August 30, 2012 | By | Posted in General News

State to take a closer look at Medicaid bills before paying up

By Melissa Daniels | PA Independent

HARRISBURG — Preventing wasteful Medicaid payments is on the Department of Public Welfare’s to-do list, an effort bolstered by federal funding and sophisticated computer programming.

The DPW this fall will roll out a computer system to examine all medical assistance payments before they’re issued.

The program, called InvestiClaim, will review claims for errors, such as incorrect codes or duplication, to ferret out fraudulent or mistakenly filed claims. The department will look at suspicious claims before issuing the payments.

The audit enhancements are expected to save $5 million a year, according to department projections.

To set up the system, DPW got approval from the federal Centers for Medicaid and Medicare Services, as much of the funding is federal.

The state contracted with HP Enterprise Services in April for $2.5 million to build the service, 90 percent of which is federal money. An additional $1.7 million in first-year software licensing fees will be 75 percent federally funded.

Anne Bale, DPW spokeswoman, said it’s more costly to investigate claims after a provider is reimbursed, rather than to fix errors before payment.

She said the system is similar to a federal version, but it’s relatively new from a state perspective.

The types of inefficient claims the system will check for include:

  • wrong provider type for the service;
  • invalid provider or license number;
  • procedure or diagnosis codes not supported by the claim or medical documentation;
  • Duplicate claims for same procedure and date of service.

Bale said the addition of the system won’t require new personnel.

Michael Lane is director of health care finance policy for the statewide industry group The Hospital and Healthsystem Association of Pennsylvania. He said when the state improperly pays a provider, oftentimes the provider will agree with the error and return the money. In other cases, such as when the dispute is over the medical necessity of the claim, the case could go to court.

A system that could prevent the first type of scenario would help on both ends, Lane said.

“From the provider or hospital perspective, we never want to be paid for things we shouldn’t be paid for,” Lane said. “Anything that can cut down on that burden on both ends would certainly be beneficial to both.”

But if the system ends up increasing the amount of time it takes for claims approval, or becomes a method for the state to withhold money, it could throw off hospitals’ budgeting process, he said.

“If everything is working smoothly and there are still avenues in place where hospitals can appeal should they feel an incorrect determination is being made, I do believe that is a concept the hospital community does support,” he said of the new system.

In addition to the pre-payment analysis, more system checks will kick in during 2013. Bale said those steps will examine provider behavior before and after payment, reviewing provider spending patterns.

The system comes in addition to existing departmental guidelines. DPW’s Bureau of Program Integrity is charged with post-payment reviews, which can result in the recovery of improper payments.

DPW also has self-audit guidelines for providers who discover inappropriate payments, which includes recovering the money without additional penalties.

Pennsylvania’s medical assistance caseload is projected to hit more than 2.1 million cases in the 2012-13 year, a growth of .3 percent from the last fiscal year.

Medical assistance program spending is projected to be more than $5.1 billion, out of a $10.5 billion department budget.

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Melissa Daniels is a reporter for PA Independent. She can be reached at 717-350-0962 or

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