The HHS Office of Inspector General (OIG) recently reported that the New Jersey Department of Human Services (NJ DHS) made incorrect Medicaid electronic health record (EHR) incentive payments to 15 hospitals for a total of $2,544,870, with 10 hospitals being overpaid a total of $2,407,541 and five hospitals being underpaid a total of $137,329.  This marks the second recent report from OIG finding that State Medicaid programs made incorrect Medicaid EHR incentive payments to hospitals, and again recommends that the State repay the money to CMS and apply the alleged overpayments against future incentive payments owed to those hospitals.

As detailed in OIG’s report, the NJ DHS paid approximately $119 million in Medicaid EHR payments from February 1, 2012, through September 30, 2013.   OIG’s review of those EHR incentive payments examined 33 hospitals that received an incentive payment totaling $1 million or more during the audit period and the five highest-paid professional groups.  According to OIG report, although the NJ DHS made incorrect payments to 15 out of the 33 hospitals that were reviewed, it correctly paid the five professional groups. 

OIG’s report stated that the incorrect payments were a result of the NJ DHS program integrity contractor failing to identify certain errors and inconsistently applying the requirements of the EHR Incentive Programs.  For example, although CMS guidance states that psychiatric days and discharges cannot be included as inpatient acute-care services in the calculation of the EHR incentive payments, the calculations for five of the 33 hospitals reviewed included psychiatric services. 

As a result of the identified deficiencies, OIG made several recommendations, including that the NJ DHS refund to the Federal government $2,270,213 in net overpayments made to the 15 hospitals, analyze the payments made to the other hospitals not reviewed by OIG, and refund any additional overpayments identified.  NJ DHS agreed with the OIG’s recommendations.  As noted in the report, OIG’s review of NJ Medicaid EHR incentive payments is just one in a series of OIG reviews focusing on Medicaid EHR incentive payments to hospitals, including a review that identified Arizona as overpaying $14.8 million which was the subject of a Health Headlines article in August.