New Jersey Hospitals Receive Incorrect Medicaid Electronic Health Record Incentive Payments

New Jersey Hospitals Receive Incorrect Medicaid Electronic Health Record Incentive Payments

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In August 2016, the Department of Health and Human Services Office of Inspector General (“OIG”) released an audit report entitled “New Jersey Made Incorrect Medicaid Electronic Health Record Incentive Payments” (“Report”).

The Report states that “New Jersey made incorrect Medicaid electronic health record incentive payments totaling $2.5 million. Incorrect payments included both overpayments and underpayments, for a net overpayment of approximately $2.3 million.”

OIG has performed previous audits where it was found that incorrect payments to hospitals were made in Oklahoma, Texas, Arkansas, Arizona, Louisiana and Massachusetts. However, OIG determined that Florida, Pennsylvania and the District of Columbia have been making the proper payments to hospitals.


The Health Information Technology for Economic and Clinical Health Act, enacted as part of the American Recovery and Reinvestment Act of 2009, provided incentive programs for Medicare and Medicaid providers that adopted the use of certified electronic health record (“EHR”) technology. This technology was created to increase efficiency and record keeping accuracy. The use of certified EHR technology by healthcare professionals is endorsed by the Federal government in order to improve the quality and value of healthcare. The Federal government is providing incentive payments to those healthcare providers that attest to the “meaningful use” of EHRs.

The Audit

The audit was conducted for several reasons. The Government Accountability Office identified improper incentive payments as the primary risk to the EHR incentive programs. In addition, Centers for Medicare & Medicaid Services and States face various obstacles when overseeing the Medicare and Medicaid EHR incentive programs. As outlined in the Report, these obstacles leave the programs vulnerable to paying incentive payments to providers that do not fully meet requirements.

During the audit, OIG focused on incentive payments made from February 1, 2012 through September 30, 2013 (“audit period”). Per the Report, “During the audit period the State agency paid $118,634,704 for Medicaid EHR incentive payments.” OIG selected 33 hospitals for the audit whose health systems received incentive payments of $1 million or more and the five highest-paid professional groups which had a total of 253 professionals. The hospitals and professional groups that were selected accounted for roughly 64% of the total incentive payments made during the audit period.

Report Highlights

The following are some of the areas highlighted in the Report.

Incentive Payment Eligibility Requirements

Per the Report, “To receive an incentive payment, eligible providers attest that they meet program requirements by self-reporting data using the National Level Repository (“NLR”).” The NLR is a web-based provider registration and verification system that contains information with respect to providers participating in the Medicare and Medicaid EHR incentive programs. In general, to qualify for eligibility, providers must meet Medicaid patient-volume requirements.

Eligible Hospital Payments

As outlined in the Report, “Hospital incentive payments are based on a one-time calculation of a total incentive payment, which is distributed by States over a minimum of 3 years and a maximum of 6 years. The total incentive payment is the overall EHR amount multiplied by the Medicaid share.”

In certain instances, hospitals may not receive the entire payment as they must re-attest and meet the program requirements annually. In addition, it is permissible for hospitals to receive both Medicare and Medicaid payments within the same year; however, it is prohibited for hospitals to receive Medicaid incentive payments from more than one State.

Eligible Professional Payments

The Report states “Professionals receive a fixed amount of $21,250 in the first year and $8,500 in subsequent years; the total may not exceed $63,750 over a 6-year period.” Certain pediatricians who fall between the 20-30% Medicaid patient-volume threshold received a two-thirds reduced EHR incentive payment. Thus, they would only receive $14,167 in the first year and $5,667 in subsequent years, for a maximum of $42,500. Unlike hospitals; eligible professionals are limited to receiving either Medicaid or Medicare incentives, but are disallowed from receiving both in the same year. Furthermore, similar to hospitals, eligible professionals cannot receive payments from more than one State.

Report Recommendations

The following recommendations were noted in the Report with respect to the State agency:

  • Refund the Federal government $2,270,213 in net overpayments made to the 15 hospitals;
  • Adjust the 15 hospitals’ remaining incentive payments to account for the incorrect calculations (which will result in future cost savings of $514,107);
  • Review the calculations for the hospitals not included in the 33 reviewed to determine whether payment adjustments are needed, and refund any overpayments identified; and
  • Work with CMS to ensure that the one unreported professional incentive payment is reported to the NLR.

Additional Resourse

A copy of the Report can be accessed below.

New Jersey Made Incorrect Medicaid Electronic Health Record Incentive Payments

Ask Our Experts

Please contact a member of Withum’s Healthcare Services Group at [email protected] for further questions or assistance.

The information contained herein is not necessarily all inclusive, does not constitute legal or any other advice, and should not be relied upon without first consulting with appropriate qualified professionals for your individual facts and circumstances.

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