Department of Social Services
Department of Health

Payment for Outpatient Services for Hospitalized Medicaid Recipients

The Medicaid reimbursement rates for inpatient care cover most of the services typically needed by hospital patients. However, in certain circumstances, a hospitalized patient may receive one of these covered services from a provider other than the hospital. In such circumstances, if Medicaid is billed by the second provider and the hospital's all-inclusive inpatient rate is not reduced to reflect this additional billing, Medicaid pays twice for the same service.

The Department of Social Services conducts routine tests to detect such duplicate payments. In our prior audit report 93-S-86, we conducted our own tests and identified more than $19 million in duplicate payments that were not detected by the Department. In the course of conducting these tests, we also identified an additional $800,000 in potential overpayments for services that may not have been provided. We recommended that all overpayments be recovered and improvements be made in the tests used by the Department. In our follow-up review, we found that the Department made significant progress in implementing our recommendations. For example, the Department recovered $9.6 million in overpayments and referred certain medical service providers to the State Attorney General's Office for investigation. 95-F-12