Purpose

To determine whether Medicaid made inappropriate payments to providers that failed to use modifier codes properly. The audit covered the period from January 1, 2012 to March 31, 2017.

Background

The Medicaid program is a federal, state, and locally funded program that provides a wide range of health care services to those who are economically disadvantaged and/or have special health care needs. The Department of Health (Department) administers the Medicaid program in New York State. Health care providers bill Medicaid for services provided to Medicaid recipients. Medicaid payments are based, in part, on procedure codes reported on claims that indicate the services provided. In certain instances, providers must include a modifier code on the claim to further describe the service(s) provided.

Medicaid payments for surgical procedures include the preoperative, intraoperative, and postoperative services normally performed by the provider. This is commonly known as the global surgery period. All routine services related to the surgery, such as evaluation and management (E/M) services, are included in Medicaid’s payment for the procedure. E/M services that are unrelated to the original procedure may sometimes occur during the global surgery period. These circumstances may be reported, and reimbursed, by adding the appropriate modifier code to the E/M service.

Key Findings

Auditors identified about $2.6 million in inappropriate payments made to providers for E/M services from January 1, 2012 to March 31, 2017. Specifically, the audit found:

• Medicaid made 50,715 inappropriate payments totaling $2,093,285 for E/M services billed without a modifier code on the same day a surgical procedure was performed. The payments were inappropriate because the costs of the services were already included in Medicaid’s payment for the surgical procedures.

• Medicaid also made 15,170 inappropriate payments totaling $517,492 for E/M services billed without a modifier code during the postoperative period of surgery. Similarly, the costs of these services were already included in Medicaid’s payment for the surgical procedures.

Key Recommendations

• Review the $2.6 million in inappropriate payments made to providers for E/M services and recover overpayments, as appropriate.

• Formally advise providers that received inappropriate payments to report accurate claim information when billing Medicaid for E/M services during global surgery periods to ensure claims are paid appropriately.

Other Related Audits/Reports of Interest

Department of Health: Medicaid Claims Processing Activity April 1, 2016 Through September 30, 2016 (2016-S-12)
Department of Health: Medicaid Claims Processing Activity October 1, 2016 Through March 31, 2017 (2016-S-66)