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Medicaid overpayments linked to incorrect inpatient claims

  • / Updated:
  • Staff Report 

A recent audit of the State’s Medicaid program, managed by the Department of Health, has uncovered potential improper payments to hospitals for services wrongly billed as inpatient claims.


The audit, which spanned from January 2018 to March 2022, explored the discrepancy between inpatient and outpatient services. Inpatient care generally necessitates an overnight stay in a hospital, while outpatient services, which are typically less costly, can be performed within a day. Billing inaccuracies between these two can significantly impact Medicaid’s reimbursements.

The investigation unveiled a considerable lack of guidance from the Department to hospitals, which may have led to the billing errors and subsequent overpayments. The audit discovered 34,264 fee-for-service inpatient claims, amounting to approximately $360.6 million, that indicated Medicaid patients were discharged within 24 hours.

A further in-depth review of 190 claims from this batch revealed 48% were improperly billed, resulting in overpayments of about $1.58 million. Key recommendations from the audit suggest creating clearer guidelines for hospitals, revisiting improperly billed claims for potential recovery, and establishing a process to regularly assess high-risk short-stay inpatient claims.