Review of Clinical Laboratory Services Connecticut Medicaid Program

EXECUTIVE SUMMARY:

This report presents the results of our review of the Connecticut Department of Social Services' (State Agency's) reimbursements 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 services. Our review was limited to clinical laboratory services involving chemistry, hematology and urinalysis tests.

Our review disclosed that the State agency informed Medicaid providers of the requirements for claiming reimbursement of clinical laboratory tests and reviewed reimbursement of Medicaid services, including clinical laboratory tests, made to selected providers on a post payment basis. However, the State agency did not have adequate edits in its claims processing system to ensure that all reimbursement for clinical laboratory tests under Medicaid did not exceed amounts recognized by the Medicare program, as required by Section 6300 of the State Medicaid Manual. In this regard, Medicare regulations provide that claims for laboratory services in which a provider bills separately for tests that are available as part of an automated multichannel chemistry panel, should be paid at the lesser amount for the panel. Specifically, we found that providers received excess reimbursements for automated multichannel chemistry tests that should have been grouped (bundled into a panel) for payment at a lower rate. In addition, the State agency's claim payment system did not have adequate edits to detect and prevent payment of duplicate or multiple units of the same hematology or urinalysis tests.

We statistically selected 150 instances involving claims with potential payment errors from a population of calendar years 1993 and 1994 paid claims valued at $2,237,391. We found that 124 of the 150 sampled instances were potentially overpaid. Each of the 124 instances represents a payment error in which the State agency paid a provider for clinical laboratory tests on behalf of the same recipient on the same date of service. The payment errors consisted of individual tests that were billed separately instead of as part of a lower cost group and tests that were duplicative of each other. The State agency had already identified and recovered overpayments related to 29 of the 124 instances of potential error. As a result, we projected only the remaining 95 errors from our statistical sample over the sample population using standard statistical methods. We estimate that the State agency overpaid providers $427,068 (Federal share $213,534) for chemistry, hematology and urinalysis tests.

We are recommending that the State agency (1) install necessary controls and edits to detect and prevent payment for unbundled and/or duplicative laboratory services; (2) take appropriate action to recover overpayments caused by unbundled or duplicative clinical laboratory services that have not been previously identified; and (3) make adjustments for the Federal share of the amounts recovered by the State agency on its Quarterly Report of Expenditures to the Health Care Financing Administration. In response to our draft report, the State agency agreed with our recommendations.

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