Purpose

To determine whether the Department of Health established adequate controls to prevent duplicate and excessive Medicaid payments to clinics and outpatient facilities reimbursed by the Ambulatory Patient Groups (APG) payment methodology. The audit covered the period from December 1, 2008 through May 29, 2013.

Background

The Medicaid program reimburses outpatient services using the APG payment methodology. The Department of Health (Department) adopted the APG methodology in an effort to pay providers more accurately for their services. APG claims are reimbursed based on patient condition and complexity of service. The Department phased in the APG methodology beginning with hospital outpatient departments and ambulatory surgery centers on December 1, 2008. The methodology was implemented in freestanding diagnostic and treatment centers and ambulatory surgery centers on September 1, 2009.

Key Findings

• Medicaid made $32.1 million in actual and potential overpayments to providers for services that exceeded Medicaid service limits. For example, Medicaid limits dental exams to two times per year, yet we found Medicaid reimbursed a clinic for 41 dental exams (totaling $2,771) for one patient over three years. We determined the clinic’s records did not support any of the exam procedures, and in some instances the medical records did not indicate any service was provided. As a result, none of the 41 claims were eligible for reimbursement.
• Medicaid also overpaid $7.5 million for duplicate claims. In these cases, a clinic, for instance, and an individual practitioner (i.e., medical doctor) both billed Medicaid for the same service.
• APG claims processing does not have the controls necessary to detect and prevent the types of overpayments we identified.

Key Recommendations

• Review the overpayments we identified and make recoveries as appropriate.
• Strengthen controls over APG claims processing to address the weaknesses we identified.

Other Related Audits/Reports of Interest

Department of Health: Multiple Same-Day Procedures on Ambulatory Patient Groups Claims (2012-S-163)
Department of Health: Overpayments of Ambulatory Patient Group Claims (2011-S-43)