Department of Health

Medicaid Payments to Clinics When the Patients Were Hospitalized

Medicaid reimbursement rates for inpatient hospital care are generally intended to cover all the costs associated with a hospital stay, including the cost of any services provided by a clinic or emergency room either during hospitalization or on the day a patient is hospitalized. However, we determined that, in the five years covered by our audit, as much as $25.7 million in Medicaid payments were inappropriately made for services provided by clinics or emergency rooms to hospitalized patients either during the patient’s hospital stay or on the day the patient was hospitalized. More than $4.9 million of these payments were made to two clinics. We visited the two clinics and found that they regularly submitted inappropriate bills to Medicaid. We also found that the clinics’ owners were related to the owners of the affiliated hospitals. In response to our audit findings, Department of Health officials informed us that, because of the significance of the billing problems at the two clinics, the Department would no longer reimburse the clinics’ Medicaid claims and was considering whether the clinics’ Medicaid certification should be revoked.

We recommended that the $25.7 million in potential Medicaid overpayments be investigated and all overpayments recovered. We also recommended that certain automated Medicaid claims processing controls be activated. These controls were designed to detect and prevent the types of overpayments that we identified, but the controls had not been activated by the Department of Health.

For a complete copy of Report 2006-S-51 click here.
For a copy of the 90-day response click here.
For a copy of the associated follow-up report click here.