OIG: Mass. Made $3.3M in Incorrect Medicaid EHR Incentive Payments

November 26, 2014 in News

The Massachusetts Executive Office of Health and Human Services, Office of Medicaid made $3.3 million in incorrect electronic health record incentive payments under the Medicaid meaningful use program to eligible hospitals, according to an HHS Office of Inspector General report, Clinical Innovation Technology reports (Walsh, Clinical Innovation Technology, 11/26).

Under the 2009 economic stimulus package, providers who demonstrate meaningful use of certified EHRs can qualify for Medicaid and Medicare incentive payments.

Audit Details

HHS’ OIG conducted the audit to determine whether the state’s Medicaid office adhered to federal and state requirements for disbursing Medicaid EHR incentive payments to eligible hospitals (Murphy, EHR Intelligence, 11/25). According to Clinical Innovation Technology, OIG decided to investigate Massachusetts after discovering that the state agency had paid out $45.8 million to 25 hospitals, accounting for 71% of all payments made in 2011 and 2012 (Clinical Innovation Technology, 11/26).

Audit Findings

The audit found that 19 of the 25 audited hospitals calculated incentive payments in a way that did not comply with disbursal requirements. For example, the payment calculations included:

  • Nursery services at 16 hospitals;
  • Psychiatric services at two hospitals; and
  • Skilled nursing facility services at one hospital.

According to EHR Intelligence, CMS prohibits such services from inclusion in the calculation of hospitals’ incentive payments (EHR Intelligence, 11/25).

The mistakes resulted in 13 hospitals receiving overpayments totaling $2.7 million and six hospitals receiving underpayments of about $564,000 (Bowman, FierceEMR, 11/26).

Further, the report stated that “[b]ecause the hospital calculation is computed once and then paid out over three years,” subsequent payments also would be incorrect. According to the report, “The adjustments to these payments total $1,715,362.”

The report also found that the Medicaid Office failed to report two hospital EHR incentive payments totaling more than $2.4 million.


OIG in the report recommended that Massachusetts:

  • Repay the federal government $2.1 million in net overpayments given to the 19 hospitals;
  • Update the hospitals’ remaining incentive payments to correct the improper calculations;
  • Review calculations for hospitals that were not included in the final review;
  • Update the hospital calculation worksheet to identify which services should not be included in the calculations; and
  • Work with CMS to make sure that the missing hospital incentive payments are posted to NLR and reconcile future reports with NLR for each quarter.


According to EHR Intelligence, Massachusetts’ Office of Medicaid has agreed that it made the overpayments but has disputed the amount and the claims that it failed to submit the missing reports to NLR.

The agency said it has so far paid back $1.3 million of the overpayments made to 15 of the 19 hospitals. In addition, it has said it will implement a reconciliation process for future NLR reports to identify transfer errors (EHR Intelligence, 11/25).

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