Review of Medicaid Services Provided on the Day of Admission to an Inpatient Hospital or During an Inpatient Stay in New York State

New York State did not claim Medicaid ancillary services in accordance with Federal and State requirements from October 1, 2000, through September 30, 2002.  Medicaid claims for inpatient hospital care are paid at an all-inclusive rate that covers costs of services, including ancillary services (e.g., laboratory, radiology, surgical services), furnished to beneficiaries during hospital stays.  However, of the 196 ancillary services in our sample, the State separately reimbursed Medicaid providers for 138 services provided during a beneficiary's inpatient hospital stay or on the day the beneficiary was admitted to an inpatient hospital.  For 61 of the 138 services, the State did not recoup payment through its postpayment review process.  As a result, we estimated that the State improperly claimed $293,000 ($147,000 Federal share) for ancillary services.  This overpayment occurred because the State's computerized payment system and postpayment review process did not identify ancillary services separately billed during a beneficiary's hospital stay. We recommended that the State (1) refund $147,000 to the Federal Government and (2) improve its internal controls to preclude Medicaid payments for ancillary services during a hospital stay or on the day of admission. The State agency disagreed with our first recommendation and generally agreed with our second recommendation. Nothing in the State's response caused us to alter our recommendations.