Yesterday, HHS-OIG issued an audit entitled “Acute-Care Hospitals In Texas Did Not Always Reconcile Invoice Records With Credit Balances And Refund To The State Agency The Associated Medicaid Overpayments.”

The federal auditors, in looking over eight acute care hospitals in Texas, found that HHSC and its claims administrator TMHP did not have in place the proper administration procedures to ensure that credit balances on Medicaid patient accounts were refunded back to the state. It found only one hospital in the sample always reconciled accounts and returned the credit funds back to Medicaid. The other seven did not. Out of 148 patient accounts with both Medicaid payments and credit balances reviewed, 81 were found to have overpayments that should have been refunded. This amounted $30,057 for those 81 accounts.

Extrapolating the sample results, HHS-OIG estimated that HHSC was missing over $15 million in overpayments from all hospitals in Texas. The federal share of the amount would be $10.5 million.

The audit states that the reasons for HHSC’s lackluster performance are “because the State agency did not require them to exercise reasonable diligence in reconciling patient account credit balances to determine whether overpayments had been made” and “the State agency did not require hospitals to submit reports that showed all identified Medicaid overpayments recorded as credit balances in the hospitals’ accounting systems.”

The following recommendations were made:

• refund the $18,472 Federal share to the Federal Government for overpayments paid to the selected hospitals and
• enhance its efforts to recover additional overpayments, estimated at $15,299,033 ($10,538,912 Federal share), from hospitals and realize future savings by requiring and ensuring that hospitals exercise reasonable diligence in reconciling patient account credit balances and refunding the associated Medicaid overpayments within a specified time period.

HHSC responded on the $15 million that “HHSC will work with TMHP to strengthen provider education and outreach to ensure hospitals exercise reasonable diligence in reconciling patient account balances and refunding associated Medicaid overpayments within a specified time period. HHSC will evaluate existing Texas Administrative Code (TAC) Rules and Medicaid Managed Care Contract requirements for possible revision.”