Bad Billing Platform Tied to $16.6 Million in Home Health Overpayments

The New York State Department of Health (DOH) made $16.6 million in Medicaid overpayments to home health providers over the course of three-and-a-half years—and now some of those providers may be on the hook to pay back the agency.

“Home health care providers fill a great need by allowing patients to stay in their homes and avoid costly placement in hospitals or rehabilitation centers,” New York State Comptroller Thomas P. DiNapoli said in a press release issued Dec. 8. “However, my auditors found numerous instances where the state Department of Health’s eMedNY billing system paid providers for weeks of service, when only days of care had been given.”

That eMedNY system lacks necessary system controls to prevent the improper payments identified in the audit, according to a report from DiNapoli’s office.

The audit looked at the time period between May 1, 2012, and Dec. 31, 2015. In 2012, the state implemented an episodic payment system for Medicaid home health services, such as long-term nursing, home health aide services, physical therapy, and social work/nutrition services. Under this system, certified home health agencies are paid for 60-day episodes of care. If they provide care for fewer than 60 days, they are supposed to receive a pro-rated payment amount.

However, 95 home health providers received overpayments during the time period audited, according to DiNapoli’s office. And 93% of the overpayments went to just 20 providers.

About $8.2 million in overpayments were related to beneficiaries who transferred to a Medicaid managed long-term care plan during a 60-day episode of care. The agencies who began treating them received full 60-day payments rather than pro-rated amounts.

Around $7.1 million in overpayments went to agencies that improperly billed multiple episodes during the 60-day period from the start of care. The remainder of overpayments, about $1.3 million, were related to beneficiaries who started receiving care through one agency but then transferred to a different agency. In one instance, an agency received $10,979 for a full 60-day episode, even though it only served the beneficiary for 10 days before the individual switched to a different provider, according to the press release.

DOH employees flagged potential problems with the eMedNY system controls while the episodic payment structure was being considered, according to the Office of the Comptroller. However, “insufficient resources” and the billing configuration under EPS meant that no sufficient system controls were put in place.

The audit report contained two recommendations: the DOH should review the overpayments and try to recover them, “as appropriate”; and DOH should take steps to create mechanisms to identify and recover overpayments when billing does not fit guidelines.

The Department of Health concurred with the recommendations and stated that it is taking steps to address the issue, including by working with a new vendor—Xerox—to replace the current Medicaid billing system.

Written by Tim Mullaney