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New Jersey Overpays $2.3M in Medicaid EHR Incentive Payments

According to a report from the Office of the Inspector General, New Jersey overpaid and underpaid hospitals for the Medicaid EHR Incentive Programs.

By Sara Heath

- The New Jersey Department of Human Services made overpayments for the Medicaid EHR Incentive Program of nearly $2.3 million, according to an Office of the Inspector General report.


According to OIG, the state made EHR incentive payments to 15 Medicaid hospitals in the total amount of $2.5 million. New Jersey overpaid 10 hospitals by a total of $2.4 million and underpaid five hospitals by a total of $137,000.

These errors occurred between Feb. 1, 2012, and Sept. 30, 2013, because the state's office did not follow proper protocol for calculating Medicaid EHR Incentive Program payments.

“The incorrect payment errors occurred because the State agency’s program integrity contractor failed to identify certain errors and inconsistently applied this new program’s complex requirements,” OIG reported. “The reporting error occurred due to a technical error.”

OIG calculated the total mispayments by following their own Federal protocol for incentive program payments and reconciling the differences between their results and the actual payments the State Agency made.

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The report noted that Medicaid EHR Incentive Program payments are calculated once and then paid out over the course of three years. Because of that provision, any payments after September 30, 2013 will also be incorrect. The adjustments for these subsequent payments will be $514,107.

The State Agency also made incorrect EHR Incentive Program payments to two additional healthcare organizations. However, New Jersey reconciled these payments prior to the OIG audit.

New Jersey additionally failed to report one incentive payment to the National Level Repository (NLR). Upon further investigation, OIG found that the State Agency did pay the five professional groups within the NLR correctly.

Going forward, OIG made the following recommendations to no protest on the part of the New Jersey State Agency:

  • refund to the Federal government $2,270,213 in net overpayments made to the 15 hospitals
  • adjust the 15 hospitals’ remaining incentive payments to account for the incorrect calculations (which will result in future cost savings of $514,107),
  • review the calculations for the hospitals not included in the 33 we reviewed to determine whether payment adjustments are needed, and refund any overpayments identified and
  • work with CMS to ensure that the 1 unreported professional incentive payment is reported to the NLR.

These payments were issued in according to the HITECH Act of 2009 and its provision on EHR incentives. As a part of the national agenda to increase EHR adoption, the State Agency issued nearly $118.6 million in EHR incentive payments between February 2012 and March 2013.

This is not the first time a state agency has made incorrect EHR Incentive Program payments. Earlier this month, the OIG issued similar report stating that Arizona made nearly $14 million in overpayments for the same program.

According to the report, Arizona’s State Agency made both overpayments and underpayments to 24 hospitals between October 1, 2011 and January 31, 2016.

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.

These errors occurred due to errors made by the hospitals receiving incentive payments through the program. OIG also deemed the Arizona Health Cost Containment System as partially responsible because it did not confirm that these calculations were made properly.

OIG issued similar commendations to Arizona as it did New Jersey, including to refund the federal government the overpaid money, to adjust hospital payment calculations, and implement better calculation education protocols.

However, unlike New Jersey’s state agency, Arizona did not agree with OIG’s findings.

“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.”

In response, OIG stood by its original findings:

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.

Read the complete report here.

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