Follow-Up Audit of Virginia Department of Medical Assistance Services Payments for Outpatient Clinical Laboratory Services

EXECUTIVE SUMMARY:

The objective of this audit was to determine if the Virginia Department of Medical Assistance Services (State agency) had controls to prevent claiming Federal financial participation (FFP) for clinical laboratory service payments in excess of the amounts Medicare pays.  We found that controls did not exist to prevent the State agency from claiming FFP for clinical laboratory services paid in excess of Medicare amounts.  As a result, the State agency was overpaid $445,948 in FFP for paid claims totaling $867,631 from Calendar Years 1996, 1997, and 1998.  In addition, the State agency had not refunded the Federal share of overpayments related to 1993 and 1994 totaling $723,463 as identified in our prior audit of Outpatient Clinical Laboratory Services (A-03-96-00202).  We recommended, in addition to financial adjustments, that the State agency install and revise edits to detect and prevent payments for unbundled and duplicate services, and eliminate payments for additional hematology indices.