Massachusetts Made Incorrect Medicaid Electronic Health Record Incentive Payments to Hospitals

The Massachusetts Executive Office of Health and Human Services, Office of Medicaid (State agency), did not always pay electronic health record (EHR) incentive payments to eligible hospitals in accordance with Federal and State requirements. The State agency made incorrect EHR incentive payments to 19 hospitals totaling $3.3 million. Specifically, the State agency overpaid 13 hospitals a total of $2.7 million and underpaid 6 hospitals a total of $564,000, for a net overpayment of $2.1 million. Because the hospital calculation is computed once and then paid out over 3 years, payments subsequent to calendar year 2012 will also be incorrect. The adjustments to these payments total $1.7 million. Additionally, the State agency did not report two hospital incentive payments to CMS's National Level Repository (NLR).

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 $64 million in Medicaid EHR incentive program payments to hospitals during calendar years 2011 and 2012.

We recommended that the State agency (1) refund to the Federal Government $2.1 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 future cost savings of $1.7 million; (3) review the calculations for the hospitals not included in the 25 we reviewed to determine whether payment adjustments are needed, review supporting documentation for the numbers provided in the cost reports, and refund any overpayments identified; (4) modify the hospital calculation worksheet to state that inpatient nonacute-care services should be excluded from the incentive payment calculation; and (5) work with CMS to ensure that the 2 hospital incentive payments not posted to the NLR are posted and establish a policy to reconcile the CMS-64 report to the NLR each quarter. The State agency concurred in part and disagreed in part with our findings and recommendations.