The New Jersey Department of Human Services made incorrect Medicaid electronic health record incentive payments to 15 hospitals, according to an audit by the Department of Health and Human Services’ Office of Inspector General.

The net amount of the erroneous payments by New Jersey totaled $2.5 million, auditors reported. Ten hospitals were overpaid $2.4 million, while five hospitals were underpaid $137,000, resulting in a net overpayment of nearly $2.3 million. The state agency did not always pay EHR incentive program payments in accordance with federal and state requirements, concludes the report.

In addition, the OIG found that New Jersey made incorrect payments to two additional hospitals. However, auditors confirmed that the state agency adjusted these payments after their audit period. Further, New Jersey did not report one professional incentive payment to the CMS National Level Repository (NLR), a registration and verification system that contains information on providers participating in the Medicaid and Medicare EHR incentive programs.

“The incorrect payment errors occurred because the state agency’s program integrity contractor failed to identify certain errors and inconsistently applied this new program’s complex requirements,” states the OIG report. “The reporting error occurred due to a technical error.”

The report notes that the Government Accountability Office has identified improper payments as the primary risk to the EHR incentive programs.

“These programs may be at greater risk of improper payments than other programs because they are new and have complex requirements,” contend auditors.

OIG recommended that New Jersey take the following corrective actions:

  • Refund to the federal government almost $2.3 million in net overpayments made to the 15 hospitals.
  • Adjust the 15 hospitals’ remaining incentive payments to account for the incorrect calculations (expected to result in future cost savings of $514,107).
  • Review the calculations for other hospitals in the state that were not among the 33 that auditors reviewed, to determine whether payment adjustments are needed and refund to the federal government any overpayments identified.
  • Work with CMS to ensure that the one unreported professional incentive payment is reported to the NLR.

In written comments in response to the audit, the state agency concurred with OIG’s findings and recommendations.

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