Purpose

To determine the implementation status of the five recommendations made in our initial audit report, Multiple Same-Day Procedures on Ambulatory Patient Groups Claims (Report 2012-S-163).

Background

The State’s Medicaid program provides a wide range of health care services to individuals who are economically disadvantaged and/or have special health care needs. The Medicaid program reimburses outpatient services according to the Ambulatory Patient Groups (APG) payment methodology, which is based on patient condition and complexity of service. The Department of Health (Department) phased in the APG methodology beginning with hospital outpatient departments and ambulatory surgery centers on December 1, 2008. The APG methodology was then implemented in diagnostic and treatment centers and freestanding ambulatory surgery centers on September 1, 2009.

We issued our initial audit report on August 12, 2014. The audit objective was to determine if the Medicaid program overpaid APG claims because of deficiencies in the Medicaid claims processing and payment system. The audit covered the period December 1, 2008 through March 31, 2013. Our initial audit determined the Department did not implement adequate controls to enforce APG policy and payment rules. As a result, we identified over $11 million in improper and questionable APG claim payments. For example, overpayments were made for the same medical procedure billed multiple times on the same date of service and for services that were billed beyond the allowed service limits.

In our initial audit report, we made five recommendations to the Department to strengthen controls over APG claims processing and, where feasible, to apply professional service limits to APG claims. We also recommended that the Department review and recover the inappropriate APG payments.

Key Finding

Officials made some progress in addressing the problems we identified in the initial audit report. Those efforts included strengthening payment controls over APG claims processing of excessive rehabilitation services and recovering $107,388 in APG claim overpayments. The initial report’s five audit recommendations were partially implemented. In certain instances, the actions taken were relatively limited, and consequently more purposeful and definitive actions were needed.

Key Recommendation

Officials are given 30 days after the issuance of the follow-up report to provide information on any actions that are planned to address the unresolved issues discussed in this report.

Other Related Audit/Report of Interest

Department of Health: Multiple Same-Day Procedures on Ambulatory Patient Groups Claims (2012-S-163)