States are likely to crack down harder in the near future on Medicaid billing errors, including accidental up-coding, according to Robert Holster, CEO of New York City-based Health Management Systems, which checks Medicaid claims for 40 states.
States are facing tough times, Holster said. Although Medicaid up-coding errors have never been an area of emphasis, it's likely states will follow the federal government's lead in trying to squeeze out every recoverable dollar they can.
"Many states have fraud and abuse detection mechanisms, surveillance, retroactive sampling and clinical review of payments," Holster said. "It's just a matter of scale, but I believe they will step the level of energy they spend on recovery because CMS (the Centers for Medicare and Medicaid Services) has led the way."
HMS checks 680 million insurance records a year and has the largest repository of Medicaid data, representing some $600 billion in Medicaid claims, Holster said. The company has recovered more than $1 billion for its government clients, mainly by ensuring the Medicaid recipient didn't have private insurance.
According to Holster, about 10 percent of the recoveries HMS makes are from billing errors. Typically the errors are administrative and include improper emergency care claims, wrong diagnosis codes and claim dates and times that don't match up with services. Holster said only a "miniscule amount" of claims are flagged as fraud and are forwarded to an attorney general's office for investigation.
In 2006, CMS identified $304 million in improper Medicare claims. A February CMS report on claims recovery in New York, Massachusetts, Florida, South Carolina and California showed 3.9 percent of Medicare claims were billed incorrectly, projected to total $10.8 billion in overpayments and underpayments. The recovery is part of the CMS Recovery Audit Contractors pilot to go nationwide in 2010.
Holster said HMS is working now to develop the products needed to recover more money from Medicaid up-coding and other billing errors.
"It will be the fastest growing piece of our business going forward," he said. "If we can't slow the growth in healthcare, then we can try to wrap more controls around the individual expenditures."