OIG: New York should have corrected Medicaid MU payments


The latest audit of states’ payments of Medicaid Meaningful Use incentives by the Health and Human Services Department's Office of Inspector General found that New York erred in overpaying two hospitals, but backed down from an initial assessment of more errors after the Empire State defended its actions.

The New York State Department of Health made about $589 million in incentive payments from Oct. 1, 2011, through June 30, 2014. Of that amount, about $350 million was paid to hospitals. The OIG selected for further review all 30 hospitals whose health systems had received incentives of $4 million or more. The state had paid those 30 hospitals $179,399,827, representing 51 percent of the total paid to all hospitals during the audit period. The OIG also “judgmentally selected” five professionals for audit who had received Medicaid meaningful Use incentives of $259,250 during the audit period.

The OIG found that the professionals had been paid correctly, but that the state made incorrect payments to two hospitals resulting in overpayments of $175,322. The errors occurred because the state allowed for a variance within a 5 percent margin of error for incorrectly calculated payments and used incorrect cost report data that it didn’t correct once it learned that it was incorrect. The OIG recommended that the state refund the federal government that amount, plus the remaining payments for the incorrect calculations, which will result in future cost savings of $19,480.

New York was willing to review the payments made to hospitals not audited but balked at returning any payments, claiming that the Centers for Medicare & Medicaid Services had agreed to New York’s methodology. As a result, OIG backed down a bit and revised its findings of three of five calculations it had questioned in its draft report.

It stuck to its guns otherwise, however.

“We agree that CMS, in its letter to the State agency, did not object to the State agency’s application of a 5-percent variance as part of the State agency’s auditing plan," OIG said. "However, we note that CMS, in other correspondence provided by the State agency, indicated that States are 'obligated to adjust ... payments, change the calculation, and reconcile payments' in instances in which incorrect data was put into an agency’s original calculation."