Health Reform WK-EDGE New York claims none of its $50.3M federal reimbursement was for PPC treatment
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Monday, June 24, 2019

New York claims none of its $50.3M federal reimbursement was for PPC treatment

By Laura Lefkow, J.D.

The OIG found no evidence to support New York’s assertion that it appropriately reduced payments for inpatient hospital services related to treating provider-preventable conditions as required by the ACA and state law.

The HHS Office of Inspector General (OIG) audited the New York State Department of Health’s Medicaid paid claims to see if it complied with federal and state requirements prohibiting Medicaid payments for inpatient hospital services related to treating certain provider-preventable conditions (PPCs). Because New York did not provide sufficient evidence that it properly identified claims containing provider-preventable conditions or that it reduced any payments for the related services, the OIG could not verify whether New York had complied with the law. The OIG recommended that New York substantiate its claim that all of the $50.3 million it received in federal Medicaid reimbursement was allowable and refund any unallowable portion to the federal government (OIG Report, No. A-02-16-01022, May 30, 2019).

Federal regulations. The Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) and federal regulations prohibit Medicaid payments for services related to reasonably preventable conditions caused by medical accidents or errors in health care settings. CMS delayed implementation for one year to allow providers to implement systems to accommodate the new law. PPCs are classified as either (1) health-care-acquired conditions that occur in any inpatient hospital setting, result in increased payment for services, and could have been reasonably prevented; or (2) "other," meaning either a wrong surgical or invasive procedure, a procedure performed on the wrong body party, or performed on the wrong patient. Payment for such claims must be reduced by the amount attributable to the PPC that caused an increase in payment and can reasonably be isolated.

State regulations. The New York Medicaid State plan requires the state agency to follow federal requirements as to nonpayment of PPCs. The state agency pays Medicaid inpatient hospital claims using either an all-patient refined diagnosis-related group (APR-DRG) or a per diem. For claims reimbursed by APR-DRG, the Medicaid payment should exclude reimbursement for services not present on admission. For per diem payments, claims containing a diagnosis not present on admission should be reviewed by clinical review staff to try to isolate the portion of the stay related to the condition not present on admission.

Methodology. In reviewing Medicaid paid claim data from July 2013 through June 2016, the OIG looked for claims that contained at least one secondary diagnosis code for a PPC and claims missing a present-on-admission (POA) code. The audit uncovered 3,686 such claims totaling $90,923,002, of which $50,256,025 was the federal share.

Finding. The OIG could not determine whether New York complied with federal and state requirements because the state agency did not provide sufficient evidence that it properly identified claims containing PPCs or determined whether the payments for the related services should have been reduced. Without that evidence, the OIG could not verify whether the $91 million in payments for claims containing provider-preventable conditions were appropriately reduced. Therefore, the OIG set aside payments for those services for resolution by CMS and the state agency.

New York’s response. New York disagreed with the OIG’s findings, pointing to the numerous policies and protocols implemented to comply with federal and state requirements for nonpayment of PPCs. For instance, the payment system software was updated to include a POA field, and a health-care-acquired condition (HCAC) grouper software caused the redaction of codes from the claim prior to assigning an APR DRG. The state responded that its claim processing system was designed to prevent or reduce claims that contained provider-preventable conditions that were reimbursed under the APR-DRG payment methodology; however, the OIG determined it did not have documentation to support this. The state protested that verifying the accuracy of the PPCs claim payments would involve considerable staff time, and offered instead to verify the payments for 50 APR-DRG claims. Based on its review of 50 claims, the payments were processed accurately. Again, the OIG was unpersuaded because the state did not provide evidence that its claim processing system prevented or reduced any payments.

Recommendations. The OIG recommended that New York (1) provide CMS with sufficient documentation to determine whether any portion of the $50.3 million federal Medicaid reimbursement was unallowable and refund the unallowable amount; (2) review inpatient hospital claims it processed and paid before the OIG audit and refund to the federal government the federal share of any improper payments; (3) ensure its policies and procedures are fully implemented and effective in prohibiting unallowable payments for services related to PPCs; and (4) work with its contractors to maintain evidence that supports its assertion that payments for claims with PPCs are prevented or reduced.

ReportsLetters: OIGReports AgencyNews HealthCareAcquiredConditionNews MedicaidNews ProgramIntegrityNews NewsFeed

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