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Medicaid Payments for Therapy Services in Excess of State Limits


Past OIG work has shown that Medicare- and Medicaid-paid physical, occupational, and speech therapy services were vulnerable to improper payments because (1) plans of care were incomplete or missing; (2) documentation was missing, or providers failed to respond to our request for documentation; or (3) providers lacked proper qualifications, or we could not determine whether they had proper qualifications.


We asked Medicaid staff from all States and the District of Columbia (States) to respond to a questionnaire requesting information about whether their States placed limits on the amount, duration, and scope of therapy services, and if so, the nature of those limits. We examined paid Medicaid fee-for-service claims for therapy services in eight States (Arkansas, Florida, Hawaii, Illinois, Maine, Maryland, Michigan, and North Carolina) for the period July 1, 2008, through June 30, 2009, to determine whether the therapy services complied with State limits. We asked State Medicaid officials to describe the safeguards established to prevent payments in excess of State limits. We also asked State Medicaid staff to identify the reason(s) States' safeguards failed to prevent payments in excess of State limits.


Thirty-five of the forty-eight States that paid for any type of Medicaid therapy services placed limits on the amount of services a beneficiary could receive. All eight States we reviewed described safeguards established to prevent payments in excess of State limits; however, six of those States improperly paid claims totaling approximately $744,000. Three States paid claims for therapy services that were potentially improper. Although we identified a relatively low number of claims for therapy services paid improperly, the errors were easily preventable in most instances. Several States reported improving their program integrity safeguards to address our findings.


We recommend that CMS work with States to prevent Medicaid payments for therapy services in excess of State limits and to follow up on the inappropriate claims identified in our review. CMS concurred with our recommendations.