New Jersey Claimed Medicaid Reimbursement for Adult Partial Hospitalization Services That Did Not Comply With Federal and State Requirements

All 100 of the New Jersey Department of Human Services' (State agency) sampled claims for Federal Medicaid reimbursement for partial hospitalization services did not comply with Federal and State requirements, and 92 contained more than 1 deficiency. Partial hospitalization services are provided on a hospital-outpatient basis to adults with serious mental illnesses to prevent inpatient hospitalization and achieve community integration. On the basis of our sample results, we estimated that the State agency improperly claimed at least $30.7 million in Federal Medicaid reimbursement for partial hospitalization services that did not meet Federal and State requirements.

The deficiencies occurred because the State agency did not (1) work with the State Department of Health (DOH) to ensure that partial hospitalization services are provided by appropriately licensed hospitals, (2) adequately monitor the partial hospitalization program to ensure that providers complied with Federal and State requirements, and (3) have adequate controls to ensure that services were paid at the proper payment rate.

We recommended that the State agency (1) refund $30.7 million to the Federal Government, (2) work with the State's DOH to ensure partial hospitalization services are provided by appropriately licensed hospitals, (3) issue guidance to providers on Federal and State requirements for claiming Medicaid reimbursement for partial hospitalization services, (4) improve its monitoring of partial hospitalization services providers to ensure compliance with Federal and State requirements, (5) review and revise payment controls to ensure the correct rates are paid for partial hospitalization services, and (6) work with CMS to identify claims outside of our audit period that were paid at an incorrect rate or for services that were not provided by a facility licensed as a hospital. The State agency disagreed with our first recommendation and did not indicate concurrence or nonconcurrence with our remaining recommendations.