States’ failure to implement NCCI edits cost Medicaid program billions annually

Money mapImproper payments to healthcare providers cost the Medicaid program approximately $17.5 billion in fiscal year 2014, according to a new report from the HHS Office of the Inspector General. The reason: States’ failure to fully implement or properly use Medicaid National Correct Coding Initiative (NCCI) edits.

The purpose of the NCCI edits is to prevent improper payment when incorrect code combinations are reported. These edits are programmed into states’ claims processing systems to automatically deny payment for ineligible and incorrectly coded services on Medicaid fee-for-service claims. If an NCCI edit denies payment for a service, providers can correct the coding for the service and rebill when appropriate. These edits are based on, among other things, standard medical practice and coding conventions and apply only to those services performed by the same provider, for the same beneficiary on the same date of service.

CMS implemented NCCI edits for the Medicaid program as a result of legislation within the Affordable Care Act. This meant that state Medicaid agencies were required to incorporate these edits for Medicaid claims filed on or after Oct. 1, 2010.

However, according to the OIG study: “States’ inconsistent implementation and use of the edits may reduce their ability to promote correct coding by providers and prevent improper Medicaid payments.” In addition, “states’ lack of reporting of cost savings estimates, and the limitations of the estimates that were reported, inhibit CMS’s ability to meaningfully estimate national NCCI cost savings.”

Non-compliance not only results in overpayments, but also opens the doorway for fraud and overpayment. Although the NCCI edits were mandated as of Oct. 1, 2010, it still may not relieve the provider of overpayment liability should the insurer compensate the provider for improper billing in non-compliance with NCCI rules.

OIG recommended the following:

  • CMS take appropriate action to ensure that states fully implement the NCCI edits
  • Provide technical assistance to states to ensure that they use the NCCI edits correctly
  • Issue guidance to states on how to estimate NCCI cost savings and take steps to ensure that states report as required
  • Examine whether using the NCCI edits on claims paid under managed care is beneficial, and if so, take appropriate action.

This isn’t the first time the OIG has looked into the situation. In 2013, an OIG audit found that Georgia could have prevented $1.5 million in improper payments between November 1, 2010 and September 20, 2011 if it has used the Medicaid NCCI edits in a way that was consistent with the program requirements. However, this is the first time OIG has looked at the Medicaid NCCI program on a national level.

The OIG, in looking at it from a national perspective, found that even though it had been four years since CMS required states to implement all required NCCI edits, ten states had not done so. Combined they accounted for nearly 20 percent of Medicaid spending in 2014. They are: Illinois, Oklahoma, Louisiana, New Jersey, Maine, Missouri, Ohio, Delaware, North Carolina and New Mexico.

The report went on to state that most states did not use all of the NCCI edits correctly in one way or another. And, as of August 2015, most states (48) did not report NCCI cost savings to CMS as required.

With regard to the OIG recommendations, CMS said it agreed with them and would work with states to help them with their implementation of the NCCI edits.

The Health Law Offices of Anthony C. Vitale can assist you in understanding your NCCI edit obligations as well as defending a carrier assessed overpayment.

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