OIG Reports that Millions of Medicaid Overpayments Remain Uncollected

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On February 19, 2013, the OIG published a report detailing the collection status of Medicaid overpayments.  The Secretary of HHS requires CMS to collect overpayments, defined as “the amount paid by a Medicaid agency to a provider which is in excess of the amount that is allowed for services furnished” through a state’s plan for medical assistance.  42 C.F.R. § 433.304.  In accordance with its authority granted under the Inspector General Act of 1978, the OIG routinely audits CMS and reports findings of unallowable expenditures and the collection status of overpayments.

The OIG recently selected 147 audit reports to determine whether CMS had collected previously identified overpayments.  The audit reports, covering fiscal years 2000 through 2009, were chosen based on the high total dollar amount of overpayments.  Eleven states were represented: Florida, Indiana, Illinois, Kansas, Louisiana, Massachusetts, Missouri, New York, New Jersey, Oregon, and Pennsylvania.  Overpayments reflected in the audit reports totaled $1.2 billion.  As of December 2012, over $225 million remained to be collected.  In addition, CMS could not document over $7 million that reportedly had been collected.

The uncollected $225 million resulted from ten outstanding audit reports for which states did not agree to refund the overpayments.  Based on the OIG’s findings, CMS did not collect the overpayments in a timely manner, letting them remain uncollected for up to 86 months at the close of the OIG’s initial audit.  CMS has indicated that it has resolved three of the outstanding audits and is close to reaching a resolution for the remaining seven.  Regarding the $7 million in collected overpayments that CMS could not document, the OIG concluded that CMS had not ensured that states properly reported overpayments on the appropriate form, CMS-64.  The OIG has recommended that CMS collect the remaining overpayments, review and improve its collection process, maintain adequate documentation regarding collection, and educate states on the proper use of CMS forms.

To view the OIG’s report, please click here.

Reporter, Paige Fillingame, Houston, +1 713 615 7632, pfillingame@kslaw.com.