News Feature | December 8, 2014

Massachusetts Made Incorrect Medicare Payments To Hospitals

Christine Kern

By Christine Kern, contributing writer


The total of the overpayments was $3.3 million to 19 hospitals, according to OIG audit.

According to an OIG audit, the Massachusetts Executive Office of Health and Human Services, Office of Medicaid (State agency) made incorrect EHR incentive payments to 19 hospitals that amounted to $3.3 million. Specifically, the audit found $2.7 million was overpaid to 13 hospitals, and $564,000 was underpaid to six hospitals for a net overpayment of $2.1 million. The review was conducted between January 1, 2011 and December 31, 2012.

According to the audit, “The State agency did not always pay EHR incentive payments in accordance with Federal and State requirements. These errors occurred because State agency instructions on the hospital incentive payment calculations lacked needed information, and the State agency did not reconcile the CMS-64 report to the NLR.”

As a result of the audit, the OIG recommended the State agency should refund $2,131,192 in net overpayments to the Federal Government; adjust the remaining incentive payments to the 19 hospitals affected (which will result in future cost savings of $1,715,362); review calculations for hospitals not included in the OIG review to ensure that proper payments were made; modify the hospital calculation worksheet to reflect the exclusion of inpatient non-acute-care services from incentive payment calculations; and work with CMS to ensure the posting of all hospital incentive payments and establish a policy to reconcile the CMS-64 report to the NLR each quarter.

The audits are a result of the growing adoption of EHRs and incentive programs. The Congressional Budget Office estimates that between 2011 and 2019, spending on Medicare and Medicaid EHR incentive programs will cost more than $30 billion and the Medicaid EHR incentive program will account for more than a third of that amount or an estimated $12.4 billion.

According to the U.S. Government Accountability Office (GAO) improper incentive payments are the primary risk to the EHR incentive programs. New and complex requirements of the programs increase the risk of potentially improper payments. The obstacles to proper implementation leave the programs vulnerable to paying incentive payments to providers that do not fully meet requirements.

To receive an incentive payment under the HITECH Act, eligible hospitals attest that they meet program requirement by self-reporting data using CMS’s National Level Repository (NLR). The NLR is a provider registration and verification system that contains information on providers participating in the Medicaid and Medicare EHR incentive programs.

While the State agency admitted that it made incorrect payments, it took issue with the amount reported and said that the report inaccurately stated that it did not always report incentive payments to the NLR. While the OIG did tweak its findings slightly, the core of its recommendations still stand.