Review of Arkansas Department of Human Services' Reimbursement for Clinical Laboratory Services Under the Medicaid Program

This report presents the results of our review of Arkansas Department of Human Services' (State agency) reimbursement for clinical laboratory services under the Medicaid program. The objective of our review was to determine the adequacy of procedures and controls over the processing of Medicaid payments to providers for clinical laboratory tests. Our review was limited to clinical laboratory services involving chemistry, hematology, and urinalysis tests.

The State agency allowed excessive reimbursements for (1) chemistry and urinalysis tests that should have been bundled into a panel for payment and (2) duplicate payments of hematology and urinalysis tests. Controls were not effective in detecting unallowable claims for laboratory tests that should have been claimed as one test and duplicated claims. The State agency did not have procedures or controls in place in its claims processing system that would identify and reject these types of overpayments.

We randomly selected 150 claims with potential payment errors from a population of calendar years (Cys) 1993 and 1994 paid claims valued at $497,625. Of the 150 sampled items, 105 were overpaid. Each represented a potential payment error in which the State agency paid a provider for clinical laboratory tests on an individual test basis instead of as part of a group, or were duplicative of each other. Projecting the results of our statistical sample over the population using standard statistical methods, we estimate that the State agency overpaid providers $167,162 for chemistry, hematology and urinalysis tests. At the 90 percent confidence level, the precision of this estimate is plus or minus 28.74 percent.