Objective

To determine the extent of implementation of the two recommendations made in our initial audit report, Improper Medicaid Payments for Recipients Diagnosed With Severe Malnutrition (Report 2017-S-85).

About the Program

Malnutrition can result from the general deterioration of an individual’s health, inadequate treatment or neglect, or from the treatment of another condition. Once malnutrition is identified, a hospital must use the appropriate International Classification of Diseases (ICD) code on its Medicaid claim to reflect the diagnosis. Generally, as the severity of the malnutrition diagnosis increases, Medicaid’s payment to a hospital will increase.

We issued our initial audit report on April 8, 2019. The audit objective was to determine whether Medicaid made overpayments to hospitals that improperly billed All Patient Refined-Diagnosis Related Group inpatient claims containing a severe malnutrition diagnosis. The audit covered the period from January 1, 2013 through December 31, 2017. We identified $416,237 in Medicaid overpayments on inpatient claims that contained a severe malnutrition diagnosis that the medical records did not appear to support. We made two recommendations to the Department to review and recover the inappropriate payments and formally remind hospitals of billing and documentation requirements of severe malnutrition.

Key Finding

Department officials made some progress in addressing the problems we identified in the initial audit report; however, additional action is needed. In particular, the Office of the Medicaid Inspector General had not taken action to review the Medicaid overpayments and make any recoveries. Of the initial report’s two audit recommendations, one was implemented and one was not implemented.

Key Recommendation

Officials are given 30 days after the issuance of the follow-up report to provide information on any actions that are planned to address the unresolved issues discussed in the follow-up report.