New Jersey Claimed Medicaid Adult Mental Health Partial Care Services That Were Not in Compliance With Federal and State Requirements

Most of the New Jersey Department of Human Services' (State agency) claims for Federal Medicaid reimbursement for partial care services did not comply with Federal and State requirements. The partial care services program provides individualized outpatient clinic services (e.g., group and individual therapy, prevocational services, and medication management) to beneficiaries with mental illness to reduce unnecessary hospitalization. On the basis of our sample results, we estimated that the State agency improperly claimed at least $94.8 million in Federal Medicaid reimbursement for partial care services that did not meet Federal and State requirements.

Of the 100 claims in our random sample, 8 claims complied with Federal and State requirements, but 92 claims did not. Of the 92 noncompliant claims, 19 contained more than 1 deficiency. The deficiencies included services not documented or supported; services not provided by, or under the direction of, a psychiatrist affiliated with the facility where the services were provided; individualized plan-of-care requirements not met; weekly progress notes not documented; and the partial care provider not providing an applicable intake assessment.

The deficiencies occurred because the State agency did not adequately monitor the partial care services program to ensure that providers complied with these requirements. Providers stated that two State agency components—the Division of Medical Assistance & Health Services and the Office of Program Integrity and Accountability—conducted onsite reviews of their facilities that were inconsistent. For example, providers stated that the State agency components had different standards for documenting services. Further, we found that the Division of Medical Assistance & Health Services' reviews did not include tests for compliance with certain requirements (e.g., physician affiliation agreements, prior authorization of services, and services included in the beneficiary's plan of care) and were sometimes inconsistent.

We recommended that the State agency (1) refund $94.8 million to the Federal Government, (2) issue guidance to the partial care provider community on Federal and State requirements for claiming Medicaid reimbursement for partial care services, and (3) improve its monitoring of partial care providers to ensure compliance with Federal and State requirements. The State agency disagreed with our first recommendation and generally agreed with our remaining recommendations.