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Arizona Overpays $14M in Medicaid EHR Incentive Payments

These overpayments may be a result of hospital and State agency miscalculations for the Medicaid EHR Incentive Program reimbursements.

By Sara Heath

- A new report from the Office of the Inspector General shows that Arizona may have made significant overpayments for its Medicaid EHR Incentive Program totaling to $14,830,859.


According to the report, Arizona has been making both over payments and underpayments to 24 hospitals between October 1, 2011 and January 31, 2016.

These errors were the result of miscalculations on the part of the hospitals submitting for the Medicaid EHR Incentive Program. The Arizona Health Care Cost Containment System (State agency) has also been deemed at partial fault because it was its duty to ensure the calculations were submitted correctly.

OIG conducted this investigation by looking at the total incentive reimbursements Arizona issued between 2011 and 2016, identifying 25 hospitals that individually received over $1 million in reimbursements. Collectively, those hospitals received over $100 million in reimbursement payments, which accounted for over 60 percent of the state’s Medicaid EHR Incentive Program Payments.

This indicated a problem considering there are 70 hospitals who received incentive payments under that program.

As noted above, these errors occurred in part because hospitals submitted incorrect incentive payment calculations.

Typically, hospitals attesting to the Medicaid EHR Incentive Program must meet a minimum Medicaid patient volume, which is calculated by dividing the number of Medicaid patient discharges by the number of total patient discharges. This one-time calculation influences reimbursement payments for the duration of the program, to be distributed to hospitals over the course of three to six years.

Because the calculations influence payments for the duration of the program, OIG says payments made after January 2016 will also be incorrect. The adjustments for those payments will total to over $1 million.

As a result of these findings, OIG issued the following suggestions to the State agency:

  • refund to the Federal Government $14,830,859 in net overpayments made to the 24 hospitals,
  • adjust the 24 hospitals’ remaining incentive payments to account for the incorrect calculations (which will result in cost savings of $1,674,728 after January 31, 2016),
  • review the calculations for the hospitals not included in the 25 we reviewed to determine whether payment adjustments are needed and refund to the Federal Government any overpayments identified,
  • educate hospitals to ensure that they follow Federal and State requirements for calculating their incentive payments, and
  • review supporting documentation provided by all hospitals to help identify any errors in their incentive payment calculations.

Arizona’s State agency did not agree with these findings, OIG reported.

“The State agency commented that it could not reconcile the amounts we reported and that many of the hospitals had submitted to us different cost reporting and supplemental data from what they had provided to the State agency,” OIG wrote.

“The State agency commented that its postpayment audits for the hospitals we selected have identified discrepancies with our incentive payment calculations. The State agency also provided information on actions that it had taken or planned to take to address our recommendations.”

However, OIG maintained that its findings were accurate, submitting to the State agency the data supporting its claims.

After reviewing the State agency’s comments, we maintain that our findings and recommendations are valid. We provided the State agency with our incentive payment calculations that applied the relevant Federal and State requirements; those calculations were based on data that each hospital provided to us. We also provided the State agency with our calculation of the total incentive payment amount for each hospital. We suggest that the State agency work with the hospitals to resolve any discrepancies between its postpayment audit calculations and our calculations of the incentive payments.

Ultimately, the State agency and the hospitals it serves will need to determine how to reconcile the alleged payment discrepancies, and determine where there may have been errors in calculating those payments.

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