Arizona overpaid hospitals nearly $15M in Medicaid MU incentives


The Arizona Health Care Cost Containment System made incorrect Medicaid incentive payments to 24 out of 25 hospitals reviewed, totaling almost $15 million in overpayments, according to a new report from the Department of Health and Human Services’ Office of Inspector General (OIG).

Arizona paid about $219 million in Medicaid Meaningful Use incentive payments from Oct. 1, 2011, through March 31, 2015; of that, $151 million was paid to 70 hospitals. 

The OIG’s review found that of the 24 hospitals incorrectly paid, both overpayments and underpayments were made, with a net overpayment of $14.8 million. Since the incentive payments are calculated once and paid over four years, payments made after Jan. 31, 2016, will also be incorrect. The adjustments of these payments total $1.7 million.

The errors occurred because the hospitals didn’t always follow federal and state requirements for calculation of the incentive payments. Also, the state agency did not review the supporting documentation provided by the hospitals, which would have helped identify the calculation errors. 

The OIG recommended that the state:

  • Refund to the federal government $14.8 million
  • Adjust the 24 hospitals’ remaining incentive overpayments, which will result in cost savings of $1.7 million after Jan. 31, 2016
  • Review payments made to the other hospitals
  • Educate hospitals regarding how to calculate payments
  • Review supporting documentation 

The state does not agree with the findings, claiming that there were discrepancies that could not be resolved because the hospitals had provided different data to the OIG than what it had received from them. The OIG maintains that its findings are valid.  

“The Government Accountability Office has identified improper incentive payments as the primary risk to the EHR incentive programs," the OIG says. "These programs may be at greater risk of improper payments than other programs because they are new and have complex requirements. Other ... reports describe the obstacles that the Centers for Medicare & Medicaid Services and states face overseeing the Medicare and Medicaid EHR incentive programs. The obstacles leave the programs vulnerable to making incentive payments to providers that do not fully meet requirements."

This OIG audit is one of a series of such audits being conductedOklahoma made overpayments of more than $888,000, Arkansas incorrectly paid $12 million and Texas incorrectly paid more than $15 million. In contrast, both Florida and the District of Columbia made payments correctly; Delaware had a small overpayment affecting one hospital.

To learn more:
- here’s the report