Purpose

To determine whether Medicaid made overpayments to hospitals that improperly billed All Patient Refined Diagnosis Related Groups (APR-DRG) inpatient claims containing a severe malnutrition diagnosis. The audit covered the period from January 1, 2013 through December 31, 2017.

Background

Malnutrition can result from the general deterioration of an individual’s health, inadequate treatment or neglect, or from the treatment of another condition. Once malnutrition is identified, a hospital must use the appropriate International Classification of Diseases (ICD) code on its claim to reflect the diagnosis. Generally, as the severity of the malnutrition diagnosis increases, Medicaid’s payment to a hospital will increase. Medicaid will only pay for medical care and services that are medically necessary, whose necessity is evident from documentation in the patient’s medical record, and that meet existing standards of professional practice. For the five-year period ended December 31, 2017, Medicaid paid about $521 million for inpatient claims that included a severe malnutrition diagnosis.

Key Finding

We identified $416,237 in overpayments on inpatient claims that certain hospitals billed to Medicaid that contained a severe malnutrition diagnosis that the medical records did not appear to support. We found that the hospitals were not following recommended guidelines for identifying and documenting severe malnutrition on these claims.

Key Recommendations

• Review the overpayments identified and make recoveries, as appropriate.
• Formally remind all hospitals to:
  • Ensure clinical assessments for severe malnutrition meet existing standards of professional practice;
  • Only bill for severe malnutrition that meets accurate clinical assessments and Medicaid billing rules; and
  • Properly document severe malnutrition in a patient’s medical record.

Other Related Audits/Reports of Interest

Department of Health: Improper Fee-for-Service Payments for Services Covered by Managed Care (2017-S-74)

Department of Health: Medicaid Overpayments for Medicare Part B Services Billed Directly to eMedNY (2017-S-36)