Spreadsheet Errors at DSS Cost $6.7M in Overpayments to Hospitals

The big FY2018 state audit report finds that the Department of Social Services miscalculated Medicaid reimbursement rates and overpaid hospitals $6.7 million:

Several errors were made in the calculation of inpatient hospital reimbursement rates for FFY 2018, resulting in inpatient hospitals reimbursed under the DRG [Diagnosis Related Group] methodology being overpaid a total of $6,734,217 during State Fiscal Year 2018. Of this amount, $4,188,510 was paid from federal funds [Department of Legislative Audit, FY 2018 single audit report, p. 250].

The audit says DSS had been notified of an error in its DRG weight calculations and had tried to fix it. The Department of Legislative Audit looked at the revised spreadsheets and found four errors. DLA told DSS to fix those DRG errors, and DSS said can do, but when DLA checked again, DSS had left two of the errors in place and added a third.

The result: $6.7 million that could have fixed more owies but instead briefly padded the hospitals’ bottom lines.

Briefly. In response, DSS is clawing back its overpayments from the hospitals. With some adjustments subsequent to DLA’s review, DSS notified hospitals in January 2019 of final overpayment amounts of $6.46 million. DSS expects to have all the money back by the end of June. DSS also tells DLA that it is tightening up its spreadsheets and “retaining a third-party expert” to recommend improvements.