Review of Clinical Laboratory Services - New Hampshire Medicaid Program

EXECUTIVE SUMMARY:

This report presents the results of our review of the New Hampshire Office of Medical Services' (State Agency's) reimbursements for clinical laboratory services under the Medicaid program. The objective of our review was to determine the adequacy of procedures and controls over the processing of Medicaid payments to providers for clinical laboratory services. Our review was limited to clinical laboratory services involving chemistry and hematology tests.

Our review disclosed that the State agency did not have adequate procedures or controls to ensure that reimbursements for clinical laboratory tests under Medicaid did not exceed amounts recognized by the Medicare program, as required by Section 6300 of the State Medicaid Manual. In this regard, Medicare regulations provide that claims for laboratory services in which a provider bills separately for tests that are available as part of an automated multichannel chemistry panel, should be paid at the lesser amount for the panel. Specifically, we found that providers received excess reimbursements for automated multichannel chemistry panel tests that should have been grouped together (bundled into a panel) for payment at a lower panel rate. In addition, the State agency did not have any procedures or controls to detect and prevent payment of chemistry and hematology tests claimed more than once.

We statistically selected 100 instances involving claims with potential payment errors from a sample population of January 1993 through June 1994 paid claims valued at $339,388. We found that 99 of the 100 sampled instances were overpaid. Projecting the results of our statistical sample over the population using standard statistical methods, we estimate that the State agency overpaid providers $160,485 (Federal share $80,243) for chemistry and hematology tests over the 18 month audit period.

We recommend that the State agency (1) establish controls to identify unbundled or duplicate charges for laboratory tests, (2) update its provider billing instructions to reflect Medicare bundling requirements, (3) consider obtaining recoveries from providers with a large number of payment errors, and (4) make adjustments for the Federal share of amounts recovered by the State agency on its Quarterly Report of Expenditures to the Health Care Financing Administration.

The State agency concurred that overpayments to laboratory service providers had occurred for certain procedures and agreed to take corrective action in response to our recommendations. In this regard, the State agency indicated that the scope of its review would cover a 24 month period beginning January 1994 to be consistent with its routine review procedures for focused reviews.

Since the scope of our audit identified overpayments during calendar year 1993, we believe that the State agency should also consider the cost benefits of recovering the overpayments made in 1993 in its review of selected providers. We intend to provide the State agency with a file that will aid them in this effort.

---