Audit: Children’s Hospital Had Overpayments Owed to Medicaid
By - A California children’s hospital had credit balances that represented overpayments that had not been returned to the Medicaid program, according to a recent audit by the Office of the Inspector General (OIG). Children’s Hospital & Research Center Oakland had 23 accounts with overpayments of approximately $71,000 ($35,000 Federal share).
OIG explained in its report that the Oakland hospital was chosen for an audit for several reasons. First, the organization reported that 67 percent of its patient population was covered by Medicaid and it had not been audited recently by the state Medicaid agency. That information was added to the fact that previous reviews found that hospitals sometimes did not have adequate policies and procedures to prevent, detect and take necessary and timely action for Medicaid overpayments.
Previous reports also found that Medicaid credit balances recorded in hospitals’ accounting records represented overpayments that had not been returned to the Medicaid program.
“For 14 of the 23 accounts, the Hospital took timely action to request that the State agency recoup the overpayments,” the report explained. “However, for the remaining nine accounts, the Hospital did not return the overpayments to the State agency because it lacked adequate policies and procedures to detect and take proper corrective action in a timely fashion for Medicaid overpayments.”
Credit balances do not always contain overpayments owed to Medicaid, OIG said. Sometimes the credit balances occur when the reimbursement that a provider receives for services provided to a Medicaid beneficiary exceeds the program payment ceiling or allowable costs. This then results in an overpayment.
Another example of how credit balances can occur is when a provider receives payments for the same services from the Medicaid program and another third-party payer.
However, when a provider does receive an overpayment, it must return it to the State Medicaid agency, which is required to refund to the Federal Government the Federal share of the overpayment.
OIG was told by the hospital that it took timely action on 14 of the 23 accounts, requesting that the State agency recoup the overpayments. For seven of the 15 accounts older than 60 days, the hospital started the process of returning the overpayments within 60 days, according to OIG. Moreover, the three largest accounts totaled $63,812 and had credit balances between 159 and 321 days. OIG reported that the hospital has been working directly with the State agency to return the overpayments since shortly after identifying them.
The federal agency had two recommendations for the Department of Health Services (DHCS) Audits and Investigations (A&I): refund the federal share ($35,426) to the government and work with the hospital to ensure adequate policies and procedures are developed and implemented to prevent these incidents from happening in the future. And if they do occur, corrective action will be taken in a timely manner.
According to the OIG report, both DHCS and the hospital agreed with the finding and the subsequent recommendations.
“We have since revised our credit balance review process to assure timely processing,” Benioff Children’s Hospital Senior Vice President and Financial Officer Kathleen Cain wrote in a letter to OIG. “Previously, two government payor staff routinely looked for MediCal credit balances. Our new process assigns all government payor staff to screen for overpayments monthly. We believe this new process will prevent small credit balances from being missed.”
