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

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.

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

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.