Purpose

To determine if Medicaid overpaid Ambulatory Patient Groups (APG) claims because of deficiencies in the claims processing and payment system. The audit covered the period December 1, 2008 through March 31, 2012.

Background

The Ambulatory Patient Groups (APG) payment methodology covers most medical outpatient services. Claims are reimbursed based on a patient's condition and complexity of service. The APG system was adopted by the Department of Health (Department) in an effort to more accurately pay providers for services rendered. Prior to the APG implementation, outpatient services were paid under an all-inclusive reimbursement model. The patient's condition and complexity of service were not factored into the claim payment. Under the new APG system, the Department assigned providers new APG rate codes and deactivated the rate codes used under the previous payment methodology. The Department phased in APGs beginning with hospital outpatient departments and ambulatory surgery centers on December 1, 2008. APGs were then implemented in freestanding diagnostic and treatment centers and freestanding ambulatory surgery centers on September 1, 2009. The Department uses its automated eMedNY system to process Medicaid claims and make payments.

Key Findings

• Providers used five prohibited combinations of APG reimbursement codes on 6,615 claims which resulted in improper Medicaid payments totaling $1,204,186. These improper payments occurred because the Department did not properly design automated system edits to deny claims with the prohibited rate code combinations.
• For example, Medicaid paid a provider $149 for a clinic visit that was billed under one particular rate code. Later, the provider submitted a second claim for the same service to the same recipient on the same date using a different rate code, and Medicaid paid the provider $128 for this claim. Because the edit was not programmed to stop this particular rate code sequence, the applicable eMedNY edit did not prevent payment of the second claim.
• We also identified $933,399 of duplicate payments made to providers for the same services under both the old and the new (APG) payment methodologies. Furthermore, the Department must reprocess $4,286,603 of payments made under the pre-APG methodology.

Key Recommendations

• Review the 6,615 instances of improper payments (totaling $1,204,186) and make recoveries, as appropriate.
• Design and implement eMedNY system edits which prevent the improper payments we identified.
• Review the 8,819 duplicate payments (totaling $933,399) and make recoveries, as appropriate.

Other Related Audits/Reports of Interest

Department of Health: Medicaid Claims Processing Activity April 1, 2011 Through September 30, 2011 (2011-S-9)
Department of Health: Medicaid Payments for Excessive Dental Services (2009-S-46)