Review of Claims Paid for Clinical Diagnostic Laboratory Services Under the Massachusetts Revised Fee Schedule - July 1999 Through March 2002

EXECUTIVE SUMMARY:

The objective of this review was to determine whether Medicaid payments for hospital outpatient laboratory and pathology tests complied with rates allowed by the Medicare program.  Section 1903(i)(7) of the Social Security Act limits Medicaid payments for clinical laboratory tests to the amounts payable for the same tests under the Medicare fee schedule.  However, our analysis showed that of the $29 million in hospital outpatient laboratory claims submitted by the State for the period July 1999 through March 2002, $8.2 million ($4.1 million Federal share) exceeded the Medicare fee schedule amounts.  The State's procedures were not adequate to ensure that the amounts claimed for Medicaid laboratory services and submitted for Federal reimbursement complied with the Medicare fee schedule.  We recommended that Massachusetts (1) make an adjustment of $8.2 million ($4.1 million Federal share) on the next quarterly report of expenditures and (2) ensure that amounts claimed for hospital laboratory services and submitted for Federal reimbursement do not exceed the Medicare fee schedule amounts.

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