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From Health Reform WK-EDGE, January 29, 2019

Rhode Island failed to prohibit payments for provider-preventable conditions

By Elizabeth M. Dries, J.D.

Rhode Island’s Medicaid internal controls were inadequate, leading to $4 million in unallowable payments that may impact current and future capitation payment rates for the state. The state agrees to review and adjust future rates, but believes there are sufficient safeguards.

Rhode Island failed to ensure its managed care organizations (MCOs) complied with federal and state requirements prohibiting Medicaid payments to providers for inpatient hospital services related to treating provider-preventable conditions (PPCs) resulting in unallowable payments. A recent OIG report reveals that Rhode Island’s internal controls were not adequate to ensure that its MCOs complied with federal and state requirements. In addition, the MCOs did not have policies or procedures in place to identify PPCs on claims for inpatient hospital services or to determine whether payments for claims containing PPCs should have been reduced (OIG Report, No. A-01-17-00004, January 4, 2019).

Background. PPCs are reasonably preventable conditions caused by medical accidents or errors in a health care setting. Federal regulations effective July 1, 2011, prohibit Medicaid payments for services related to PPCs. CMS delayed its enforcement of the regulations until July 1, 2012, to allow States time to develop and implement new payment policies. The OIG report is part of a series of reviews to determine whether the states ensured their MCOs complied with the regulations. From July 2012, to June 2015, the state agency contracted with two MCOS to provide services to Medicaid beneficiaries. The OIG reviewed Medicaid encounter data from the two MCOS to identify providers’ paid claims that contained at least one secondary diagnosis code for a PPC, and that had a present on admission (POA) code indicating that the condition was not present on admission or did not have a POA code.

OIG findings. The state agency failed to ensure that its MCOs complied with federal and state requirements prohibiting Medicaid payments to providers for inpatient hospital services related to treating certain PPCs. The OIG identified that MCOs paid providers $3,968,040 for 241 claims that contained PPCs. Specifically, the state agency did not have policies and procedures to determine whether its MCOs complied with federal and state requirements and provisions of the managed care contract relating to the nonpayment of PPCs and did not ensure that MCO’s payment rates were based only on services that were covered in the state plan. As a result, unallowable payments for services related to treating PPCs were included in the calculation of capitation payment rates for state fiscal years 2017 and 2018.

The OIG made several recommendations to the state agency including:

  • work with the MCOs to determine the portion of the $3,968,040 that was for claims containing PPCs and its impact on current and future capitation payment rates;
  • include a clause in its managed-care contracts with the MCOs that would allow the state agency to recoup funds from the MCOs when contract provisions and federal and state requirements are not met, thereby resulting in potential cost savings;
  • require the MCOs to implement internal controls to prohibit payments for inpatient hospital services relating to PPCs’
  • require its MCOs to review all claims for inpatient hospital services that were paid after the audit period to determine whether any payments for services relating to treating PPCs were unallowable and adjust future capitation payment rates for any unallowable payments identified;
  • strengthen its monitoring of its MCOs to ensure the MCOs comply with federal and state requirements and its managed-care contracts relating to the nonpayment of PPCs; and
  • ensure that claims identified are referred back to the MCOs for appropriate correction and inclusion of missing POA codes.

The state agency concurred with the first, fourth, fifth and sixth recommendations, but did not concur with the second and third recommendations. The state agency recommended including specific provisions allowing the state agency to recoup the amount of unallowable claims that were attributable to PPCs. Finally, the state agency stated that it believes sufficient requirements are already in place in the managed care contracts.

ReportsLetters: OIGReports AgencyNews ManagedCareNews MedicaidNews NewsFeed

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