Health Law Daily Audit finds SC made estimated $2M in unallowable Medicaid telemedicine payments
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Thursday, April 16, 2020

Audit finds SC made estimated $2M in unallowable Medicaid telemedicine payments

By Kathleen Kennedy-Luczak, J.D.

Based on sample results, the HHS OIG estimated that 96 percent of South Carolina’s Medicaid fee-for-service telemedicine payments were unallowable during the 2014-2017 audit period.

The HHS Office of Inspector General (OIG) conducted an audit of South Carolina’s payments for Medicaid telemedicine services performed during 2014 through 2017 to assess whether the payments complied with federal and state requirements. The audit determined that insufficient provider training and lack of program oversight led to an approximately 96 percent unallowable payment rate (OIG Report, No. A-04-18-00122, April 2020).

Telemedicine. Medicaid telemedicine services allow for health service delivery via telecommunication systems. Medicaid patients at a referring site can use audio and video equipment to communicate with a health professional at a consulting site. Telemedicine services are viewed as a cost-effective alternative to providing care the traditional face-to-face way. In some cases, telemedicine can provide beneficiaries with increased access to specialists, better continuity of care, and less hardship of traveling extended distances. States have significant flexibility to establish telemedicine payment methodologies and payments.

Medicaid programs are seeing an increase in payments for telemedicine services. The audit’s objective was to determine whether selected states complied with federal requirements when claiming reimbursement for telemedicine services.

Scope. South Carolina’s state agency was selected for audit based on a risk assessment. The OIG noted that the state has a more established telemedicine program with a higher total payment amount than other states given a risk assessment. The audit covered $2.3 million in payments ($1.6 million federal share) made by South Carolina from July 1, 2014, through June 30, 2017, for telemedicine services. Specifically, the OIG reviewed a stratified random sample of 100 payments totaling $27,470.

Findings. Of the 100 Medicaid fee-for-service telemedicine payments in the OIG’s sample, only three payments were allowable. The remaining 97 payments in the sample were determined to be unallowable. For 95 of the unallowable payments, the providers failed to document the start and stop times of the service provided. Those providers also failed to document the consulting site location of the medical service. The remaining two unallowable payments were for in-office consultations, rather than telemedicine services.

Inadequate training and monitoring. The OIG determined that the noncompliance occurred because the state agency did not give providers formal training on the required telemedicine documentation requirements. Moreover, the OIG found that the state agency did not adequately monitor compliance with the program’s requirements. Based on the sample results, the OIG estimated that unallowable payments totaled at least $2.1 million during the audit period.

Recommendations. As a result of the audit findings, the OIG recommended that the South Carolina Department of Health and Human Services:

  • refund approximately $1.5 million to the federal government;
  • give providers formal training on telemedicine documentation requirements; and
  • enhance its monitoring of provider compliance by conducting periodic reviews of telemedicine payments.

South Carolina response. The state agency concurred with the OIG’s recommendations and described training and monitoring it planned to conduct to address the concerns raised by the audit. In addition, the state commented that negotiation of a lesser refund amount was appropriate. However, the OIG’s findings remained unchanged and it continued to recommend that the state agency refund approximately $1.5 million to the federal government.

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