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Audit Audit of the Office of Medicaid (MassHealth)—Review of Claims for Drug Test and Screen Services

Audit of MassHealth found that over the nearly four year audit period MassHealth overpaid claims for these services by as much as $4.38 million. The audit examined the period March 1, 2013 through December 31, 2016.

Binder organization: Office of the State Auditor
Date published: April 19, 2018

Executive Summary

The Office of the State Auditor (OSA) receives an annual appropriation for the operation of a Medicaid Audit Unit to help prevent and identify fraud, waste, and abuse in the state’s Medicaid program, known as MassHealth. Medicaid is a joint federal-state program created by Congress in 1965 as Title XIX of the Social Security Act. At the federal level, the Centers for Medicare and Medicaid Services (CMS), within the federal Department of Health and Human Services, administer the Medicare program and work with state governments to administer state Medicaid programs.

OSA has conducted an audit of MassHealth’s payments for drug tests and screens for the period March 1, 2013 through December 31, 2016. We expanded our audit testing through June 30, 2017 to determine how effective MassHealth’s use of its NetReveal predictive modeling software was in detecting instances of unbundling before payments were made. The purpose of this audit was to determine whether MassHealth properly identified and denied payment for both duplicate and unbundled drug tests. In a previous audit (No. 2012-1374-3C), OSA identified significant weaknesses in MassHealth’s claim-processing system for drug tests and screens that resulted in millions of dollars of improper claim payments.

This audit was conducted as part of OSA’s ongoing independent statutory oversight of the state’s Medicaid program. As with any government program, public confidence is essential to the success and continued support of the state’s Medicaid program. To ensure that claims for drug tests and screens are paid properly, MassHealth must have effective controls in place, including program regulations, operating policies and procedures, control activities, claim-processing system edits, monitoring activities, and enforcement actions.

Based on our audit, we have concluded that MassHealth overpaid as much as $4.38 million for drug tests and screens provided to its members.

Below is a summary of our findings and recommendations, with links to each page listed.

Finding 1
 

MassHealth paid for $2,294,369 in unallowable, unbundled drug screens and tests performed on the same day.

Recommendations
 

  1. MassHealth should seek to recover as much of the $2,294,369 in unbundled drug test payments improperly paid to laboratories as it deems appropriate.
  2. MassHealth should modify the system edits in the Medicaid Management Information System (MMIS) and its NetReveal software to ensure that they properly identify and deny payment for quantitative drug tests when a member also receives a qualitative drug screen on the same day. Once modifications have been made, MassHealth should test new edits completely to make sure they are functioning correctly.
  3. MassHealth should update its MMIS and NetReveal system edits as soon as possible when CMS revises procedure codes or implements new ones.
  4. MassHealth should not turn off the NetReveal prepayment system edit that is designed to prevent the payment of unallowable unbundled claims.

Finding 2
 

MassHealth improperly paid as much as $1,888,620 for unbundled drug tests.

Recommendations
 

  1. MassHealth should determine how much it should recover of the $1,888,620 that we identified in potential unbundled drug test payments improperly paid to laboratories and should take the necessary measures to recoup funds as appropriate.
  2. MassHealth should monitor claim activity to identify unacceptable billing practices related to unbundled drug tests and should program system edits in MMIS and/or NetReveal to deny any unbundled claims billed.

Finding 3
 

MassHealth paid $198,100 for duplicate drug tests.

Recommendations
 

  1. MassHealth should determine how much it can recover of the $198,100 that we identified in duplicate drug test and screen payments and should take the necessary measures to recoup these funds.
  2. MassHealth should ensure that its Claims Operations staff members research its suspect-duplicates report for duplicate drug tests paid for and make recoupments for such tests.
  3. MassHealth should update its NetReveal system edit to deny payment for duplicate drug tests and screens, including those that are billed by two different laboratories that are not for emergency hospital drug tests.

 

A PDF version of the audit of the Office of Medicaid (MassHealth) - Review of Claims for Drug Test and Screen Services is available here.

Post-Audit Action

MassHealth officials informed us that since May 2016, MassHealth has been using its predictive modeling software (a system that denies improper claims), known as NetReveal, to identify and deny payments for duplicate drug tests and screens when the services are provided to the same member on the same date. This software provides a second level of system controls for laboratory services in addition to the existing system control in MMIS known as the “suspect duplicate” function. This existing system control flags and reports a suspected duplicate claim as a potentially duplicate payment, but still pays the claim. After the claim is paid, MassHealth’s Claims Operations staff is responsible for researching all reported suspected duplicate claims for future recoupment. However, with the new function in the predictive modeling software for duplicate services, claims are automatically denied.

MassHealth officials informed us that since the implementation of this additional control in May 2016, MassHealth has been able to deny the payment of approximately 40,000 duplicate claims, totaling approximately $2 million.

List of Abbreviations

CMR

Code of Massachusetts Regulations

CMS

Centers for Medicare and Medicaid Services

MMIS

Medicaid Management Information System

OSA

Office of the State Auditor

PCU

Provider Compliance Unit

SUD

substance use disorder

Contact

Phone

Fax

(617) 727-3014

Address

Massachusetts State House
Room 230
Boston, MA 02133

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