Review of the New Jersey Department of Human Services Reimbursement for Clinical Laboratory Services Under the Medicaid Program

EXECUTIVE SUMMARY:

This report provides you with the results of our "Review of the New Jersey Department of Human Services Reimbursement for Clinical Laboratory Services Under the Medicaid Program." The objective of our audit 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.

Our review disclosed that the New Jersey Department of Human Services, Division of Medical Assistance and Health Services (State agency) did not have adequate procedures or controls to ensure that reimbursements 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 guidelines 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. The Medicare guidelines also require that a provider be liable for overpayments it receives for overlapping or duplicate bills.

Using statistical sampling techniques, we estimate that $297,427 (Federal share $148,714) was overpaid to providers during calendar years 1993 and 1994 for chemistry, hematology and urinalysis tests that should have been grouped together (bundled into a panel, profile, or complete test) for payment at a lower rate. We found that the State agency established procedures and controls (including computer edits) for chemistry tests, but these were not fully effective in identifying and properly grouping together these tests into lower value.