ICYMI: Arkansas Sent Out $1.2 Million In Incorrect Medicaid Payments From 2011-2013.

Bill Smith, Editor: Just received the below linked DHS IG report. On June 22, 2015, the Inspector General (IG) for the Department of Health & Human Services (HHS) announced the Arkansas Department of Human Services (DHS) awarded $1.2 million in incorrect Medicaid electronic health record incentive payments from November 2011 – June 2013. According to the report, "Incorrect payments included both overpayments and underpayments, for a net overpayment of $79,428."

From the  Report:
WHAT THE IG FOUND:
The [Arkansas] State agency did not always pay EHR incentive program payments in accordance with Federal and State requirements. The State agency made incorrect EHR incentive payments to 14 hospitals. Specifically, for 13 hospitals, the State agency made incorrect payments totaling $1,225,734. Of the 13 hospitals, 8 were overpaid a total of $652,581, and 5 were underpaid a total of $573,153, for a net overpayment of $79,428. Because the hospital calculation is computed once and then paid out over 4 years, payments after September 30, 2014, will also be incorrect. The net adjustments to these payments total $134,295. We were unable to determine what portion of the incentive payment to one hospital was incorrect and are setting aside the entire payment of $1,534,708 for the State agency to work with the hospital to determine the correct incentive payment.

These errors occurred because (1) the State agency did not follow Federal requirements specific to cost report data elements on calculating the hospital incentive payment and (2) State agency personnel did not review supporting documentation for the numbers provided in the cost reports that were used to calculate incentive payments or, in one instance, use the correct cost report period.

WHAT THE IG RECOMMENDED TO DHHS:
We recommend that the Arkansas State agency:

• refund to the Federal Government $79,428 in net overpayments made to the 13 hospitals;
• adjust the 13 hospitals' remaining incentive payments to account for the incorrect
  calculations (which will result in future cost savings of $134,295);
• work with the one hospital for which the $1,534,708 total incentive amount was set aside to recalculate the incentive payment using the June 2009 cost report;
• review the calculations for the hospitals not included in the 20 we reviewed to determine whether payment adjustments are needed, and refund any overpayments identified;
• review supporting documentation for the numbers provided in the cost reports and ensure that the correct cost report periods were used; and
• provide guidance to the hospitals that states that inpatient nonacute-care services and
  unpaid Medicaid services should be excluded from bed-days and discharge lines of the incentive payment calculation, that neonatal intensive care unit bed-days and discharges should be included, and that bad debts, courtesy discounts, and any other unallowable charges should be excluded from charity care charges.

Copy of DHHS Inspector General Report here.

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