Report Template Update:  06-30-07  
    
 Department of Health and Human Services
 
OFFICE OF 

   
INSPECTOR GENERAL 

 
 
 
 
 
 
 
 
PAYMEN  TS MADE IN ERROR FOR 

 
P C S
ERSONAL  ARE  ERVICES 

 
 
D I S
URING  NSTITUTIONAL  TAYS 

 
 
 
 
 
 
Daniel R. Levinson 
  
Inspector General 

 
August 2008 
 
OEI-07-06-00620 
  Report Template Update:  06-30-07  
 
 
Office of Inspector General

http://oig.hhs.gov  
 
The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452,  
as amended, is to  protect the integrity of  the Department of Health and Human Services 
(HHS)  programs, as well as the health and welfare of beneficiaries  served by those 
programs.  This statutory mission  is  carried  out through  a nationwide network  of  audits, 
investigations, and inspections conducted by the  following operating components:  
Office of Audit Services 
The Office  of  Audit Services  (OAS) provides auditing services  for HHS, either by  
conducting audits with its own audit resources or by overseeing audit work done by  
others.  Audits examine the performance of HHS programs and/or  its grantees  and 
contractors in carrying  out  their respective responsibilities and are intended  to provide  
independent assessments of HHS programs and operations.  These assessments help 
reduce waste, abuse,  and mismanagement and promote economy and efficiency  
throughout HHS.  
Office of Evaluation and Inspections  
The Office  of  Evaluation and Inspections (OEI)  conducts national evaluations to  provide 
HHS, Congress, and the public with timely, useful, and reliable information on 
significant issues.  These evaluations focus on preventing fraud,  waste,  or abuse  and 
promoting economy, efficiency, and effectiveness of departmental programs.  To promote  
impact, OEI reports also present practical recommendations for improving program 
operations.  
Office of Investigations 
The Office of Investigations (OI) conducts criminal, civil, and administrative  
investigations of fraud and misconduct related  to  HHS programs, operations, and 
beneficiaries.  With investigators working in all 50 States and the District of Columbia, 
OI utilizes its resources by actively coordinating with the Department of Justice and  
other Federal, State,  and local law  enforcement authorities.  The investigative efforts of 
OI often lead  to criminal convictions,  administrative sanctions, and/or civil monetary  
penalties.  
Office of Counsel to the Inspector General 
The Office of Counsel to the  Inspector  General (OCIG) provides general legal services to 
OIG, rendering  advice and opinions on HHS programs and operations and  providing all  
legal support for OIGs  internal operations.  OCIG represents  OIG in all civil and 
administrative fraud and  abuse cases involving HHS programs, including False Claims 
Act, program exclusion, and civil monetary  penalty cases.  In connection with these 
cases, OCIG also negotiates  and monitors  corporate integrity agreements.  OCIG 
renders advisory opinions, issues compliance program guidance, publishes fraud alerts, 
and provides other guidance  to the  health care industry concerning  the  anti-kickback 
statute and other OIG enforcement authorities.   Report Template Update:  06-30-07  
 
 
 E X E C U T I V E   S U M M A R Y  

D E S I G N      
 
OBJECTIVE 
 
To determine (1) the extent to which five State Medicaid programs 
made payments in error for personal care services (PCS) during periods 
of beneficiary institutionalization and (2) what controls these States 
reported establishing to prevent those payments.  
BACKGROUND 
PCS provide the elderly,  people with disabilities, and individuals with 
chronic or temporary conditions with the assistance that they need to  
remain in their homes or communities.  State Medicaid programs may 
reimburse the cost of PCS for individuals who are not inpatients or  
residents of certain institutions but should not separately reimburse for 
personal care services furnished during institutional stays.   
We reviewed Medicaid PCS and institutional claims and Medicare 
institutional claims for services provided from October 1 through 
December 31, 2005, in five States:  Minnesota, New Mexico, 
North Carolina, Texas, and Washington.  During the period  of our 
review, these States paid a total of $11.6 million for 29,057 claims for 
PCS that overlapped with the dates of institutional stays.  We compared 
the dates of service for paid PCS claims with the  dates of service for 
paid Medicaid and Medicare institutional stays to identify Medicaid 
payments for PCS provided during institutional stays.  We also 
interviewed State Medicaid officials about the reasons the identified  
claims were  paid and their efforts to prevent such payments.   
FINDINGS 
In the first quarter of fiscal year  2006, the five States reviewed paid 
nearly  $500,000 in error for personal care services provided during 
periods of institutionalization.  In one quarter, Medicaid programs in  
the five States paid $243,385 for 1,670 claims for PCS provided on days 
that Medicaid also paid for institutional care.  These claims represented 
43 percent of the PCS claims paid in error that we identified, using data 
that were available in the States own Medicaid payment systems.  The 
Medicaid programs also paid $251,260  for 2,251 claims for PCS provided 
on days that Medicare paid for institutional care.  State Medicaid 
officials volunteered that they do not  have complete access to the 
information necessary to prevent payments for PCS provided during 
institutional stays paid by Medicare.   
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EE XX EE CC UU TT II VV EE    SS UU MM MM AA RR YY    
Billing practices in three States create vulnerabilities that could  
mean that up to $11 million in one quarter  may  have been paid in  
error.   In one quarter, the Minnesota, Texas, and Washington Medicaid 
programs paid $11.2 million for 26,929 PCS claims that overlapped with 
claims for institutional care. We determined that 7 percent of these 
claims were  paid in error. However,  because these three State Medicaid 
programs allowed PCS providers to bill for services using date ranges 
that included days on which no PCS were provided, we could not 
determine, using existing claims data, whether the remaining 
93 percent of the overlapping PCS claims, representing approximately 
$10.9 million, were paid in error. 
Although all five States reported having controls to prevent 
Medicaid payments for personal care  services  provided during 
institutional  stays, the controls  did not prevent all erroneous 
payments.   All five State Medicaid programs had payment system edits 
and postpayment audits in place that were intended to prevent or  
recover payments for PCS during institutional stays, but they were not 
always completely effective. State Medicaid officials identified some  
reasons the identified claims were  paid in error, including payment 
system edits that were not working properly and case managers failure 
to terminate service authorizations.   
RECOMMENDATIONS 
The Medicaid programs in the five States reviewed paid $494,645 in 
error for 3,921 claims for PCS provided during institutional stays in the 
first quarter of fiscal year 2006. However, payments made in error for 
PCS provided during institutional stays could total up to $11.2 million 
in that quarter in three States that allowed PCS providers to bill using 
date ranges that included days on which no PCS were provided. 
Therefore, we recommend that the Centers for Medicare & Medicaid  
Services (CMS): 
Enforce existing Federal Medicaid payment policies that prohibit 
Medicaid reimbursement for personal care services provided over a 
range of dates if the range includes dates on which the beneficiary  
was institutionalized.    CMS could accomplish this by including claims for 
PCS billed in date ranges in Medicaid audits and disallowing Federal 
expenditures for PCS claims that lack supporting documentation. 
 
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E EX XE EC CU UT TI IV VE E   S SU UM MM MA AR RY
 Y    
Work with States to reduce erroneous Medicaid payments for 
personal care services provided during institutional stays by:   
 	 exploring ways to ensure that State Medicaid programs have  
complete information on Medicare institutionalizations for dually 
eligible beneficiaries to prevent  payments for PCS during Medicare-
paid institutionalizations (e.g., requiring admission dates on all 
crossover claims submitted to State Medicaid agencies);   
 	 disseminating information to State Medicaid agencies regarding the 
vulnerabilities identified (e.g., payment system edit failures, 
untimely or inaccurate service authorizations) and the importance 
of educating PCS providers on policy prohibiting payment for PCS 
while beneficiaries are institutionalized; and  
 	 including information regarding the vulnerabilities identified in the 
technical assistance and support provided to State Medicaid 
integrity programs by the Medicaid Integrity Group. 
AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL  
RESPONSE 
CMS concurred with the OIG recommendation to work with States to 
reduce erroneous Medicaid payments for PCS provided during 
institutional stays. However, CMS did not concur with the OIG 
recommendation to prohibit Federal Medicaid reimbursement for PCS 
claims billed with date ranges that include days on which no PCS were 
provided.  CMS indicated that existing Federal reimbursement policies 
are sufficient to prohibit such payments when States have effective  
controls in place.  We revised the recommendation to state that CMS 
should enforce existing Medicaid payment policies.       
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E X E C U T I V E   S U M M A R Y  
 T A B L E   O F   C O N T E N T S  

EXECUTIVE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i
  
 
I N T RO DUC T IO N  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  1 
  
 
 
F I N D IN G S  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8  

Five States paid nearly $500,000 in error . . . . . . . . . . . . . . . . . . . . 8  

  Billing practices in three States could mean that up to  

$11 million may have been paid in error . . . . . . . . . . . . . . . . . . . .  10 
  
States Medicaid controls did not prevent all erroneous 
 
payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  11 
  
 
 
R E C O MMEN D A T ION S  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  13 
  
Agency Comments and Office of Inspector General Response. . . . 14 
 
 
 
APPENDIXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  15 
  
A:	  Methodology Used To Identify Errors and Calculate Medicaid   

Payments Made in Error for Personal Care Services Provided 
 
During Institutional Stays. . . . . . . . . . . . . . . . . . . . . . . . . . . .  15 
  
B: 	Personal Care Services:  Total Beneficiaries, Paid Claims,  

Overlapping Claims, and Claims Paid in Error. . . . . . . . . . . .  20
  
C:	  Agency Comments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  21
  
 
 
A C K NO WL E D G M E N T S  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  24 
  
 
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 I N T R O D U C T I O N  

OBJECTIVE 
To determine (1) the extent to which five State Medicaid programs 
made payments in error for personal care services (PCS) during periods 
of beneficiary institutionalization and (2) what controls these States 
reported establishing to prevent those payments.  
BACKGROUND 
PCS provide the elderly,  people with disabilities, and individuals with 
chronic or temporary conditions with the assistance that they need to  
remain in the community.  The State Medicaid Manual describes PCS 
as assistance relating to eating, bathing, dressing, toileting, 
transferring, maintaining continence, personal hygiene, light  
housework,  laundry, meal preparation, transportation, grocery 
shopping, using the telephone, medication management, and money 
management.1      
Section 1905(a)(24) of the Social Security Act allows State Medicaid 
programs to furnish PCS as an optional benefit under the Medicaid 
State plan to individuals who are not institutionalized in certain types 
of facilities.2  The statute specifies that Medicaid-funded PCS must be 
furnished in a beneficiarys home or  another location specified by the 
State. In addition, States may furnish PCS as home- or 
community-based services (HCBS) under a section 1915(c) waiver3 or 
under the mandatory home health benefit.4 Historically, section 1915(c) 
waivers have accounted  for the majority of Medicaid spending on 
noninstitutional long term care, followed by State plan PCS and home 
health services.5  However, the Deficit Reduction Act of 2005 (DRA) 
allows State Medicaid programs greater flexibility to provide home- and 
community-based services, including PCS, without first seeking 
 
1 The State Medicaid Manual, Pub. No. 45,  4480(C).  Available online at 
http://www.cms.hhs.gov/manuals/downloads/P45_04.zip. Accessed on January 16, 2008. 
2 Coverage of PCS is optional except when such services are medically necessary to  
correct or ameliorate medical problems found as a result of an Early and Periodic  
Screening, Diagnostic, and Treatment (EPSDT) screening.  Under section 1905(r)(5) of the 
Social Security Act, PCS are mandatory when medically necessary under EPSDT.   
3 Social Security Act  1915(c); 42 CFR  440.180.
  
4 Social Security Act  1905(a)(7); 42 CFR  440.70. 

5 Medicaid 1915(c) Home and Community-Based  Service Programs:  Data Update, 

Kaiser Commission on Medicaid and the Uninsured.  December 2006, p. 4.  Available online 
at http://www.kff.org/medicaid/upload/7575.pdf. Accessed on April 1, 2008.  
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I N T R O D U C T I O N   
approval for a Medicaid waiver. The Congressional Budget Office  
projects that, By 2015, we expect that states with about one-quarter of  
enrollees would use [the DRA] authority to provide additional services 
to about 120,000 enrollees.6  The option is projected to increase Federal 
costs by $766 million over the 20062010 period and $2.6 billion over 
the 20062015 period.7    
State Medicaid programs are providing PCS and other HCBS to an 
ever-increasing number of Medicaid beneficiaries in efforts to contain 
increasing Medicaid spending, limit beneficiary institutionalization, and 
reduce long  term care expenditures.  Medicaid is jointly funded by the 
State and Federal Governments. Total combined State and Federal 
Medicaid expenditures for PCS alone reached $9.4 billion in 2005, an 
increase of 56 percent over 3 years.8   Patterns in Medicaid long term 
care spending in recent years show that expenditures for personal care 
and home health services are increasing at a greater rate than 
expenditures for institutional long term care services. 9 In fiscal year 
(FY) 2006, spending for personal care and home health services 
accounted for 40 percent of total Medicaid expenditures for long term 
care nationally and exceeded expenditures for any type of long term  
institutional care in 18 States.10  The rising Medicaid costs associated 
with home- and community-based services, including PCS, make it 
important to ensure that all payments for PCS are appropriate.     
 
6 Letter to the Honorable Joe Barton regarding Medicaid provisions in S. 1932, the 
Deficit Reduction Act of 2005.  Congressional Budget Office, January 31, 2006.   
Available online at: http://www.cbo.gov/ftpdocs/70xx/doc7033/s1932medic.pdf. Accessed on 
April 16, 2008. 
7  Congressional Budget Office Cost Estimate, S. 1932, Deficit Reduction Act of 2005.  
January 27, 2006.  Available online at: 
http://www.cbo.gov/ftpdocs/70xx/doc7028/s1932conf.pdf. Accessed on April 16, 2008. 
8 Centers for Medicare & Medicaid Services (CMS) Form CMS64 summary data for 
2002 and 2005.   This was the most recent CMS64 data available at the time of this report. 
9 Kaiser Commission on Medicaid and the Uninsured.  Understanding the Recent  
Changes in Medicaid Spending and Enrollment Growth Between 20002004. May 2006, 
p. 7. Available online at http://www.kff.org/medicaid/upload/7499.pdf. Accessed on 
April 2, 2008.  Office of Inspector General (OIG) analysis of data contained in this document 
supports this conclusion.  These data were the most recent research data available at the 
time of this report. 
10 Other types of long term care services include services provided in a nursing facility, 
an intermediate care facility for persons with mental retardation, or a psychiatric 
institution. State Health Facts, Distribution of Medicaid Spending on Long Term Care,  
FY 2006. Available online at http://www.statehealthfacts.org/. Accessed on January 16, 
2008. 
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Medicaid Should Not Pay for Personal Care Services While the Recipient is 
an Inpatient or a Resident of an Institution 
Under the  Medicaid statute and regulations, State Medicaid programs  
should not separately reimburse for PCS provided to inpatients or  
residents of a hospital, a nursing facility, an intermediate care facility 
for the mentally retarded (ICF/MR), or an institution for mental 
diseases (IMD), hereinafter referred to as institutions.11 Medicaid 
regulations also prohibit furnishing PCS under the home health benefit 
or under an HCBS waiver program to inpatients of a hospital, a nursing  
facility, or an ICF/MR.12   The Medicaid programs in each of the five 
States included in this review allowed payments for PCS on the date of 
admission to an institution and, with the exception of Texas, the 
Medicaid programs in these States  also allowed payments for PCS on 
the date of discharge from an institution. Payments for PCS on the 
dates of admission and discharge can be appropriate because the  
beneficiaries may have  been at home for part of these days.13    
Recent Office of Inspector General Work 
In a 2006 report, OIG determined that little national information 
existed regarding the overall delivery of and reimbursement for 
Medicaid PCS.14 The lack of this information could increase Medicaids 
vulnerability to claims and payments made in error for PCS during 
periods of institutionalization.    
METHODOLOGY 
We selected five States for this review: Minnesota, New Mexico, 
North Carolina, Texas, and Washington. We selected these States 
because they were in the top 25 percent of States in terms of national 
expenditures for Medicaid PCS in FY 2004.15 These five States 
represented 17 percent of total national Medicaid expenditures for PCS 
 
11 Social Security Act  1905(a)(24); 42 CFR  440.167. 

12 42 CFR  441.301(b)(1)(ii); 42 CFR  440.70(c). 

13 A State Medicaid Director Letter dated July 25, 2000, allows State Medicaid programs 

to make payments to PCS providers, under a home-and community-based services waiver, 
to allow beneficiaries to retain their caregivers for up to 30 days  during institutional stays.   
Of the five States included in this review, only Minnesota allowed this type of payment for a 
small number of ventilator-dependent beneficiaries. We did not identify any beneficiaries 
receiving this type of payment in our claims analysis. 
14 States Requirements for Medicaid PCS Attendants. OEI-07-05-00250. 
15 CMS64 summary data for 2004. These were the most recent CMS64 data available 
at the start of our review. 
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I N T R O D U C T I O N   
alone in FY 2004, and personal care and home health services 
constituted at least 40 percent of Medicaid long term care spending in 
each of these States in FY 2004.16    
All claims for Medicaid PCS that we examined in the five selected  
States were  paid on a fee-for-service basis during the review period.  
Each of the five State Medicaid programs allowed PCS providers to bill 
Medicaid using date ranges rather than specific dates.  North Carolina 
and New Mexico required that PCS be provided  on every day in the date 
ranges billed. In Washington, Minnesota, and Texas, the date ranges 
represented billing periods, rather than actual dates of service; 
beneficiaries may not have received PCS on every day included in the 
date ranges.   
Data Used in Analysis 
From the five selected States, we obtained the following Medicaid data 
for the period October 1 through December 31, 2005: 
 	 eligibility data for all beneficiaries enrolled in Medicaid,      
 	 paid and denied Medicaid claims data for all PCS provided to  
eligible beneficiaries, and 
 	 paid Medicaid claims data for all services provided in institutions.  
To ensure that we identified all Medicaid- and Medicare-paid 
institutional stays for Medicaid recipients for whom PCS were claimed,  
we also obtained Medicare paid claims data from the National Claims 
History File.  These claims represented all Medicare-paid institutional 
stays for Medicaid beneficiaries who received PCS from October 1 
through December 31, 2005.  To obtain this information, we matched 
the Social Security numbers contained in State Medicaid eligibility data  
with Social Security numbers contained in the CMS Enrollment 
Database to obtain Medicare Health  Insurance Claims Numbers.  We  
then used the Health Insurance Claims Numbers to identify Medicare 
claims for these beneficiaries.   
Identifying Overlapping Personal Care Services and Institutional Dates of 
Service 
Using the Medicaid data obtained from each of the five States, we  
matched the beneficiary identifiers and service dates on the Medicaid  
 
16 State Health Facts, Distribution of Medicaid Spending on Long Term Care, FY 2006. 
Available online at http://www.statehealthfacts.org/. Accessed on January 16, 2008. 
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PCS claims against the beneficiary identifiers and service dates on 
the paid Medicaid institutional claims to identify overlapping dates of 
service. We  then matched the beneficiary identifiers and service 
dates for all PCS claims against the beneficiary identifiers and service 
dates for paid Medicare institutional claims to identify overlapping 
service dates. Our matching program reflected  State PCS payment 
policies as identified through discussions with State officials and 
documentation obtained. The identified claims described above will 
hereinafter be referred to as overlapping claims. 
For analysis purposes, we combined multiple institutional stays with 
the same or consecutive admission and discharge dates into a single 
date range. For example, if a beneficiary was admitted to an 
institution on October 1 and discharged on October 7 and admitted to 
another institution on October 7 and discharged on October 10, we 
combined those two stays into one stay, lasting from October 1 
through October 10. States payment systems, which are based on 
their payment policies, may have allowed payment for PCS on 
October 7 because that was a discharge date for one stay and an 
admission date for the other stay. However, we  considered October 7 
from this example as part of an overlapping claim because the 
beneficiary was likely discharged from one institution and 
immediately admitted to another. The beneficiary likely would not 
have returned home on October 7,  making payment for  PCS 
inappropriate. For the first and last days of consecutive stays 
combined into single date ranges and all nonconsecutive stays, we 
applied the individual payment policies of the reviewed States to 
determine the accuracy of PCS payments on admission and discharge 
dates. 
Determining Payment Errors for Overlapping Personal Care Services and 
Institutional Dates of Service 
Medicaid Matches. The methodology used to identify PCS claims paid in 
error in each of the five States varied. 
North Carolina and New MexicoBecause PCS providers in these two  
States had to provide care on every day within a PCS date range billed, 
any overlapping claim was an error (see Appendix A, Figure 1). State 
Medicaid officials confirmed that all of the PCS claims we identified  
were paid in error. 
Minnesota, Texas, and WashingtonBecause PCS providers in these 
three States were allowed to bill using date ranges that included days 
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I N T R O D U C T I O N   
on which no PCS were provided, we were unable to determine which of 
the overlapping claims were paid in error without further review (see  
Appendix A, Figure 2).  For the Minnesota claims, we reviewed PCS 
attendants timecards to identify errors for the PCS claims that fell 
during Medicaid-paid institutional stays (see Appendix A, Figure 3);17  
for the Texas and Washington claims, we performed further analysis on 
the dates and PCS units billed. We identified claims paid in error in 
these States by identifying instances in which beneficiaries were 
institutionalized for the entire PCS date ranges billed or the hours of 
PCS billed exceeded 24 hours of care per day.  These methods are 
described in more detail in Appendix A. 
If the PCS dates of service matched  the dates of service for both 
Medicaid- and Medicare-paid institutional claims, we counted the PCS 
claim as a Medicaid match because the information needed to identify 
and prevent the overlapping dates was available in the States own 
Medicaid payment systems.   
Medicare Matches.   Under the provisions of the Computer Matching and  
Privacy Protection Act of 1988, we were prohibited from providing State 
Medicaid officials with information regarding the PCS claims that we 
identified for services provided during Medicare institutional stays.18   
Therefore, we used the same methodology utilized in Texas and 
Washington to identify PCS payments made in error for claims that 
overlapped with Medicare-paid institutional stays in all five States 
(see Appendix A).  
Payment Calculations.   We calculated the total amount (i.e., State and 
Federal shares) of Medicaid payments made in error for PCS provided  
during institutional stays. The methodologies by which the claims were  
identified necessitated different methods for determining payments 
made in error.  Further details on how payments for PCS provided  
 
17 Minnesota Medicaid officials provided timecards for 35 of the 41 PCS claims that 
overlapped with Medicaid-paid institutional stays.  
18 The Computer Matching and Privacy Protection Act of 1988 (P.L. No. 100-503), 
amended by P.L. No. 101-508 (1990), established procedural safeguards and due process 
rights related to agencies use of  Privacy  Act records in performing certain types of 
computerized matching programs.  Because our evaluation  did  not undertake computerized  
matching to take action on individual claims or deny individual claims or recover payments 
to individual providers, we  were not required to follow the procedures specified  by the Act 
for those purposes and may not forward the results to the States to be used for those 
purposes.  5 U.S.C.  552a(a)(8)(B).  
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during institutional stays were calculated in each State appear in 
Appendix A.  
Causes of Errors.   We consulted Medicaid State agency staff in each of 
the five States to discuss controls established to prevent payments for 
PCS during institutional stays, the payment errors identified, and 
possible reasons those payments were made in error. We also discussed 
the methods used by the State officials to identify periods of beneficiary 
institutionalization and to detect and deny Medicaid claims for PCS 
during periods of institutionalization. 
Standards 
This study was conducted in accordance with the Quality Standards for 
Inspections issued by the Presidents Council on Integrity and 
Efficiency and the Executive Council on Integrity and Efficiency. 
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 F I N D I N G S
   
The five States that we  reviewed  
In the first quarter of fiscal year 2006, the five 
paid $11.6 million for 29,057 claims 
States reviewed paid nearly $500,000  in error  for  for PCS that overlapped with the  
personal care services  provided during periods  dates of institutional stays in the 
of institutionalization  first quarter of FY 2006. Of these, 
3,921 claims (13.5 percent) were 
paid in error, totaling $494,645 (4.3 percent).19 Table 1 provides an 
overview of total overlapping PCS claims and PCS claims paid in error 
in each State.20  Appendix B contains further details on the number of 
beneficiaries and PCS claims in each State, overlapping claims 
identified, and the claims paid in error.   
 
Table 1:   Overlapping  Claims  and Claims Paid  in Error, From October  1  Through 
December 31 , 2005 
  Overlapping Claims  PCS Claims Paid  in Error 
Number of  Expenditures   Number of   Percentage   Expenditures  Percentage of 
 
Claims  for Claims  Claims   of Claims  for Claims  Expenditures 
Minnesota    120  $117,974  34  28.3%  $6,504  5.5% 
New Mexico  552  $303,669  451  81.7%  $124,134  40.9% 
North Carolina   1,576  $146,148  1,576  100.0%  $131,521  90.0% 
Texas  23,773  $8,132,839  1,634  6.9%  $171,917  2.1% 
 
Washington  3,036  $2,901,640  226  7.4%  $60,569  2.1%
   Total  29,057  $11,602,270  3,921  13.5%  $494,645  4.3% 
 
Source:  OIG analysis  of claims  data,  2008. 
 
The billing practices of New Mexico and North Carolina enabled us to 
determine, using only claims data, which of the PCS claims that fell 
during Medicaid-paid institutional stays were paid in error. Our 
inability to provide State Medicaid officials with information regarding 
the PCS claims that fell during Medicare-paid institutional stays and 
the billing practices of the other three States required us to perform 
additional analysis to identify claims paid in error.21 However, this 
 
19 All expenditures represent combined State and  Federal shares. 
20 Each PCS claim represents services provided  during a range of days, and payment for 
PCS could  have  been appropriate on some of those days.  The expenditures in error 
represent only payments for the services provided on days  within each range on  which the 
beneficiary was in an institution. 
21 All of the North Carolina Medicaid PCS claims that overlapped  with Medicare-paid  
institutional stays had date ranges that either fell within the institutional stays or had  
more than 24 hours of services per noninstitutional day; hence,  North Carolinas error rate  
in Table 1 is 100 percent.  The other four States had some PCS claims that overlapped with  
Medicare-paid institutional stays that did not meet these criteria. 
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F I N D I N G S  

additional analysis could not identify every claim paid in error.  
Therefore, the error rates may be understated.   We discuss the impact 
of States billing practices on our analysis and the error rates identified 
in the next finding.     
State Medicaid programs paid $243,385 for personal care services provided 
during Medicaid-paid institutional stays 
In one quarter, Medicaid programs in the five States paid  
1,670 Medicaid PCS claims, totaling $243,385, for services provided on 
days on which Medicaid also paid for institutional care.  The Medicaid 
matches represent 43 percent of the claims identified as paid in error as 
shown in Figure 1.  The claims were identified using data that were 
available in the States own Medicaid payment systems.   
State Medicaid programs paid $251,260 for personal care services provided 
during Medicare-paid institutional stays 
For the overlapping PCS claims that  matched Medicare institutional 
stays, we identified instances in which beneficiaries were 
institutionalized for the entire PCS date ranges billed or in which the 
hours of PCS billed exceeded 24 hours of care per day for days on which 
the beneficiaries were not institutionalized.  We identified 2,251 PCS 
claims, totaling $251,260, that met these conditions. As described in 
Figure 1:  Percentage of PCS Claims Paid  in Error by Institutional Payor,  
From October 1  Through December 31,  2005 
Total 
Minnesota 
Institutional Payor 
New Mexico 
Medicaid matches 
Medicare matches 
North Carolina 
Texas 
Washington 
0%  20%  40%  60%  80%  100% 
Source: OIG analysis of claims data, 2008. 
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the methodology, this analysis did not enable us to identify all of the 
claims paid in error, so the error rate is likely higher than indicated. 
The Medicare matches represent 57 percent of the claims identified as 
paid in error. As previously noted, if a PCS claim matched the dates of 
both Medicaid- and Medicare-paid institutional stays, we counted it as a 
Medicaid match. 
State Medicaid officials in three States volunteered that the  lack of 
access to  or incompleteness of Medicare institutional claims data 
available to them prevents them from identifying Medicaid payments 
for PCS during Medicare-paid institutional stays. The only Medicare 
information that State Medicaid officials reported receiving consistently  
was crossover claims.22   Medicaid officials in one State volunteered that 
the absence  of institutional admission dates on crossover claims 
prevented them from using those claims to identify overlapping 
payments. 
We analyzed overlapping Medicaid and Medicare payments to identify 
any patterns in provider types or institutional settings within and 
among the five States.  We identified no patterns based on specific 
provider types or procedure codes.   
 
In the first quarter of  
Billing practices in three States create  FY 2006, Minnesota, Texas, and 
vulnerabilities that could mean that up to  Washington paid $11.2 million 
$11 million in one quarter may have been paid  for 26,929 PCS claims that 
overlapped with Medicaid- and 
in error 
Medicare-paid institutional 
stays. Because these three State Medicaid programs allow PCS 
providers to bill using date ranges that can include days on which no 
PCS were provided, existing claims data do not provide the information  
necessary to ensure that the overlapping claims are not paid in error.   
For example, a beneficiary was institutionalized from October 1 through 
October 7, and PCS were billed for the date range October 3 through 
October 9. In this scenario, we  were unable to determine whether the 
PCS were provided between October 3 and October 6, when the 
 
22 Crossover claims are claims for dually eligible beneficiaries sent to Medicaid for 
payment of the coinsurance and/or deductible on  institutional services paid by Medicare. 
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beneficiary was institutionalized, or between October 7 and 
October 9, when the beneficiary was at home.   
In the three  States, we could not determine whether claims for PCS 
were paid in error unless (1) beneficiaries were institutionalized for the 
entire PCS date ranges billed, (2) the hours of PCS billed exceeded 
24 hours of care per day for days on  which the beneficiaries were not 
institutionalized, or (3) we had access to timecards. Through our  
analysis, we determined that 1,894 (7 percent) of the overlapping claims 
in these three States were paid in error.   However, using claims data 
alone, we were unable to determine whether the remaining 93 percent 
of the overlapping PCS claims, representing $10.9 million, were 
provided during institutional stays. Therefore, the remaining 
25,035 claims are at risk of being paid in error because States lack the 
information necessary to determine whether the claims were 
appropriate. 
 
All five State Medicaid programs had 
Although all five States reported having 
payment system edits and postpayment 
controls to prevent Medicaid payments for 
audits in place that were intended to 
personal care services provided during 
prevent or recover payments for PCS  
institutional stays, the controls did not prevent  during institutional stays, but they 
all erroneous payments  were not completely effective. For 
example, Minnesota, North Carolina, 
and New Mexico had edits in place that disallowed payment of PCS on  
days when the beneficiary was institutionalized. Texas and Minnesota 
had edits in place that were designed to prevent authorizations for PCS 
and inpatient services from being entered for the same date. In 
Washington, case managers were required to create service 
authorizations for beneficiaries eligible to receive PCS, designating 
what services were payable on what dates. To stop the beneficiary from 
receiving PCS before the end  of the service authorization period  
(i.e., because of the beneficiarys institutionalization), the authorization 
had to be manually terminated by the case manager. Additionally, 
Washington had instituted random postpayment audits comparing the 
hours billed to the hours recorded on PCS providers timesheets and 
contracted with local Area Agencies on Aging to monitor PCS provider 
timesheets.  
However, as evidenced by the claims identified in our analysis, these 
edits and audits were not completely effective. For example, in 
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F I N D I N G S  
North Carolina and New Mexico, payment system edits were not 
working properly during the timeframe of our review and allowed  
payments for PCS provided during institutionalizations.23  Minnesota 
had a payment edit in place to prevent payments for certain services 
during institutionalization, but it  did not work for PCS claims because 
providers were allowed to bill using date ranges.  Minnesota officials 
noted that, prior to our review, they were already implementing 
changes requiring providers to submit claims with exact dates of service 
to ensure that the payment edit would work in the future.  Minnesota 
also planned to increase provider education on this issue, create clear 
documentation on payment guidelines, and implement an annual data 
check for PCS provided during institutional stays to recoup any 
payments made in error.  In Washington, many of the overlapping 
claims were  paid because case managers failed to close the service 
authorization when the beneficiary was institutionalized. 
 
 
23 In New Mexico, the malfunctioning edit was discovered and corrected early in 2006.  
In North Carolina, the malfunctioning edit was discovered and corrected in June 2007.  
Because these corrections were made after our review period, we cannot make any 
determination regarding their efficacy.   
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 R E C O M M E N D A T I O N S  

 
In the five States reviewed, we identified 3,921 claims, totaling 
$494,645, paid in error for PCS provided during institutional stays 
during one quarter.  We also identified billing practices in Minnesota, 
Texas, and Washington that could mean that up to $11 million may 
have been paid in error during the quarter.  Because these three States 
allowed PCS providers to bill using date ranges that include days on 
which no PCS were provided, available claims data did not enable us to 
identify all payments made in error.  For all five States, Medicaid 
officials lacked access to Medicare institutional claims data needed to  
identify PCS claims paid in error during Medicare-paid institutional 
stays. However, Medicaid matches represent 43 percent of the PCS 
claims paid in error and were identified using information contained in 
the States own Medicaid payment systems.  Finally, although all five 
State Medicaid programs had system edits in place and conducted 
postpayment audits, no program was able to prevent all erroneous  
payments for PCS provided during institutional stays. 
Therefore, we recommend that CMS:  
Enforce Existing Federal Medicaid Payment Policies That Prohibit Medicaid  
Reimbursement for Personal Care Services Provided Over a Range of Dates 
if the Range Includes Dates on Which the Beneficiary  was Institutionalized   
CMS could accomplish this by including claims for PCS billed in date 
ranges in Medicaid audits, and disallowing Federal expenditures for 
PCS claims that lack supporting documentation.  
Work With States To Reduce Erroneous Medicaid Payments for Personal 
Care Services Provided During Institutional Stays by: 
 	 exploring ways to ensure that State Medicaid programs have  
complete information on Medicare institutionalizations for dually 
eligible beneficiaries to prevent payments for PCS during 
Medicare-paid institutionalizations (e.g., requiring admission dates 
on all crossover claims submitted to State Medicaid agencies);  
 	 disseminating information to State Medicaid agencies regarding the 
vulnerabilities identified (e.g., payment system edit failures, 
untimely or inaccurate service authorizations) and the importance 
of educating PCS providers on policy prohibiting payment for PCS 
while beneficiaries are institutionalized; and 
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  including information regarding the vulnerabilities identified in the 
technical assistance and support provided to State Medicaid 
integrity programs by the Medicaid Integrity Group. 
 
For this evaluation, we  performed a computerized comparison of claims data 
for the purpose of examining State Medicaid payments. Under the provisions 
of the Computer Matching and Privacy Protection Act of 1988, we cannot 
forward the results to CMS or the States for purposes of denying individual 
claims or recovering payments to individual providers. 
AGENCY COMMENTSAND OFFICE OF INSPECTOR GENERAL  
RESPONSE 
CMS concurred with the OIG recommendation to work with States to 
reduce erroneous Medicaid payments for PCS provided during 
institutional stays. CMS stated that Medicare should advise State 
Medicaid agencies of institutional stays for dually eligible beneficiaries 
and that the Medicaid Integrity Group would integrate the 
vulnerabilities identified in this report into its inspection criteria. CMS 
concurred with our recommendation to disseminate information to State 
Medicaid agencies regarding the vulnerabilities we identified. To better 
respond to one of the recommendations, CMS requested that OIG 
provide details surrounding why automated prepayment and 
postpayment system edits failed to prevent PCS payments made in 
error. We did not evaluate States automated systems edits or the 
reasons edits failed, so we are unable to provide any further details 
regarding why edits did not prevent erroneous PCS payments. 
However, CMS did not concur with the OIG recommendation to prohibit 
Federal Medicaid reimbursement for PCS claims billed with date ranges 
that include days on which no PCS were provided. CMS indicated that 
existing Federal reimbursement policies are sufficient to prohibit such 
payments when States have effective controls in  place. We  revised the  
recommendation to state that CMS should enforce existing Medicaid  
payment policies.   
Finally, CMS indicated that any publicly released statements about the 
report should emphasize that the study was conducted in only five 
States and cannot be extrapolated nationally to other States or beyond  
the period covered by the evaluation. The full text of CMSs comments  
can be found in Appendix C. 
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Methodology Used To Identify Errors and Calculate Medicaid 
Payments Made in Error for Personal Care Services Provided 
During Institutional Stays 
Medicaid Matches 
The methods used to identify personal care services (PCS) claims paid  
in error for  PCS provided during Medicaid-paid institutional stays are 
described below and illustrated in Figures 15 on page 19. 
North Carolina and New Mexico.  Because the New Mexico and North  
Carolina Medicaid programs allowed PCS providers to include only days 
on which PCS were actually provided in their date ranges, our analysis 
and State confirmation were sufficient to identify the payments made in 
error for PCS provided during Medicaid-paid institutional stays.  As the 
example in Figure 1 illustrates, in North Carolina and New Mexico, 
because at least one service was provided on every day in the PCS date 
range, we know that the services provided on the overlapping days were  
paid in error. 
Minnesota. The Minnesota Medicaid program allowed PCS providers to  
bill using date ranges that represented billing periods rather than 
actual dates of services; beneficiaries may not have received PCS on 
every day included in the date ranges.  As Figure 2 illustrates, we were 
unable to determine using only claims data whether the PCS were 
provided between October 1 and October 4, when the beneficiary was at 
home, or between October 5 and October 7, when the beneficiary was 
institutionalized. 
For Minnesota, we reviewed PCS attendants timecards for 35 of the 
41 PCS claims that fell during Medicaid-paid institutional stays to 
identify the days on which PCS were provided.  By reviewing the 
timecards, we determined on which days PCS were actually provided 
during the date ranges billed.  If PCS were provided on any day on 
which the beneficiary also received institutional services, we  considered  
the PCS payment to be in error.  As  the example in Figure 3 illustrates, 
a beneficiary has a PCS claim with the date range from October 2 
through October 8 and an institutional stay from October 4 through 
October 10. The timecard for his personal care attendant for October 2 
through October 8 shows that services were provided on October 5 and  
October 6. Because those days are within his institutional stay, the 
payments for them were made in error.    
Texas and Washington. The Texas  and Washington Medicaid programs  
also allowed PCS providers to bill using date ranges that represented 
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billing periods rather than actual dates of services; beneficiaries may 
not have received PCS on every day included in the date ranges.  As  
Figure 2 on page 19 illustrates, in these two States, we were unable to  
determine using only claims data, whether PCS were provided between  
October 1 and October 4, when the beneficiary was at home, or between  
October 5 and October 7, when the beneficiary was institutionalized.  
Additionally, Texas and Washington  Medicaid officials were unable to 
review the claims identified or to provide timecards for our review 
because of the large volume of overlapping claims.  Therefore, we used 
the following methodologies to identify claims paid in error in these 
States: 
(1)  beneficiaries were institutionalized for the entire PCS date ranges 
billed (see Figure 4) or  
(2)  the hours of PCS billed would exceed 24 hours of care per day for 
days on which the beneficiary was not institutionalized.  If the hours 
provided would exceed 24 hours of care per day while the beneficiary 
was not institutionalized, any hours in excess of 24 would have to 
have been provided while the beneficiary was institutionalized 
(see Figure  5). 
We consulted with Medicaid officials in these two States, who confirmed  
the validity of this analysis. However, this analysis could not identify 
all the claims paid in error. 
Medicare Matches 
The Computer Matching and Privacy Protection Act of 1988 prevented 
us from providing State Medicaid officials with information regarding 
the PCS claims that we identified for services provided during 
Medicare-paid institutional stays.24  Therefore, we used the  
methodology illustrated in Figures 4 and 5 to identify PCS payments 
made in error for claims that overlapped with Medicare-paid 
institutional stays in all five States. 
 
24 The Computer Matching and Privacy Protection Act of 1988 (P.L. No. 100-503), 
amended by P.L. No. 101-508 (1990), established procedural safeguards and due process 
rights related to agencies use of  Privacy  Act records in performing certain types of 
computerized matching programs.  Because our evaluation  did  not undertake computerized  
matching to take action on individual claims or deny individual claims or recover payments 
to individual providers, we  were not required to follow the procedures specified  by the Act 
for those purposes and may not forward the results to the States to be used for those 
purposes.  5 U.S.C.  552a(a)(8)(B). 
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A P P E N D I X   ~   A  
Entire PCS date range falls within institutional stay.  This test identified 
PCS claims with date ranges that were entirely within one or more 
institutional stays. As the example illustrated in Figure 4 shows, a 
beneficiary had a PCS claim with the date range of October 2 through 
October 8 and an institutional stay from October 1 through October 10.  
The date range of his PCS claim is entirely within the dates of his 
institutional stay, and therefore he was never at home to receive PCS on  
any of the days within the date range. 
More than 24 hours of PCS were billed per noninstitutionalized day. This  
test compared the units of PCS billed to the number of days in the PCS 
date range on which the beneficiary was not institutionalized to 
determine which claims had more than 24 hours of PCS billed per day.  
As the example illustrated in Figure 5 shows, a beneficiary had a PCS 
claim with the date range from October 1 through October 8.  He also 
had an institutional stay from October 4 through October 10.  He was 
home only on 4 days in the PCS date rangeOctober 1 through 
October 4 (the dates of admission and discharge are counted  as at-home 
days).  Therefore a maximum of 96 hours of PCS were possible during 
those 4 days.  If more than 96 hours of services were billed, the 
beneficiary would have had to receive some of those services on days 
when he was institutionalized.  We would have counted only the hours  
in excess of 96 hours in  error.  However, if fewer than 96 hours were 
billed, we had no basis to question the PCS claim, even if PCS were 
provided while the beneficiary was institutionalized.  It is possible that 
some or all of these PCS claims were paid in error. 
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A P P E N D I X   ~   A  
Medicaid Matches in North Carolina and New  Mexico 
 
Figure  1:  Example  of Overlapping Claims in  North Carolina and  New  Mexico 
 
Oct. 1  Oct. 2  Oct . 3  Oct. 4  Oct. 5  Oct. 6  Oct. 7  Oct. 8  Oct. 9  Oct. 10 
PCS date  range 
 
PCS paid  inappropriately 
Institutional date range 
 
Figure 2:  Example of  Overlapping Claims in Minnesota, Texas, and Washington 
Oct. 1  Oct. 2  Oct.  3  Oct. 4  Oct. 5  Oct. 6  Oct. 7  Oct. 8  Oct. 9  Oct. 10 
PCS date range 
 
PCS could be paid appropriately  PCS could not be paid appropriately 
  Institutional date range 
Medicaid Matches in Minnesota  
 
Figure 3:   Example of Timecard Review  
 
 
Oct. 1  Oct. 2  Oct. 3  Oct. 4  Oct. 5  Oct. 6  Oct. 7  Oct. 8  Oct. 9  Oct. 10 
 
PCS date range 
 
PCS paid  inappropriately 
  Institutional date range 
 
Medicaid Matches in Texas and Washington; Medicare Matches in All Five  States 
Figure 4:  Example of Entire PCS Date Range Contained Within  Institutional Stay 
Oct. 1  Oct. 2  Oct. 3  Oct. 4  Oct. 5  Oct. 6  Oct. 7  Oct. 8  Oct. 9  Oct.  10 
PCS date range 
PCS  could not be paid appropriately 
Institutional date range 
 
Figure 5:  Example of  More Than 24 Hours of PCS Billed on NonInstitutional Days 
 
Oct. 1  Oct. 2  Oct. 3  Oct. 4  Oct. 5  Oct. 6  Oct. 7  Oct. 8  Oct. 9  Oct. 10 
 
4 noninsititutional da y  s    -   m  a x  .  9  6   h  o u  r s               PCS date range 
 
PCS could be paid appropriately  PCS could not be paid appropriately
 
Institutional date range 
 
 
 
 
 
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Calculation of Payments  
North Carolina, New Mexico, Texas, and Washington. For these four  
States, the calculations of payments made in error for PCS provided  
during both Medicaid- and Medicare-paid institutional stays were the 
same. For PCS claims during which  the beneficiary was 
institutionalized for the entire date range, the entire amount paid was 
counted in error.  For these claims, the beneficiary was institutionalized 
and not at home at any point during the date range; no  PCS should  
have been paid. For PCS claims in  which the provider billed for more 
than 24 hours of PCS per noninstitutional day, we calculated the 
maximum possible hours of PCS that each beneficiary could have 
received while not institutionalized (e.g., 4 noninstitutional days 
x 24 hours per day = 96 possible hours of PCS). Only the portion of the 
payment associated with the hours in excess of the maximum possible 
hours was counted in error.   Washington paid one type  of PCS in units 
of 1 day. For these claims, if the beneficiary was institutionalized for 
part of the date range, we counted  only days on which the beneficiary 
was institutionalized in determining the amount paid in error. 
Minnesota. We employed different methods to identify PCS claims paid  
in error during Medicaid- and Medicare-paid institutional stays in 
Minnesota.  Minnesota was the only one of the five States that provided  
timecards for the overlapping PCS claims. For the PCS claims that 
matched Medicaid-paid institutional stays, we reviewed the timecards 
to determine how many units of services were provided on days on 
which beneficiaries were in institutions. We then multiplied those units 
by the unit rate to determine the amount paid in error.  Payment errors  
for PCS claims that matched Medicare-paid institutional stays were  
calculated similarly to those in the other four States as described above. 
 
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 A P P E N D I X ~ B  
A P P E N D I X   A  
Personal Care Services:  Total Beneficiaries, Paid Claims, 
Overlapping Claims, and Claims Paid in Error 
First Quarter of Fiscal Year 2006  Minnesota  New Mexico  North Carolina  Texas  Washington 
Number of  beneficiaries enrolled in Medicaid  266,347  428,884  1,600,120  4,431,491  1,028,330 
Number of  beneficiaries receiving personal care services (PCS)  11,674  11,130  75,217  141,947  53,694 
Number of beneficiaries who received PCS and Medicaid  
636  951  10,446  14,393  1,926 
institutional services 
Number of beneficiaries who received PCS and Medicare  
163  637  2,895  7,473  2,450 
institutional services 
Number of  paid PCS claims  160,979  242,808  3,080,667  1,133,608  220,574 
Number of  PCS claims for beneficiaries  who also received 
10,161  24,229  396,480  154,794  12,559 
institutional services 
Expenditures for PCS claims for beneficiaries who also received  
$4,230,738  $16,471,359  $24,500,100  $39,227,964  $11,445,130 
institutional services 
Medicaid 
PCS claims that overlap with the dates of Medicaid-paid institutional  
41  390  345  14,721  1,235 
stays 
PCS  claims  for services provided during an institutional stay 
24  390  345  851  60 
paid in  error 
Erroneous  payments identified through claims  
N/A  390  345  N/A  N/A 
review 
Erroneous  payments identfied through 
24  N/A  N/A  N/A  N/A 
timecard review 
Erroneous  payments identifed through 
N/A  N/A  N/A  851  60 
reasonableness tests 
Claims in  which the 
beneficiary was  
N/A  N/A  N/A  826  55 
institutionalized every day in  
PCS range 
Claims in  which more than    
24 hours of services/day were  N/A  N/A  N/A  25  5 
billed 
Medicare 
PCS claims that overlap with the dates of Medicare-paid institutional  
79  162  1,231  9,052  1,801 
stays 
PCS  claims  for services provided during institutional stays  
10  61  1,231  783  166 
paid in error, identified through reasonableness tests 
Claims in which the beneficiary was  
7  60  1,025  765  161 
institutionalized every day in PCS range 
Claims in which more than 24 hours of  
3  1  206  18  5 
services/day were billed 
Source: Office of Inspector General analysis of claims data, 2008. 
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 A P P E N D I X   ~   C  

Agency Comments 
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A P P E N D I X   ~   C  

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A P P E N D I X   ~   C  

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 A C K N O W L E D G M E N T S  

This report was prepared under the direction of Brian T. Pattison, 
Regional Inspector General for Evaluation and Inspections in the 
Kansas City regional office.   
Deborah Walden served as the team  leader for this study.  Other 
principal Office of Evaluation and Inspections staff from the  Kansas 
City regional office who contributed to the report include Emily 
Meissen, Elander Phillips, and Michala Walker; other central office staff 
who contributed include Kevin Manley and Scott Horning.  
 
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