Washington State Made Incorrect Medicaid Electronic Health Record Incentive Payments to Hospitals

Although the Washington State Health Care Authority (State agency) made Medicaid electronic health record (EHR) incentive program payments to eligible hospitals, it did not always make these payments in accordance with Federal requirements. Specifically, from October 1, 2011, through December 31, 2015, the State agency made incorrect Medicaid EHR incentive payments to 19 of the 20 hospitals reviewed, totaling $11.3 million. These incorrect payments included both overpayments and underpayments, resulting in a net overpayment of $9.2 million. Because the incentive payment is calculated once and then paid out over 4 years, payments made after December 31, 2015, will also be incorrect. The adjustments to these payments total $2.5 million.

The Health Information Technology for Economic and Clinical Health Act, enacted as part of the American Recovery and Reinvestment Act of 2009, established Medicare and Medicaid EHR incentive programs to promote the adoption of EHRs. As an incentive for using EHRs, the Federal Government is making payments to providers that attest to the "meaningful use" of EHRs. The State agency made approximately $250 million in Medicaid EHR incentive program payments from October 1, 2011, through December 31, 2014. Of this amount, $120 million was paid to 87 hospitals.

We recommended that the State agency (1) refund to the Federal Government $9.2 million in net overpayments made to the 19 hospitals, (2) adjust the 19 hospitals' remaining incentive payments to account for the incorrect calculations (which will result in cost savings of $2.5 million after December 31, 2015), (3) review the calculations for the hospitals not included in the 20 we reviewed to determine whether payment adjustments are needed and refund to the Federal Government any overpayments identified, and (4) review supporting documentation from all hospitals to help identify any errors in incentive payment calculations.

In written comments on our draft report, the State agency partially concurred with our recommendations and provided information on actions that it planned to take to address our recommendations.