Meaningless MU Dollars

Take the time to calculate your hospital's incentive payment. It’s important. A hospital’s incentive payments are disbursed by the percentages defined in the State’s State Health Information Technology Plan. Per Statute, the incentive amount is paid over a minimum of a three-year period and a maximum of a six-year period. No annual Medicaid incentive payment to a hospital may exceed 50% of the hospital's aggregate incentive payment. Likewise, over a two-year period, no Medicaid payment to a hospital may exceed 90% of the aggregate incentive payment. If calculations are not done correctly, the MU dollars received are meaningless.

Arizona is an excellent example of this.

On August 15, 2016, the results of an audit by the OIG were reported for the Arizona Health Care Cost Containment System (State agency). This state agency had the responsibility of generating electronic health record (EHR) incentive program payments for eligible Arizona hospitals. The sampling audit results revealed that 99% of the payments made were incorrect. Specifically, the audit found that from October 1, 2011, through January 31, 2016, the State agency made incorrect Medicaid EHR incentive payments to 24 of the 25 hospitals reviewed, totaling $15 million. These incorrect payments included both overpayments and underpayments, resulting in a net overpayment of $14.8 million by the state agency.

How were these incentive payments calculated incorrectly? In order for eligible hospitals to receive a Medicaid incentive payment, the hospital had to attest that it had met Medicaid patient-volume requirements. Patient volumes are calculated by dividing a hospital’s total Medicaid patient encounters by total patient encounters. For hospitals, patient encounters are defined as discharges, not days spent in the hospital.

Hospital incentive payments are based on a one-time calculation of a total incentive payment, which is distributed by States over a minimum of 3 years and a maximum of 6 years. The total incentive payment calculation consists of two main components: The overall EHR amount and the Medicaid share. A summary of the calculation can be found here. 

According to the OIG report this is what the OIG investigator found:

“Although the State agency made Medicaid EHR incentive program payments to eligible hospitals, it did not always make these payments in accordance with Federal and State requirements. Specifically, from October 1, 2011, through January 31, 2016, the State agency made incorrect Medicaid EHR incentive payments to 24 of the 25 hospitals reviewed, totaling $14,953,577. These incorrect payments included both overpayments and underpayments, resulting in a net overpayment of $14,830,859. Because the incentive payment is calculated once and then paid out over 4 years, payments made after January 31, 2016, will also be incorrect. The adjustments to these payments total $1,674,728.

These errors occurred because hospitals did not always follow Federal and State requirements for calculating their incentive payments. In addition, the State agency did not review supporting documentation provided by the hospitals to help identify errors in their calculations.”

The Arizona Health Care Cost Containment System denies any incorrect payments were made and noted that the OIG investigator has been provided with different cost reporting and supplemental data from the hospitals then what the state agency had previously received as supporting documentation. The OIG dismissed the state agencies concerns. The OIG suggested that the state agency revamp its protocols in reviewing supporting documentation and resolve any discrepancies between the OIG investigators post-payment audit calculations and the calculations of the incentive payment.

All remaining hospital incentive payments will have a thorough review of the calculations in order to determine whether any payment adjustments are needed and what additional refunds, if any, are due to the Federal Government.

The Arizona Health Care Cost Containment System has been tasked with educating hospitals on how to follow federal and state requirements for calculating their incentive payments, and how to conduct an internal review of supporting documentation provided by all hospitals to help identify errors in their incentive payment calculations.

Although there were not any penalties involved with this audit, the end result will impact the bottom line of all hospitals involved with these incorrect incentive payments. I am sure a few people will also lose their jobs over this type of situation.

In my professional opinion, hospitals can learn a lot from this audit because it will likely spark a domino effect of more state agency sampling audits with a focus on determining whether or not meaningful use dollars were paid correctly and per EHR Meaningful Use regulations. Compliance experts are available to provide hospitals with a thorough compliance review of EHR incentive payment calculations and create an action plan should the results not be in the hospital’s favor. They can also conduct a compliance program effectiveness review, which is a major part of Affordable Care Act mandates.

It will be highly likely that the hospitals who are being scrutinized under this audit will also be hit with OCR desktop audits and possibly even on-site facility audits. Learn from this unfortunate situation. If your hospital CFO continues to advise you that there isn’t enough money in the budget for compliance program implementation or compliance program effectiveness reviews, then I’d suggest going over the many benefits of an effective compliance program.

The implementation of a compliance program sends the message that your medical office or hospital operates in an ethical manner and is committed to quality patient care. In addition, implementing a sound compliance program can also result in numerous benefits to the covered entity.

Developing and managing an effective compliance program can:

• Increase the potential of proper submission and payment of claims
• Reduce billing mistakes
• Improve the results of reviews conducted on Medicare claims by the Medical Review Department (MR), Comprehensive Error Rate Contractor (CERT), Recovery Auditor and the Zone Program Integrity Contractor (ZPIC)
• Avoid the potential for fraud, waste and abuse
• Verify Meaningful Use incentive payment calculations
• Promote patient safety
• And ensure delivery of high quality patient care with positive patient outcomes

In closing, I want to clarify that there isn’t a “one‐size fits all” approach to compliance. You must tailor your compliance program to suit your organization’s needs. But, the Arizona audit results should act as a warning sign that further OIG audits on Meaningful Use incentive payments to both eligible hospitals and eligible professionals are just around the corner.