Massachusetts may have lost more than $8 million between fiscal years 2007 and 2009 due to increases in its MassHealth reimbursement rates and a lack of state safeguards against physician self-referral practices, according to a new report by state auditor Joseph DeNucci. MassHealth is the state's Medicaid program.

"Our focus is on the implications of Medicaid because it's the largest item in our state budget," Glenn Briere, spokesman for the Office of the State Auditor, told DOTmed News. "It represents over 25 percent of the entire state budget."

In 2009, MassHealth paid more than $30 million on 582,000 claims for advanced imaging services, according to the 47-page audit report. While Medicare reimbursement rates for advanced imaging services set by the Centers for Medicare and Medicaid Services decreased over time, MassHealth "has had a net increase in reimbursement rates for advanced imaging services in recent years," the report stated.
In addition, the state's Division of Health Care Finance and Policy, which sets reimbursement rates for MassHealth, uses a different methodology to determine payment rates from CMS.

Because of the increased rates set by DHCFP, the state potentially lost $8,587,612 in Medicare crossover payments, the report stated. Crossover payments refer to dual eligible beneficiaries, individuals who are covered by both Medicare and Medicaid. In fiscal year 2009, 20 percent of people covered by MassHealth were dual beneficiaries.

The state auditor recommended that MassHealth and DHCFP reexamine their methods in setting reimbursement rates. The Massachusetts Office of Medicaid disagreed with the findings, stating that the audit misinterpreted its payment rates.

"While we appreciate the auditor's perspectives regarding Medicaid reimbursement rates for imaging providers, we believe that the methodology used in this audit incorrectly characterizes our payment policy," a spokeswoman for the agency wrote in a statement e-mailed to DOTmed News. "We look forward to working with the auditor to address these concerns and to identify any areas where we can realize additional savings."

In its response in the report, the state's Medicaid office did point out that along with DHCFP, it's exploring the option of using Medicare's Outpatient Prospective Payment system as it applies to their method of payment.

The state's Medicaid office did agree that the Commonwealth needs to implement stricter guidelines against physician self-referrals for advanced imaging services. Although federal legislation, known as the Stark Law, exists to discourage physicians from self-referring practices and a federal "anti-kickback" law makes it illegal for physicians to accept bribes or other rewards while generating business from federal health care programs, Massachusetts does not regulate self-referrals for advanced imaging services.

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