaid payments to professionals and hospitals from Oct. 1, 2011, through Dec. 31, 2014, according to the OIG. Of this, $601 million was paid to 263 hospitals.

The OIG elected to further review the 64 hospitals that each received a first-year incentive payment exceeding $2 million. The state paid those 64 hospitals $317,444,168, which was 53 percent of the total paid. The state made additional payments to 37 of the 64 hospitals, totaling $25,700,188, which the OIG also reviewed.

The state made incorrect payments to 61 of the 64 hospitals, resulting in net overpayments of $22,043,234. Because the incentive payment is calculated once and then paid out over four years, payments made after Dec. 31, 2015, will also be incorrect; adjustments to these payments total more than $6.3 million.

The OIG recommended that the state refund the federal government the $22,043,234 in net overpayments and adjust the remaining payments to account for incorrect calculations, which will result in a cost savings of more than $6.3 million. It also calls for California to review its calculations of other hospitals’ payments, and review the hospitals’ supporting documentation.

The Golden State did not concur with the recommended refund amount to the federal government. It claimed that further detailed analysis and validation of hospital data is required to support the overpayments identified; that the OIG used hospital-generated schedules and internal financial records, which did not include detailed testing against actual payments and adjudicated claim data; and that it has committed to conducting audits of all hospitals participating in the EHR incentive program and has prioritized the audits of the 64 hospitals reviewed.

The OIG stood by its calculations and suggested that the state work with the Centers for Medicare & Medicaid Services to resolve any discrepancies identified between its post-payment audit calculations and the OIG’s calculations of the incentive payments.

The audits are part of a series of reports focused on the Medicaid Meaningful Use program for hospitals; the OIG has been increasing its issuance of findings in recent weeks. A majority of states audited thus far have been found to have made errors in their payments. Only Florida, Pennsylvania and the District of Columbia were found to have made payments correctly.