Objective

To determine the extent of implementation of the five recommendations included in our initial audit report, Medicaid Program: Improper Medicaid Payments for Outpatient Services Billed as Inpatient Claims (Report 2022-S-16).

About the Program

The Department of Health (DOH) administers New York’s Medicaid program. The Medicaid program reimburses hospitals for inpatient and outpatient services. A recipient’s status in a hospital—inpatient versus outpatient—affects Medicaid’s reimbursement for services provided. Inpatient care generally requires recipients to stay overnight in the hospital and be monitored by the health care team at the hospital throughout treatment and recovery. Generally, outpatient services are medical procedures that can be performed in the same day, and are less expensive than inpatient treatments because they are less involved and do not require a patient's continued presence in a facility.

The objective of our initial audit, issued August 30, 2023, was to determine whether Medicaid made improper payments to hospitals for outpatient services that were erroneously billed as inpatient claims. The audit covered the period from January 2018 through March 2022. The audit found that a lack of DOH guidance to assist hospitals in determining when to bill services as inpatient or outpatient likely contributed to improper billings and Medicaid overpayments. The audit identified a high-risk population of 34,264 fee-for-service inpatient claims, totaling $360.6 million, where hospitals reported Medicaid recipients were discharged within 24 hours of admission. We selected a judgmental sample of 190 of the claims, totaling $4,261,428, and determined 91 claims (48%), totaling $1,577,821, were billed improperly.

Key Finding

DOH and the Office of the Medicaid Inspector General (OMIG) officials made little progress in addressing the problems we identified in the initial audit report, and additional actions are needed. In particular, officials did not develop a process to identify and review the appropriateness of high-risk short-stay inpatient claims and OMIG was unable to demonstrate that any recoveries were initiated in response to our initial audit. Of the initial report’s five audit recommendations, three were partially implemented and two were not implemented.

Key Recommendation

DOH officials are requested, but not required, to provide information about any actions planned to address the unresolved issues discussed in this follow-up within 30 days of the report’s issuance.