j- department of health human servicesmar 25, 2009 · hospital a for inpatient psychiatric...

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Office of Inspector General;; DEPARTMENT OF HEALTH & HUMA SERVICES Office of Inspector General(:.J- DEPARTMENT OF HEALTH & HUMAN SERVICES ~" "ó

'(1-~J¡ Washington, D.C. 20201Washington, D.C. 20201 .llfVd30

MAR 25 2009MAR 25 2009

Charlene FrizzeraTO:TO: Charlene Frizzera Acting AdministratorActing Administrator Centers for Medicare & Medicaid ServicesCenters for Medicare & Medicaid Services

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oseph E. VengrinFROM:FROM: oseph E. Vengrin Deputy Inspector General for Audit ServicesÆ~~Deputy Inspector General for Audit Services

SUBJECT: Review of Medicaid Participation Eligibility for One Indiana State-ownedSUBJECT: Review of Medicaid Participation Eligibility for One Indiana State-owned Psychiatric Hospital for the Period July 1, 1996, Through June 30, 2007Psychiatric Hospital for the Period July 1, 1996, Through June 30, 2007 (A-05-07-00076)(A-05-07-00076)

Attached is an advance copy of our final report on Medicaid participation eligibility forAttached is an advance copy of our final report on Medicaid participation eligibility for hospital A, an Indiana State-owned psychiatric hospital, fOf the period July 1, 1996, throughhospital A, an Indiana State-owned psychiatric hospital, for the period July 1, 1996, through June 30, 2007. We will issue this report to the Indiana Family and Social ServicesJune 30, 2007. We wil issue this report to the Indiana Family and Social Services Administration (the State agency) within 5 business days.Administration (the State agency) within 5 business days.

Medicaid inpatient psychiatric services for recipients under the age of 21 and for those age 65Medicaid inpatient psychiatric services for recipients under the age of 21 and for those age 65 and older may be provided in psychiatric hospitals, and those hospitals must meet both the basicand older may be provided in psychiatric hospitals, and those hospitals must meet both the basic Medicare Conditions of Participation (CoP) requirements and two special Medicare CoPMedicare Conditions of Paricipation (CoP) requirements and two special Medicare CoP requirements for staffing and medical records. Special Medicare CoP compliance can only berequirements for staffing and medical records. Special Medicare CoP compliance can only be established through a special survey process.established through a special survey process.

Our objective was to determine whether the State agency made Medicaid payments to hospital AOur objective was to determine whether the State agency made Medicaid payments to hospital A for inpatient psychiatric services according to Federal eligibility requirements for hospitals.for inpatient psychiatric services according to Federal eligibility requirements for hospitals.

During the period July 1, 1996, through June 30, 2007, the State agency paid $26,208,269 ($16,298,423 Federal share) to hospital A, which was not eligible to receive Medicaid payments During the period July 1, 1996, through June 30, 2007, the State agency paid $26,208,269 ($16,298,423 Federal share) to hospital A, which was not eligible to receive Medicaid payments for inpatient psychiatric services. Hospital A did not meet Federal Medicaid eligibilityfor inpatient psychiatric services. Hospital A did not meet Federal Medicaid eligibility requirements because it did not demonstrate compliance with the two special Medicare CoP requirements.requirements. requirements because it did not demonstrate compliance with the two special Medicare CoP

We recommend that the State agency:We recommend that the State agency:

refund $16,298,423 to the Federal Government for Medicaid inpatient psychiatric service•. refund $16,298,423 to the Federal Governent for Medicaid inpatient psychiatric service payments made to hospital A from July 1, 1996, through June 30, 2007;payments made to hospital A from July 1, 1996, through June 30, 2007;

– Charlene Frizzera

• identify and refund the Federal share of additional unallowable Medicaid payments to hospital A for inpatient psychiatric services provided after June 30, 2007; and

• ensure that Medicaid payments for inpatient psychiatric services are made only to eligible

hospitals. In written comments to our draft report, the State agency disagreed with the finding and first recommendation and did not address the other recommendations. The State agency said that the facts are sufficient to establish hospital A’s eligibility to receive Medicaid payments and that hospital A’s claims related to the treatment of children are proper because the Medicare special CoP do not apply to the treatment of patients age 21 and under. After reviewing the State agency’s comments, we maintain that our finding and recommendations are valid. If you have any questions or comments about this report, please do not hesitate to call me, or your staff may contact George M. Reeb, Assistant Inspector General for the Centers for Medicare & Medicaid Audits, at (410) 786-7104 or through e-mail at [email protected] or Marc Gustafson, Regional Inspector General for Audit Services, Region V, at 312-353-2621 or through email at [email protected]. Please refer to report number A-05-07-00076. Attachment

mailto:[email protected]

mailto:[email protected]

DEPARTMENT OF HEALTH AND HUMAN SERVICES('~ OF HEALTH AND HUMAN SERVICESDEPARTMENT

OFFICE OF AUDIT SERVICESOFFICE OF AUDIT SERVICES REGION VVREGION233 NORTH MICHIGAN AVENUE233 NORTH MICHIGAN AVENUE'-"~ OFFICEOFFICE OFOF

CHICAGO, ILLINOIS 60601CHICAGO, ILLINOIS 60601 INSPECTOR GENERAL...:..IJ~JJat INSPECTOR GENERAL

MAR 30 20D9MAR 30 20D9

Report Number: A-05-07-00076Report Number: A-05-07-00076

Ms. Pat CasanovaMs. Pat Casanova Director, Offce of Medicaid Policy and PlaningDirector, Office of Medicaid Policy and Planning Indiana Family and Social Services AdministrationIndiana Family and Social Services Administration 402 West Washington Street, MS07402 West Washington Street, MS07 Indianapolis, Indiana 46204-2739Indianapolis, Indiana 46204-2739

Dear Ms. Casanova:Dear Ms. Casanova:

Enclosed is the U.S. Department of Health and Human Services (HHS), Office ofInspectorEnclosed is the U.S. Department of Health and Human Services (HHS), Office ofInspector General (OIG), final report entitled "Review of Medicaid Participation Eligibility for OneGeneral (010), final report entitled "Review of Medicaid Paricipation Eligibility for One Indiana State-owned Psychiatric Hospital for the Period July I, 1996, Through June 30, 2007."Indiana State-owned Psychiatric Hospital for the Period July l, 1996, Through June 30, 2007." We will forward a copy of this report to the HHS action official noted on the following page forWe wil forward a copy of this report to the HHS action official noted on the following page for review and any action deemed necessary.necessary.review and any action deemed

The HHS action official will make final determination as to actions taken on all matters reported.The HHS action official will make final determination as to actions taken on all matters reported. this letter. YourWe request that you respond to this official within 30 days from the date of this letter. YourWe request that you respond to this offcial within 30 days from the date of

response should present any comments or additional information that you believe may have aresponse should present any comments or additional information that you believe may have a bearing on the final determination.bearing on the final determination.

Pursuant to the Freedom ofInformation Act, 5 U.S.c. § 552, OIG reports generally are madePursuant to the Freedom ofInformation Act, 5 U.S.c. § 552, OIG reports generally are made available to the public to the extent that information in the report is not subject to exemptions inavailable to the public to the extent that information in the report is not subject to exemptions in the Act. Accordingly, this report will be posted on the Internet at http://oig.hhs.gov.the Act. Accordingly, this report will be posted on the Internet at http://oig.hhs.gov.

If you have any questions or comments about this report, please do not hesitate to call me, orIf you have any questions or comments about this report, please do not hesitate to call me, or contact David Markulin, Audit Manager, at (312) 353-1644 or through e-mail atcontact David Markulin, Audit Manager, at (312) 353-1644 or through e-mail at David.Markulin(ßoig.hhs.gov. Please refer to report number A-05-07-00076 in [email protected]. Please refer to report number A-05-07-00076 in all correspondence.correspondence.

Sincerely,Sincerely,

1r~~-y1rJ~~-y Marc GustafsonMarc Gustafson Regional Inspector GeneralRegional Inspector General

for Audit Servicesfor Audit Services

EnclosureEnclosure

Ms. Pat Casanova

Direct Reply to HHS Action Official: Ms. Jackie Garner Consortium Administrator Consortium for Medicaid and Children’s Health Operations Centers for Medicare & Medicaid Services 233 North Michigan Avenue, Suite 600 Chicago, Illinois 60601

Department of Health and Human ServicesOFFICE OF

INSPECTOR GENERAL

Daniel R. Levinson Inspector General

March 2009

A-05-07-00076

REVIEW OF MEDICAID PARTICIPATION ELIGIBILITY FOR

ONE INDIANA STATE-OWNED PSYCHIATRIC HOSPITAL FOR THE PERIOD JULY 1, 1996, THROUGH

JUNE 30, 2007

Office of Inspector General http://oig.hhs.gov

The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, as amended, is to protect the integrity of the Department of Health and Human Services (HHS) programs, as well as the health and welfare of beneficiaries served by those programs. This statutory mission is carried out through a nationwide network of audits, investigations, and inspections conducted by the following operating components: Office of Audit Services The Office of Audit Services (OAS) provides auditing services for HHS, either by conducting audits with its own audit resources or by overseeing audit work done by others. Audits examine the performance of HHS programs and/or its grantees and contractors in carrying out their respective responsibilities and are intended to provide independent assessments of HHS programs and operations. These assessments help reduce waste, abuse, and mismanagement and promote economy and efficiency throughout HHS. Office of Evaluation and Inspections The Office of Evaluation and Inspections (OEI) conducts national evaluations to provide HHS, Congress, and the public with timely, useful, and reliable information on significant issues. These evaluations focus on preventing fraud, waste, or abuse and promoting economy, efficiency, and effectiveness of departmental programs. To promote impact, OEI reports also present practical recommendations for improving program operations. Office of Investigations The Office of Investigations (OI) conducts criminal, civil, and administrative investigations of fraud and misconduct related to HHS programs, operations, and beneficiaries. With investigators working in all 50 States and the District of Columbia, OI utilizes its resources by actively coordinating with the Department of Justice and other Federal, State, and local law enforcement authorities. The investigative efforts of OI often lead to criminal convictions, administrative sanctions, and/or civil monetary penalties. Office of Counsel to the Inspector General The Office of Counsel to the Inspector General (OCIG) provides general legal services to OIG, rendering advice and opinions on HHS programs and operations and providing all legal support for OIG’s internal operations. OCIG represents OIG in all civil and administrative fraud and abuse cases involving HHS programs, including False Claims Act, program exclusion, and civil monetary penalty cases. In connection with these cases, OCIG also negotiates and monitors corporate integrity agreements. OCIG renders advisory opinions, issues compliance program guidance, publishes fraud alerts, and provides other guidance to the health care industry concerning the anti-kickback statute and other OIG enforcement authorities.

Notices Notices

THIS REPORT IS AVAILABLE TO THE PUBLIC THIS REPORT IS AVAILABLE TO THE PUBLIC at http://oig.hhs.gov

Pursuant to the Freedom of Information Act, 5 U.S.C. ' 552, Office of Inspector General reports generally are made available to the public to the extent that information in the report is not subject to exemptions in the Act.

Pursuant to the Freedom of Information Act, 5 U.S.C. ' 552, Office of Inspector General reports generally are made available to the public to the extent that information in the report is not subject to exemptions in the Act.

OFFICE OF AUDIT SERVICES FINDINGS AND OPINIONS OFFICE OF AUDIT SERVICES FINDINGS AND OPINIONS

The designation of financial or management practices as questionable, a recommendation for the disallowance of costs incurred or claimed, and any other conclusions and recommendations in this report represent the findings and opinions of OAS. Authorized officials of the HHS operating divisions will make final determination on these matters.

The designation of financial or management practices as questionable, a recommendation for the disallowance of costs incurred or claimed, and any other conclusions and recommendations in this report represent the findings and opinions of OAS. Authorized officials of the HHS operating divisions will make final determination on these matters.

at http://oig.hhs.gov

http://oig.hhs.gov/

http://oig.hhs.gov/

http://oig.hhs.gov/

EXECUTIVE SUMMARY BACKGROUND Medicaid Program The Medicaid program provides medical assistance to low-income individuals and individuals with disabilities. The Federal and State Governments jointly fund and administer the Medicaid program. At the Federal level, the Centers for Medicare & Medicaid Services (CMS) administers the program. Each State administers its Medicaid program in accordance with a CMS-approved State plan. Although the State has considerable flexibility in designing and operating its Medicaid program, it must comply with applicable Federal requirements. Medicaid generally covers inpatient psychiatric services for eligible recipients who are under the age of 21 or age 65 and older at institutions for mental disease (IMD), which include psychiatric hospitals. To receive payment for these services, psychiatric hospitals must meet certain Federal Medicaid eligibility requirements. Medicaid inpatient psychiatric services for recipients under the age of 21 and for those age 65 and older may be provided in psychiatric hospitals and those psychiatric hospitals must meet both the basic Medicare Conditions of Participation (CoP) requirements and two special Medicare CoP requirements for staffing and medical records. Psychiatric hospitals must comply with basic and special Medicare CoP to receive federally matched funding for inpatient psychiatric services provided to recipients. Generally, all Medicaid-participating hospitals demonstrate compliance with the basic Medicare CoP requirements through an accreditation process performed by the Joint Commission on Accreditation of Healthcare Organizations (JCAHO). However, psychiatric hospitals must also meet the two additional special Medicare staffing and medical record CoP requirements. Compliance with these requirements is not measured by JCAHO accreditation. Special Medicare CoP compliance can only be established through a special survey process. The Indiana Family and Social Services Administration (the State agency) administers Indiana’s Medicaid program. Pursuant to the CMS-approved State plan, the State agency provides federally matched Medicaid funding to eligible hospitals. The State agency operates psychiatric hospitals under the administrative control of the Division of Mental Health. State-owned psychiatric hospitals and IMDs are responsible for inpatient care, treatment, or detention of children, adolescents, and adults with severe mental disorders. During the period July 1, 1996, through June 30, 2007, the State agency made Medicaid payments totaling $26,208,269 ($16,298,423 Federal share) for inpatient psychiatric services to a State-owned psychiatric hospital (hospital A). In a previous audit report (A-05-06-00045, May 13, 2008), we reported that the State agency made Medicaid disproportionate share hospital payments totaling $86.1 million ($53.4 million Federal share) from July 1, 2000, through June 30, 2003, to hospital A when it did not meet Medicaid eligibility requirements.

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OBJECTIVE The objective was to determine whether the State agency made Medicaid payments to hospital A for inpatient psychiatric services according to Federal eligibility requirements for hospitals. SUMMARY OF FINDING During the period July 1, 1996, through June 30, 2007, the State agency paid $26,208,269 ($16,298,423 Federal share) to hospital A, which was not eligible to receive Medicaid payments for inpatient psychiatric services. Hospital A did not meet Federal Medicaid eligibility requirements because it did not demonstrate compliance with the two special Medicare CoP requirements. The State agency believed that hospital A demonstrated substantial compliance with the Federal Medicaid eligibility requirements through its JCAHO accreditation. However, Federal regulations stipulate that JCAHO accreditation does not demonstrate special Medicare CoP compliance for psychiatric hospitals. RECOMMENDATIONS We recommend that the State agency:

• refund $16,298,423 to the Federal Government for Medicaid inpatient psychiatric service payments made to hospital A from July 1, 1996, through June 30, 2007;

• identify and refund the Federal share of additional unallowable Medicaid payments to

hospital A for inpatient psychiatric services provided after June 30, 2007; and

• ensure that Medicaid payments for inpatient psychiatric services are made only to eligible hospitals.

STATE AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL RESPONSE In written comments to our draft report, the State agency disagreed with the finding and first recommendation and did not address the other recommendations. The State agency said that the facts are sufficient to establish hospital A’s eligibility to receive Medicaid payments and that hospital A’s claims related to the treatment of children are proper because the Medicare special CoP do not apply to the treatment of patients age 21 and under. The State agency’s comments, excluding personally identifiable information, are included as the Appendix. After reviewing the State agency’s comments, we maintain that our finding and recommendations are valid.

TABLE OF CONTENTS

Page INTRODUCTION......................................................................................................................... 1 BACKGROUND ...................................................................................................................... 1 Medicaid Program............................................................................................................... 1 Medicaid Inpatient Psychiatric Services............................................................................. 1 Medicaid Hospital Eligibility Requirements ...................................................................... 1 Indiana Psychiatric Hospitals.............................................................................................. 1 OBJECTIVE, SCOPE, AND METHODOLOGY.................................................................... 2 Objective ............................................................................................................................. 2 Scope................................................................................................................................... 2 Methodology....................................................................................................................... 2 FINDING AND RECOMMENDATIONS.................................................................................. 3 UNALLOWABLE MEDICAID PAYMENTS ........................................................................ 3 Federal Requirements ......................................................................................................... 3 Hospital A Ineligible for Medicaid Payments .................................................................... 3 Unmet Federal Requirements ............................................................................................. 4 RECOMMENDATIONS.......................................................................................................... 4 STATE AGENCY COMMENTS............................................................................................. 4 OFFICE OF INSPECTOR GENERAL RESPONSE ............................................................... 5 APPENDIX STATE AGENCY COMMENTS

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INTRODUCTION

BACKGROUND Medicaid Program Pursuant to Title XIX of the Social Security Act (the Act), the Medicaid program provides medical assistance to low-income individuals and individuals with disabilities. The Federal and State Governments jointly fund and administer the Medicaid program. At the Federal level, the Centers for Medicare & Medicaid Services (CMS) administers the program. Each State administers its Medicaid program in accordance with a CMS-approved State plan. Although the State has considerable flexibility in designing and operating its Medicaid program, it must comply with applicable Federal requirements. Medicaid Inpatient Psychiatric Services Medicaid generally covers inpatient psychiatric services for eligible recipients who are under the age of 21 or age 65 and older at institutions for mental disease (IMD), which include psychiatric hospitals. In limited circumstances, Medicaid covers these services until a recipient reaches the age of 22. To receive payment for these services, psychiatric hospitals must meet certain Federal Medicaid eligibility requirements. Medicaid Hospital Eligibility Requirements Sections 1905(a)(16) and 1905(h)(1)(A) of the Act require that Medicaid inpatient psychiatric services for recipients under the age of 21 be provided in psychiatric hospitals that meet the definition of psychiatric hospital in section 1861(f) of the Act. Section 1861(f) requires psychiatric hospitals to meet the basic Medicare Conditions of Participation (CoP) requirements1 and to meet two special Medicare CoP requirements for staffing and medical records. Federal regulation (42 CFR § 440.140(a)) requires psychiatric hospitals to comply with basic and special Medicare CoP to receive federally matched funding for inpatient IMD services provided to recipients who are age 65 and older. Generally, all Medicaid-participating hospitals demonstrate compliance with the basic Medicare CoP requirements through an accreditation process performed by the Joint Commission on Accreditation of Healthcare Organizations (JCAHO). However, psychiatric hospitals must also meet the two special Medicare CoP requirements. Pursuant to 42 CFR § 488.5(a)(2), compliance with these requirements is not measured by JCAHO accreditation. The CMS “State Operations Manual,” section 2718A, stipulates that special Medicare CoP compliance can only be established through a special survey process. Indiana Psychiatric Hospitals The Indiana Family and Social Services Administration (the State agency) administers Indiana’s Medicaid program. The State agency operates State-owned psychiatric hospitals under the 1Medicare CoP requirements as stated in §§ 1861(e)(3) through (9) of the Act.

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administrative control of the Division of Mental Health. Pursuant to the State plan, these hospitals are responsible for inpatient care, treatment, or detention of children, adolescents, and adults with severe mental disorders. During the period July 1, 1996, through June 30, 2007, the State agency made Medicaid payments totaling $26,208,269 ($16,298,423 Federal share) for inpatient psychiatric services to one State-owned psychiatric hospital (hospital A). In a previous audit report (A-05-06-00045, May 13, 2008), we reported that the State agency made Medicaid disproportionate share hospital payments totaling $86.1 million ($53.4 million Federal share) from July 1, 2000, through June 30, 2003, to hospital A when it did not meet Medicaid eligibility requirements. OBJECTIVE, SCOPE, AND METHODOLOGY Objective The objective was to determine whether the State agency made Medicaid payments to hospital A for inpatient psychiatric services according to Federal eligibility requirements for hospitals. Scope We reviewed Medicaid payments for inpatient psychiatric services made to hospital A during the period July 1, 1996, through June 30, 2007. Our objective did not require a review of the State agency’s internal controls for processing Medicaid payments. We performed fieldwork by contacting the State agency in Indianapolis, Indiana. Methodology To accomplish the objective we:

• reviewed Federal Medicaid requirements regarding hospital eligibility, • identified dates for which the State agency and hospital A could not demonstrate

compliance with Federal regulations and special Medicare CoP requirements,2 and

• used available State agency payment records to quantify the State and Federal funding amounts for Medicaid payments made to hospital A for inpatient psychiatric services provided during the audit period and the dates for which compliance with Federal requirements could not be demonstrated.

We conducted this performance audit in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objective. 2The State agency and hospital A did not demonstrate compliance with special Medicare CoP for the period February 15, 1982, through June 30, 2007. We made no compliance determinations for periods after June 30, 2007.

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FINDING AND RECOMMENDATIONS

During the period July 1, 1996, through June 30, 2007, the State agency paid $26,208,269 ($16,298,423 Federal share) to hospital A, which was not eligible to receive Medicaid payments for inpatient psychiatric services. Hospital A did not meet Federal Medicaid eligibility requirements because it did not demonstrate compliance with the two special Medicare CoP requirements. The State agency believed that hospital A demonstrated substantial compliance with the Federal Medicaid eligibility requirements through its JCAHO accreditation. However, Federal regulations stipulate that JCAHO accreditation does not demonstrate special Medicare CoP compliance for psychiatric hospitals. UNALLOWABLE MEDICAID PAYMENTS During the period July 1, 1996, through June 30, 2007, the State agency made Medicaid payments totaling $26,208,269 ($16,298,423 Federal share) to hospital A for inpatient psychiatric services that were provided during periods when hospital A did not meet Medicaid eligibility requirements. Federal Requirements Sections 1905(a)(16) and 1905(h)(1)(A) of the Act require that Medicaid inpatient psychiatric services for recipients under the age of 21 be provided in psychiatric hospitals as defined in § 1861(f) of the Act. Section 1861(f)(2) requires psychiatric hospitals to meet the basic Medicare CoP requirements as stated in §§ 1861(e)(3) through (9), and §§ 1861(f)(3) and (4) require these hospitals to meet two special Medicare CoP requirements for staffing and medical records. Federal regulation (42 CFR § 440.140(a)) requires IMDs, including psychiatric hospitals, to meet the requirements at 42 CFR § 482.60(b), (c), and (d) to receive federally matched Medicaid funding for inpatient services provided to recipients age 65 and older. All hospitals must comply with the basic Medicare CoP requirements (42 CFR § 482.60(b)) that address licensing, quality of care, safety, patient rights, self-assessment and performance improvement, service availability, utilization and review, and other requirements that apply to participating hospitals (42 CFR §§ 482.1 through 482.57). Psychiatric hospitals must also comply with the two special Medicare staffing and medical record CoP requirements (42 CFR 482.60(c) and (d)). The CMS “State Operations Manual,” section 2718A, adds clarification, requiring psychiatric hospitals to be surveyed to establish compliance with the special Medicare CoP requirements. Psychiatric hospitals must meet these requirements before they can receive federally matched Medicaid funding. Hospital A Ineligible for Medicaid Payments Hospital A was ineligible for Medicaid payments received from July 1, 1996, through June 30, 2007, for inpatient psychiatric services because it did not comply with the special Medicare CoP requirements. Specifically, the facility did not demonstrate compliance with the special

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Medicare staffing and medical record requirements for psychiatric hospitals through the special Medicare CoP survey process. Unmet Federal Requirements The State agency believed that hospital A was eligible to receive Medicaid payments because hospital A demonstrated substantial Medicare CoP compliance through its JCAHO accreditation. Although all Medicaid-participating hospitals must have JCAHO accreditation to demonstrate compliance with the basic Medicare CoP requirements, psychiatric hospitals must also meet the special Medicare staffing and medical record CoP requirements. Pursuant to 42 CFR § 488.5(a)(2), JCAHO accreditation does not demonstrate compliance with the special Medicare CoP requirements. Pursuant to the CMS “State Operations Manual,” section 2718A, compliance with the special Medicare CoP requirements can only be demonstrated through a special survey process. The State agency and hospital A were unable to establish hospital A’s compliance with the special Medicare CoP requirements for the period from February 15, 1982, through June 30, 2007. CMS terminated hospital A from Medicare program participation under involuntary conditions on February 15, 1982. When hospital A applied for readmission to the Medicare program in August 2006, CMS rejected the application specifically because it did not comply with the two special Medicare CoP requirements. RECOMMENDATIONS We recommend that the State agency:

• refund $16,298,423 to the Federal Government for Medicaid inpatient psychiatric service payments made to hospital A from July 1, 1996, through June 30, 2007;

• identify and refund the Federal share of additional unallowable Medicaid payments to

hospital A for inpatient psychiatric services provided after June 30, 2007; and

• ensure that Medicaid payments for inpatient psychiatric services are made only to eligible hospitals.

STATE AGENCY COMMENTS In written comments to our draft report, the State agency disagreed with the finding and first recommendation and did not address the other recommendations. The State agency said that the facts are sufficient to establish hospital A’s eligibility to receive Medicaid payments. Although the State agency was unable to locate hospital A’s special CoP survey documentation, it produced a letter to hospital A that described the State’s process and specific requirements, including a survey for compliance with the special CoP, which must be met to qualify for Medicaid reimbursement. The State agency also provided a subsequent letter to hospital A certifying the facility as a Medicaid provider of psychiatric hospital services. The State agency concluded that this documentation is sufficient evidence that hospital A complied with the special CoP during the audit period.

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In addition, the State agency said that the Medicare special CoP do not apply to the treatment of patients age 21 and under, and hospital A’s claims related to the treatment of children are therefore proper. Based on its review of Federal requirements at 42 CFR § 440.160(b)(1) and 42 CFR § 441.151(a)(2)(i), the State agency concluded that special CoP compliance is not required for psychiatric hospitals to provide inpatient services to individuals age 21 and under. The State agency’s comments, excluding personally identifiable information, are included as the Appendix. OFFICE OF INSPECTOR GENERAL RESPONSE After reviewing the State agency’s comments, we maintain that our finding and recommendations are valid. The State agency was unable to locate hospital A’s actual survey documentation. Without reviewing this documentation, we cannot determine whether hospital A was properly certified as meeting the special Medicare CoP, as required by the CMS “State Operations Manual,” section 2718A. Regarding the provision of inpatient psychiatric services to recipients age 21 and under, § 1905(a)(16) and § 1905(h)(1)(a) of the Act require these services to be provided in psychiatric hospitals as defined in § 1861(f) of the Act. Sections 1861(f)(3) and (4) require special CoP compliance for psychiatric hospitals. Hospital A is a psychiatric hospital and therefore must demonstrate special CoP compliance to provide these services.

APPENDIX

APPENDIX Page 1 of 10


Office of Inspector General note: We have removed personally identifiable information from this appendix.

j- department of health human servicesmar 25, 2009 · hospital a for inpatient psychiatric...

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