State Made $4.2 Million in Improper Payments for Laboratory Services for Medicaid Recipients

Auditors evaluating Medicaid claims for laboratory services found approximately $4.2 million in improper payments that violated certification rules for laboratory services or involved invalid laboratory procedure codes, the Legislative Auditor said in a report released today. The review covered a five-year period from July 1, 2011, to June 30, 2016.

Of the $4.2 million, auditors found that the Louisiana Department of Health (LDH) paid $2,440,965 for 160,110 laboratory claims for which the provider did not have the appropriate Clinical Laboratory Improvement Amendments (CLIA) certification. Sixty percent of the payments went to providers who had a lower-level CLIA certification than what the laboratory test required, while 40 percent went to providers who did not appear to have any CLIA certification.

The $4.2 million included $45,278 in fee-for-service payments for 2,878 laboratory claims and $2,395,687 paid to the five Managed Care Organizations (MCOs) that oversee the state’s Medicaid benefits for 157,232 laboratory claims.

In addition, LDH paid out $1,744,178 for 43,449 claims that involved invalid procedure codes for waived tests. The majority of these violations used a waived test procedure code that was deleted by the Centers for Medicare and Medicaid Services in 2010 because some laboratories were using questionable billing practices with the code.

The $1,744,178 included $1,462,880 in fee-for-service payments for 37,910 laboratory claims and $281,298 to the five MCOs for 5,539 laboratory claims.

Auditors also found that LDH does not monitor the MCOs to ensure that the laboratory payments they make comply with their Healthy Louisiana contracts. Of $49.5 million spent on laboratory services during fiscal year 2016, $45.1 million (91.1 percent) was for payments made by the MCOs. LDH does not currently collect enough CLIA information from the MCOs to monitor CLIA compliance.