OIG: NJ Agency Falsely Claimed $95M in Medicaid Reimbursement

January 03, 2017 - New Jersey’s Department of Health and Human Services may have to repay the federal government almost $95 million after the Office of the Inspector General (OIG) recently found that the state agency received improper Medicaid reimbursement between 2009 and 2012.

An OIG investigation showed that state’s health department did not adequately oversee a partial care services program, resulting in providers not complying with CMS requirements for Medicaid reimbursement.

Two other state agency divisions – the Division of Medical Assistance and Health Services and the Office of Program Integrity and Accountability – also failed to perform consistent onsite reviews of healthcare facilities providing partial care services.

For example, the two agency components had different standards for documenting partial care services. The Division of Medical Assistance and Health Services also did not have compliance tests for some Medicaid reimbursement requirements.

The false claims stemmed from New Jersey’s Medicaid Partial Care Services Program, which provides beneficiaries with serious mental illnesses with outpatient clinical services, such as group and individual therapy, prevocational services, and medication management. The program aims to lower unnecessary hospital admissions.

To qualify for Medicaid reimbursement, however, providers furnishing partial care services must follow CMS requirements. The requirements include:

• Mental health services must be performed by, or under the direction of, a psychiatrist associated with an organization where those services are provided

• Intake assessments must be conducted and documented

• Providers must create and regularly review written individualized care plans for each Medicaid beneficiary

• Providers must maintain written documentation to support medical and remedial therapy services, activities, or sessions

• Providers must document progress at least once a week

New Jersey’s health department claimed about $272 million ($136 million in federal share) in Medicaid reimbursement for over 3.8 million partial care services claims between 2009 and 2012.

However, a random sample of Medicaid claims for partial care claims from that period revealed that most claims did not comply with federal and state reimbursement requirements. Out of 100 claims, 92 claims did not comply, OIG reported.

Of the 92 non-compliant Medicaid reimbursement claims, OIG found the following deficiencies:

• 84 claims contained services not documented or supported

• 20 claims had no physician affiliation agreement

• 6 claims did not meet care plan requirements

• 4 claims did not have weekly progress notes documented

• 1 claim did not meet intake assessment requirements

Nineteen of the claims also contained more than one deficiency for Medicaid reimbursement, OIG added.

To resolve the falsely claimed Medicaid reimbursement, OIG started by suggesting that the state agency refund the federal government for partial care services claims that did not meet federal and state requirements for payment. Between 2009 and 2012, the false claims resulted in almost $95 million in improper Medicaid reimbursement.

The federal watchdog also recommended that New Jersey’s health department develop guidance for the partial care provider community. The guidance should focus on federal and state requirements for Medicaid reimbursement.

The state’s health department should also “improve its monitoring of partial care providers to ensure compliance with Federal and State requirements,” OIG continued.

In response, the New Jersey Department of Health and Human Services disagreed with the OIG’s repayment recommendation, citing “unreasonable documentation standards on providers.” The state agency told OIG that providers should have more flexibility with furnishing appropriate services based on their professional judgement and not be limited to the services outlined in beneficiary care plans.

CMS requirements should allow for partial care services not listed in care plans as long as clinical documentation supports why the services were necessary, the state agency replied.

The state agency also should not repay the falsely claimed Medicaid reimbursement because state law noncompliance is not “appropriate grounds for a financial disallowance.” The agency argued that Office of Management and Budget’s Circular A-87, a guide on determining costs for federal awards, does not apply to private Medicaid provider payments and the circular eliminated compliance with state laws.

Additionally, the New Jersey agency contended that OIG should not suggest repayment based on missing documentation on claims submitted more than three years prior to the OIG review.

The federal watchdog, however, still maintains its recommendations after reviewing the state health department’s comments.

Dig Deeper:

• OIG: CMS Not Reducing Medicare, Medicaid Improper Payments

• Key Ways to Improve Claims Management and Reimbursement in the Healthcare Revenue Cycle