Colorado latest state to bungle Medicaid claims data: OIG

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Long-term care providers are struggling to satisfy new mandates over electronic reporting and medical records, and can expect more in the near future. But nothing can compare to the kind of information technology nightmares some state Medicaid departments are currently reeling from.

The latest is Colorado, where the U.S. Department of Health & Human Services' Inspector General discovered the state Medicaid agency incorrectly processed and paid more than 800,000 Medicaid claims in 2011 worth more than $425 million. The problem: missing or invalid national provider identifiers, the unique, 10-digit, sequentially assigned national identification number mandated by the Health Insurance Portability and Accountability Act of 1996 to identify healthcare providers, health plans, and healthcare clearinghouses in all administrative and financial HIPAA transactions.

The news comes on the heels of a scathing March 2 report by the Government Accountability Office that casts significant doubts on the integrity and effectiveness of information systems many state Medicaid programs use to process claims.

According to the latest OIG report, Colorado outsourced its “mechanized” Medicaid Management Information System of software and hardware to a third-party to process Medicaid claims and manage information about Medicaid beneficiaries and services. Even though the state spent $2.1 million of mostly appropriated federal funds to upgrade the system to transition to the new NPI system, certain “internal controls” failed to keep the mistake from happening.

Earlier this year, a federal judge ordered the U.S. government to return a bungled $90 million credit to the Georgia Department of Community Health, even after ruling Health & Human Services had every right to reject the agency's belated request to return the money.