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OIG tackles bid savings and improper payments

OIG tackles bid savings and improper payments

WASHINGTON - The Texas Medicaid program could have saved $2 million in the Dallas/Forth Worth area alone if it had used competitive bidding pricing for certain DME items in fiscal year 2011, according to a new study from the Office of Inspector General (OIG).

The OIG found that Texas Medicaid's payment amounts for 30 of 32 DME items exceeded competitive bidding amounts.

“Our findings provide a tangible example of potential state and federal savings for Medicaid programs if the programs were to use the Medicare competitive bidding program payment amounts for DME items,” the OIG states in the study.

In all, the OIG found that Texas Medicaid spent about $12 million on those 32 items in Dallas/Forth Worth in 2011.

To conduct the study, the OIG examined pricing for 32 items covered under both the Texas Medicaid program and competitive bidding, and made comparisons across the two programs in the Dallas/Fort Worth area. For each item for which the Texas Medicaid payment amount exceeded the Medicare amount, it used the Medicaid claims volume to estimate the potential savings that could have been achieved using the Medicare amount instead. It then calculated the overall potential savings by summing the potential savings per item.

The OIG found that Texas Medicaid could have saved the most on oxygen concentrators ($883,483). It found that the state paid $161.05 for the equipment compared to Medicare's $123.

Spurring the OIG to conduct the study: the president's fiscal year 2014 budget, which emphasizes cost containment by Medicaid programs. The budget, the agency points out, proposed “limiting federal reimbursement for a state's Medicaid spending on certain DME service to what Medicare would have paid in the same state for the same services.”

The study did not contain recommendations.

OIG: 'High amounts of improper payments may continue'

WASHINGTON - A new study from the Office of Inspector General (OIG) says that while CMS took corrective actions to address the majority of the vulnerabilities it identified, the agency did not evaluate the effectiveness of these actions.

“As a result, high amounts of improper payments may continue,” the study states.

The OIG found that, of 2.6 million claims reviewed in 2010 and 2011, the RACs identified 1.3 million as having improper payments—at a cost of $1.3 billion.

During those two years, the OIG found that CMS identified 46 vulnerabilities resulting in improper payments, with the majority of them (26 out 46) occurring in Medicare Part B. Vulnerabilities included providers billing add-on codes without primary codes or indicating the incorrect place of service.

The OIG found that, by June 2012, CMS took corrective actions to address 28 of the vulnerabilities, which addressed $1.86 billion of the improper payments. Corrective actions included contractor technical direction letters, computerized edits and quarterly education letters.

But the OIG also found that, by that same date, CMS had not evaluated the effectiveness of its corrective actions.

CMS blamed a lack of resources and the difficulty of determining relationships between corrective actions and reductions in improper payments. The agency also stated that some corrective actions need to be in place for several years before it evaluates them.

The OIG also criticized CMS for not implementing metrics to evaluate the performance of the RACs on all contract requirements.

CMS concurred with the OIG's recommendations that it take appropriate action on vulnerabilities that are pending corrective action and evaluate the effectiveness of corrective actions; ensure that RACs refer all cases of potential fraud; and develop additional performance evaluation metrics of the RACs.

The agency did not say whether it concurred with a recommendation to take appropriate action on RAC referrals of potential fraud.


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