Louisiana’s Medicaid program overpaid $3.1 million in incentives to 13 hospitals in 2011 and underpaid several others, according to a recently released federal audit.
The federally funded incentive program known as the Medicare and Medicaid Electronic Health Record Incentives began in 2011 to encourage hospitals and other healthcare professionals to make meaningful use of electronic health records during the course of caring for Medicaid patients.
But Louisiana Department of Health and Hospitals made a number of errors as it awarded $93 million in incentives in 2011, according to the federal audit by the Office of the Inspector General at the U.S. Department of Health and Human Resources.
The state paid 25 hospitals a total of $53 million that year, with the rest being paid directly to eligible professionals such as physicians, dentists, certified nurse-midwives, nurse practitioners and physician assistants. When the Office of the Inspector General reviewed those payments, it found:
* Louisiana overpaid 13 hospitals by a total of nearly $3.1 million and underpaid six hospitals by $1.3 million, for a net overpayment of $1.75 million. One additional hospital was incorrectly paid, but the error was fixed before the audit was complete.
* The state overpaid 13 professionals an additional $3,250.
* DHH failed to notify the U.S. Centers for Medicare and Medicaid Services of $276,250 in incentive payments made to 13 professionals, as is required.
* The state gave hospitals incorrect instructions on how to calculate patient volume for purposes of determining eligibility for incentives. The volume is supposed to be based on numbers of patient discharges, but the state instructed providers to base it on inpatient bed days.
Though the audit dings the state for failing to provide providers with clarity about program eligibility, it also suggests many of the problems may not be solely the fault of the state agency’s implementation.
Louisiana was one of the first states to begin paying incentives through the Health Information Technology for Economic and Clinical Health (HITECH) Act, which was enacted as part of the American Recovery and Reinvestment Act of 2009.
In March, the Government Accountability Office characterized the incentive program as being so complex and new as to increase the likelihood money will be awarded to providers who do not meet the requirements.
In a July 17 letter to the Office of Inspector General, state Medicaid Director Ruth Kennedy wrote that she agrees with the findings of the audit. The state has agreed to refund the federal government the $1.75 million in overpayments issued to hospitals under the program, as well as the $3,250 sent to professionals.
“Louisiana Medicaid has made significant changes in its administration of the EHR Incentive Program since the audit began,” Kennedy’s letter states. Among other changes, the state hired an independent audit firm to study all incentive payments that the federal auditors did not already review.
In the meantime, Kennedy wrote, the state has implemented more controls, including “rigorous pre-payment review procedures” designed to ensure incentives are made only to those who qualify.
