Rhode Island Did Not Ensure Its Managed Care Organizations Complied With Requirements Prohibiting Medicaid Payments for Services Related to Provider-Preventable Conditions

Rhode Island did not ensure its Medicaid managed-care organizations (MCOs) complied with Federal and State requirements prohibiting Medicaid payments to providers for inpatient hospital services related to treating certain provider-preventable conditions (PPCs). PPCs are certain reasonably preventable conditions caused by medical accidents or errors in a health care setting. For our audit period, we identified that MCOs paid providers approximately $4 million for 241 claims that contained PPCs. Rhode Island's internal controls were not adequate to ensure that its MCOs complied with Federal and State requirements. For instance, Rhode Island did not follow up with the MCOs to determine why present on admission codes were missing or whether the payments made for the related claims complied with Federal and State requirements. In addition, the MCOs did not have policies or procedures to identify PPCs on claims for inpatient hospital services or determine whether payments for claims containing PPCs should have been reduced. As a result, the unallowable portion of the $4 million identified for our audit period was included in the capitation payment rates for State fiscal years 2017 and 2018.