Department of Health and Human Services 
OFFICE OF 
 
INSPECTOR GENERAL 
 
   
 
 
 
I S
NCONSISTENCIES IN  TATE 
 
 
I
MPLEMENTATION OF 
 
 
C C E
ORRECT  ODING  DITS 
 
 
M A I
AY  LLOW  MPROPER 
 
M P  
EDICAID  AYMENTS
 
Suzanne Murrin 
Deputy Inspector General for 
Evaluation and Inspections 
 
April 2016 
OEI-09-14-00440   
   
EXECUTIVE SUMMARY:  INCONSISTENCIES IN STATE IMPLEMENTATION 
OF CORRECT CODING EDITS MAY ALLOW IMPROPER MEDICAID 
PAYMENTS 
OEI-09-14-00440 
 
WHY WE DID THIS STUDY  
 
Improper payments to healthcare providers constitute a significant vulnerability for 
Medicaid, costing an estimated $17.5 billion in fiscal year 2014.  Automated claims 
processing safeguards called edits are critical program integrity tools that are available 
to State Medicaid agencies to prevent these improper payments.  The Affordable Care Act 
required all States to implement the Medicaid National Correct Coding Initiative (NCCI) 
edits by October 1, 2010.  The NCCI edits are designed to encourage providers to code 
correctly by automatically denying fee-for-service Medicaid payments for services that 
do not meet basic medical or billing standards. 
 
HOW WE DID THIS STUDY 
 
We used three data sources in our review.  We surveyed all States about their progress 
and experiences implementing the NCCI edits.  We asked all States to process a set of 
test claims to spot check their use of selected NCCI edits.  We received their test 
claims results and survey responses in November 2014.  We reviewed the cost savings 
estimates from the NCCI edits that States submitted to the Centers for Medicare & 
Medicaid Services (CMS) covering the period from January 2012 to August 2015.   
 
WHAT WE FOUND 
 
The effectiveness of the Medicaid NCCI edits was limited because some States had not 
fully implemented them and most did not use all of the edits correctly.  States 
inconsistent implementation and use of the edits may reduce their ability to promote 
correct coding by providers and prevent improper Medicaid payments.  Additionally, 
States lack of reporting of cost savings estimates, and the limitations of the estimates 
that were reported, inhibit CMSs ability to meaningfully estimate national NCCI cost 
savings.  Despite these weaknesses, nearly all States reported that using the NCCI edits 
benefitted their Medicaid programs, and some voluntarily used the edits on claims paid 
under managed care.   
 
WHAT WE RECOMMEND  
 
We recommend that CMS (1) take appropriate action to ensure that States fully 
implement the NCCI edits, (2) provide technical assistance to States to ensure that they 
use the NCCI edits correctly, (3) issue guidance to States on how to estimate NCCI cost 
savings and take steps to ensure that States report as required, and (4) examine whether 
using the NCCI edits on claims paid under managed care is beneficial, and if so, take 
appropriate action.  CMS concurred with all four recommendations.  
 
 
   
   
TABLE OF CONTENTS 
 
Objectives ....................................................................................................1 
Background ..................................................................................................1 
Methodology ................................................................................................5 
Findings........................................................................................................9 
Ten States had not implemented all required NCCI edits ................9 
Most States did not use all of the NCCI edits correctly ................. 11 
Most States did not report NCCI cost savings to CMS as  
required, and the estimates that were reported had limited  
value ...............................................................................................13 
Eleven States voluntarily used NCCI edits on claims paid  
under managed care .......................................................................14 
Conclusion and Recommendations ............................................................16 
Agency Comments and OIG Response......................................................18 
Appendixes ................................................................................................19 
A:  Detailed Test Claims Methodology..........................................19 
B:  Test Claims and Expected Results ...........................................21 
C:  States That Reported Not Implementing Edits From All  
Six NCCI Edit Categories ..............................................................24 
D:  States Test Claim Results ........................................................25 
E:  State Reporting on Adherence to Selected NCCI  
Program Requirements...................................................................26 
F:  Number of Quarterly Cost Savings Estimates States  
Submitted to CMS, by Year ...........................................................27  
G:  States That Reported Using NCCI Edits on Managed  
Care Claims ....................................................................................28 
H:  Agency Comments ...................................................................29 
Acknowledgments......................................................................................31 
 
 
 
   
   
OBJECTIVES 
1.  To determine the extent to which States have implemented the required 
Medicaid National Correct Coding Initiative (NCCI) edits. 
2.  To determine the extent to which States used the NCCI edits consistent 
with NCCI program requirements. 
3.  To examine the extent to which States reported NCCI cost savings 
estimates to the Centers for Medicare & Medicaid Services (CMS), as 
required, and to assess the quality of the reported data.  
4.  To determine whether States voluntarily used the NCCI edits on 
Medicaid claims paid under managed care. 
BACKGROUND  
Edits are automated claims processing safeguards that are available to 
State Medicaid agencies to help ensure program integrity.1  According to 
CMS, edits that are not implemented or working properly are a primary 
cause of improper payments.2  Improper payments to healthcare providers 
constitute a significant vulnerability for Medicaid, costing a projected 
$17.5 billion in fiscal year 2014.3 
The Affordable Care Act required all States to implement the Medicaid 
NCCI edits by October 1, 2010.4  The NCCI edits automatically deny 
payment for services that do not meet basic medical or billing standards.5  
The NCCI edits are designed to encourage providers to use the correct 
medical billing codes that accurately reflect the services provided to a 
patient.  These codes determine how much Medicaid pays to providers for 
each service.  The NCCI edits have been an effective program integrity 
tool in the Medicare program.  Since their implementation in Medicare in 
 
1 CMS, Comprehensive Medicaid Integrity Plan Fiscal Years 2014-2018, p. 15. 
2 Ibid. 
3 CMS, Medicaid and CHIP 2014 Improper Payments Reports, p. 3. 
4 The Patient Protection and Affordable Care Act, P.L. 111-148,  6507 (March 23, 
2010), as amended by the Health Care Reconciliation Act of 2010,  
P.L. 111-152 (March 30, 2010), collectively known as the Affordable Care Act.   
5 CMS, National Correct Coding Initiative Policy Manual for Medicaid Services, 
Introduction p. 3, January 1, 2014. 
 
 
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1996, the NCCI edits have saved over $7.5 billion dollars in program 
expenditures through 2013.6 
Medicaid NCCI Edits 
The NCCI edits are payment rules programmed into States claims 
processing systems to automatically deny payment for ineligible and 
incorrectly coded services on Medicaid fee-for-service claims.  For 
example, an NCCI edit would deny payment to a provider who bills 
Medicaid for more than one appendectomy on the same patient.  When an 
NCCI edit denies payment for a service, providers may correct the coding 
for the service and rebill the Medicaid program, if appropriate.  Ideally, 
over time, providers whose payments are denied because they are 
inconsistent with NCCI edits will code future claims correctly.  The NCCI 
edits are based on, among other things, standard medical practice and 
coding conventions.7  The NCCI edits apply only to services that are 
performed by the same provider, for the same beneficiary, on the same 
date of service.     
There are two types of NCCI edits:  (1) medically unlikely edits and 
(2) procedure-to-procedure edits.  Each of the two edit types is used on 
claims from three types of services.  Collectively, these comprise the six 
NCCI edit categories, as shown in Figure 1.  In total, there are 
approximately 1.3 million NCCI edits, most of which are  
procedure-to-procedure edits.  States may use the NCCI edits on claims 
paid under managed care, although it is not required.8 
 
6 U.S. Department of Health and Human Services, Report to Congress on the 
Implementation of the National Correct Coding Initiative in the Medicaid Program, p. 3, 
March 1, 2011.  Testimony of Shantanu Agrawal, CMS Deputy Administrator and 
Director on CMS Efforts to Reduce Improper Payments in the Medicare Program before 
the Committee on Oversight & Government Reform, Subcommittee on Energy Policy, 
Health Care & Entitlements, United States House of Representatives, May 20, 2014. 
7 CMS, State Medicaid Director Letter, National Correct Coding Initiative.  SMDL  
#10-017, September 1, 2010.   
8 Managed care covers nearly three-quarters of Medicaid enrollees.  CMS, Center for 
Medicaid and CHIP Services Technical Guidance on State Implementation of the 
Medicaid National Correct Coding Initiative Methodologies, p. 7, October 10, 2014.  
CMS, Medicaid Managed Care Enrollment Report:  Summary Statistics as of July 1, 
2013.  Accessed at http://www.medicaid.gov on January 26, 2016. 
 
 
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    Figure 1:  Six Medicaid NCCI Edit Categories 
Medically Unlikely Edits 
      1. Practitioner Medically Unlikely Edits 
      2. Outpatient Medically Unlikely Edits 
      3. Durable Medical Equipment Medically Unlikely Edits 
Procedure-to-Procedure Edits 
      4. Practitioner Procedure-to-Procedure Edits 
      5. Outpatient Procedure-to-Procedure Edits  
      6. Durable Medical Equipment Procedure-to-Procedure Edits 
Source:  CMS, Medicaid NCCI Edit Design Manual, 2014. 
Medically unlikely edits.  Medically unlikely edits prevent payment for an 
inappropriate number of the same service for the same beneficiary on a 
single day.  CMS defines the medically unlikely value for a service as 
the maximum units of service reportable under most circumstances, 
based on standard medical practice.9  If a provider bills for more units of 
service than the medically unlikely value, payment for all units of service 
should be denied.  According to CMS, denying payment for all units of 
service incentivizes providers to code correctly, because the provider must 
rebill for the correct number of services to receive any payment.10  For 
example, because an individual has only one gallbladder, the medically 
unlikely value for a gallbladder removal surgery is one.  If a provider bills 
for two gallbladder removal surgeries for a patient on the same day, the 
medically unlikely edit should deny payment for both surgeries.  The 
provider may then rebill for a single gallbladder removal surgery, if 
appropriate. 
Under certain circumstances, a provider may bill for multiple services 
provided to a beneficiary over a period of time (date span) without 
specifying the specific day that each service was provided.  In these 
instances, the average units of service provided per day must not exceed 
the medically unlikely value for that service.  For example, hospital 
patients may receive physical therapy treatment in a whirlpool once per 
day.  However, hospitals may bill for more than one whirlpool treatment 
over the date span of the patients stay as long as the average number of 
whirlpool treatments per day rounds to one or less. 
 
9 CMS, National Correct Coding Initiative Policy Manual for Medicaid Services, Chapter 
I p. I-6, January 1, 2014. 
10 CMS, Fact Sheet: Updates on the Medicaid National Correct Coding Initiative 
Methodologies, p. 4-5.  Accessed at http://www.medicaid.gov on August 12, 2015. 
 
 
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Procedure-to-procedure edits.  Procedure-to-procedure edits prevent 
payment for pairs of services that providers should not bill together on the 
same day (edit pair).  If a provider bills for both services in a  
procedure-to-procedure edit pair for the same beneficiary on the same day, 
the edit specifies which service should be paid and should automatically 
deny payment for the other service.  For example, a cardiac stress test 
includes multiple electrocardiograms, so a provider should not bill for an 
electrocardiogram in addition to the cardiac stress test.  In this example, 
the procedure-to-procedure edit should allow payment for the cardiac 
stress test and deny payment for any separately billed electrocardiograms. 
Under limited circumstances, providers may bill for both services in a 
procedure-to-procedure edit pair, though they would have to include one 
or more modifiers on the claim to receive payment.  A modifier is a 
two-digit code that further describes the service(s) performed, and that 
may allow the claim to bypass an NCCI edit.  For example, an NCCI edit 
would not allow providers to bill for two separate surgeries on one 
shoulder for a single beneficiary on the same day.  However, if two 
surgeries were performed, one on each shoulder, providers may add 
modifiers to the claim that would allow it to bypass the NCCI edit.11 
Medicaid NCCI Program Requirements  
The Affordable Care Act required all States to implement the NCCI edits 
into their Medicaid claims processing systems.12  Through technical 
guidance to States, CMS specifies how States must use the NCCI edits.  
NCCI program requirements include:  
Correct order to use NCCI edits during claims processing.  NCCI edits 
must be applied to Medicaid claims first, before applying any 
State-specific edits (State edits).13  Although CMS allows States to use 
additional edits, applying the NCCI edits first can help promote coding 
consistency across Medicaid providers nationwide. 
Correct quarterly edit file for use by States.  CMS posts updated edit files 
for each of the six NCCI edit categories every quarter.  The files are 
posted on the Medicaid Integrity Institutes secure Web site for States to 
download.  States must download and use these files, rather than a similar 
 
11 Modifiers should only be used to bypass NCCI edits if documentation in the medical 
record supports the use of the modifier.  CMS, National Correct Coding Initiative Policy 
Manual for Medicaid Services, Chapter I p. I-23, January 1, 2014. 
12 Affordable Care Act  6507. 
13 States may use screening editssuch as those that check for Medicaid eligibility or 
missing informationbefore the NCCI edits.  Center for Medicaid and CHIP Services 
Technical Guidance on State Implementation of the Medicaid National Correct Coding 
Initiative Methodologies, p. 16, October 10, 2014. 
 
 
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but less exhaustive public-use file that CMS publishes on its general 
Web site to inform providers of the NCCI edits.14 
Correct timing for updating NCCI edits.  CMS posts the updated edit files 
approximately 15 days prior to the start of each calendar quarter.  States 
must use the updated set of edits beginning on the first day of the new 
calendar quarter.15 
Cost savings estimates.  CMS requires States to track estimated cost 
savings from the NCCI edits and report the estimates to CMS each 
quarter.16  A CMS official indicated that CMS uses the States reported 
cost savings data to estimate the national savings from the NCCI edits.  
CMS reports the estimated national savings to Congress as part of its 
annual Health Care Fraud and Abuse Control report, which describes 
Federal and State law enforcement and program integrity activities 
targeting health care fraud and abuse.  Although CMS has provided States 
with a template for reporting cost estimates, it has not issued any guidance 
on how to estimate cost savings from the NCCI edits.   
Related Work 
This report extends the Office of Inspector Generals (OIGs) examination 
of the role of program integrity tools, such as edits, in preventing improper 
payments and protecting the integrity of healthcare programs.  For 
example, in 2003, OIG found that the Medicare NCCI edits were effective 
in preventing improper payments.17  Further, in 2013, an OIG audit found 
that Georgia could have prevented $1.5 million in improper payments 
from November 1, 2010 to September 30, 2011, if it had used the 
Medicaid NCCI edits in a manner consistent with the program 
requirements.18  
This report is the first national review of the Medicaid NCCI program. 
METHODOLOGY 
Data Collection  
In November 2014, we surveyed all 50 States and the District of Columbia 
(hereinafter referred to as States) about their progress and experiences 
 
14 Ibid., p. 11. 
15 Ibid., pg. 12. 
16 Ibid., pg. 3. 
17 OIG, Medicares National Correct Coding Initiative, OEI-03-02-00770,  
September 2003. 
18 OIG, Georgia Did Not Pay Some Line Items on Medicaid Claims in Accordance With 
Its Medicaid National Correct Coding Initiative Methodologies, A-04-12-06159, 
December 2013. 
 
 
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implementing and using the NCCI edits, and received survey responses 
from all States.  We also asked each State to process 34 test claims through 
its Medicaid claims processing system to spot check its use of 
34 selected NCCI edits during the period from November 1 to 15, 2014.19  
Although our test claims results are not projectable, this methodology 
allowed us to examine States use of edits and provided indicators of 
whether States were using the edits correctly.  All but one State submitted 
test claims results.20  We followed up with States as needed to request 
clarification of their survey responses and test claims results.  Finally, we 
requested from CMS the cost savings estimates that States submitted 
covering the period from January 2012 to August 2015.21   
Data Analysis 
States implementation of the NCCI edits.  To determine the extent to 
which States had implemented the edits in the six required NCCI edit 
categories, we analyzed States survey responses and test claims results.  
We counted a State as having implemented or not implemented the edits 
from each NCCI edit category according to their responses on the survey, 
unless the test claims results conflicted with those responses.  When we 
identified conflicts between survey responses and test claims results, we 
followed up with the State to clarify whether they had implemented the 
edits.  Because all of the NCCI edits for a given edit category are 
contained in a single file, we considered a State to have implemented all 
edits in a category if it reported that it used the categorys edit file and if 
the test claims results matched the States report.  We also analyzed States 
responses regarding whether the edits had benefitted their Medicaid 
programs. 
States use of the NCCI edits.  To determine the extent to which States 
used the NCCI edits correctly, we analyzed States survey responses and 
test claims results.  We analyzed States survey responses to determine 
whether States reported practices that were consistent with selected NCCI 
 
19 See Appendix A for a detailed description of our test claims methodology, including 
why we chose the 34 selected NCCI edits.  See Appendix B for a list of the test claims 
and expected outcomes.   
20 Utah officials reported that they tried to run our test claims through their claims 
processing systems test environment, but were unable to process them because of system 
limitations.  Therefore, we excluded Utah from our test claims analysis. 
21 CMS required States to estimate and report NCCI cost savings beginning in 2011.  
However, States were allowed to deactivate any NCCI edits until April 2011 and 
according to CMS, many States had difficulty meeting the implementation deadline.  
Because of this, we examined States cost savings reporting beginning with the first 
quarter of 2012.  U.S. Department of Health and Human Services, Report to Congress on 
the Implementation of the National Correct Coding Initiative in the Medicaid Program, 
p.1, March 1, 2011. 
 
 
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program requirements on the use of medically unlikely edits (with and 
without date spans) and on the use of procedure-to-procedure edits (with 
and without modifiers).  If a State reported one or more practices that were 
inconsistent with these requirements, we counted them among the States 
that did not always correctly use the applicable edits. 
We also compared States test claims results to the expected results, based 
on NCCI program requirements.  We used the test claims to assess the 
implementation and use of 14 medically unlikely edits and 20 procedure to 
procedure edits.  We coded each test claim result as correctly processed, 
incorrectly processed, or not tested.22  Because the NCCI edits are 
implemented as part of a large edit category data file and then automated, 
a single incorrectly processed test claim may indicate that a State is 
misusing other, similar edits.  Therefore, if a State incorrectly processed 
one or more medically unlikely or procedure-to-procedure test claims, we 
counted it among the States that did not always correctly use the 
applicable edits. 
Order of edits and updating the edit files.  We analyzed States survey 
responses to determine whether they used NCCI edits prior to any State 
edits, as required, and to determine whether they updated the NCCI edit 
files correctly.   
States cost savings estimates.  To determine the extent to which States 
reported NCCI cost savings estimates to CMS as required, we analyzed 
the cost savings reports that States submitted to CMS.  To assess the cost 
savings estimates that were reported, we analyzed the States survey 
responses describing how they estimated NCCI cost savings. 
States use of NCCI edits on claims paid under managed care.  To examine 
whether States voluntarily used the NCCI edits on Medicaid claims paid 
under managed care, we analyzed States survey responses.  We asked 
those States that did use the NCCI edits on managed care claims why they 
decided to do so and whether they had experienced any challenges.   
Limitations 
We did not directly verify States survey responses or test claims results.  
Instead, we relied on the documentation that they submitted and  
follow-up correspondence, as needed.  Any changes that States may have 
made to their implementation or use of the NCCI edits subsequent to our 
November 2014 data collection are not reflected in this report.   
 
22 In some States, certain test claims could not test the intended NCCI edit for one of 
several reasons, such as claims for services that some State Medicaid agencies did not 
cover.   
 
 
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Our test claims results are limited in scope and completeness.  We directly 
tested States use of only 34 edits out of more than 1.3 million NCCI edits, 
because testing all NCCI edits was not feasible.  Our test claims results 
cannot be projected to the population of NCCI edits.  Additionally, we 
could not test all 34 edits in some States because of limitations in the 
States claims processing system or other factors.  Appendix A provides a 
detailed description of our test claims methodology, including reasons that 
some edits were not tested.    
Standards 
This study was conducted in accordance with the Quality Standards for 
Inspection and Evaluation issued by the Council of the Inspectors General 
on Integrity and Efficiency. 
 
 
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FINDINGS 
Ten States had not implemented all required NCCI 
edits 
More than 4 years after CMS required States to implement the NCCI edits, 
10 States reported that they still had not implemented the edits from all 
6 required NCCI edit categories.  Of these, two States had not 
implemented any NCCI edits and eight States had implemented the edits 
from only some of the edit categories.  Combined, these 10 States 
accounted for nearly 20 percent of national Medicaid spending in 2014.23  
For a full list of the 10 States and the edit categories that they did not 
implement, see Appendix C.  Figure 2 shows the proportion of States that 
had implemented the edits from all, some, and none of the NCCI edit 
categories.  The remaining 41 States reported that they had implemented 
the edits from all 6 NCCI edit categories, and the test claims from 40 of 
these States generally supported that they had implemented the edits.24  
Officials from 48 States reported that implementing the NCCI edits had 
benefitted their Medicaid programs by promoting correct coding by 
providers and/or preventing improper payments.   
Figure 2: Implementation of Required NCCI Edit  
Categories Across State Medicaid Programs  
2
8
41
Implemented All Edit Categories
Implemented Some, But Not All, Edit Categories
Implemented No Edit Categories
    Source:  OIG analysis of States survey responses and correspondence, 2015. 
 
23 In 2014, national Medicaid spending totaled $476 billion.  Kaiser Family Foundation, 
State Health Facts:  Total Medicaid Spending.  Accessed at http://kff.org/medicaid/state-
indicator/total-medicaid-spending/ on August 12, 2015. 
24 Utah officials reported that they tried to run our test claims through their claims 
processing systems test environment, but were unable to process them because of system 
limitations.  Therefore, although Utah reported implementing the edits from all NCCI edit 
categories, it was unable to submit test claims results supporting implementation. 
 
 
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Two States had not correctly implemented any of the NCCI 
edits 
Oklahoma had not implemented any of the NCCI edits into its Medicaid 
claims processing system.  Oklahoma Medicaid officials reported that the 
Medicaid agency chose not to implement the edits because the States 
claims processing system had some State edits that were similar to the 
NCCI edits.  However, States are required to implement the NCCI edits, 
even if they use State edits.  Moreover, Oklahomas test claims results 
showed that its State edits did not deny payment for all services that would 
have been denied by the NCCI edits. 
Illinois had not implemented any of the NCCI edits in a manner consistent 
with NCCI program requirements.  Although Illinois reported 
implementing the edits from four of the six NCCI edit categories, it did 
not implement any of the edits so as to automatically deny payments for 
improperly coded services without staff intervention.25  Illinois officials 
reported that instead, they implemented the NCCI edits as manual 
review edits, which send each flagged claim to a staff member for review.  
For example, if a provider billed for two gallbladder removal surgeries for 
the same beneficiary, Illinoiss claims processing system would flag that 
claim and send it to a staff member for manual review instead of 
automatically denying payment for the services.  CMS officials indicated 
that Illinoiss method of manually reviewing all claims flagged by NCCI 
edits did not constitute implementation of the edits.  Because Illinois did 
not implement the NCCI edits as automated edits, we were unable to 
determine from their test claims results whether they would have correctly 
processed any of the test claims. 
Eight States had implemented only some of the NCCI edits 
Eight States had implemented edits from between two and five of the six 
NCCI edit categories.26  Officials from the eight States reported various 
reasons for not implementing all edits; among them, system and resource 
constraints, competing priorities, and State policies.  Of the eight States, 
North Carolina, New Mexico, and Ohio reported that they were in the 
process of implementing all the edits that they had not yet implemented.  
 
 
25 CMS requires States to implement the NCCI edits to automatically deny payment for 
improperly coded services.  CMS, Center for Medicaid and CHIP Services Technical 
Guidance on State Implementation of the Medicaid National Correct Coding Initiative 
Methodologies, p. 16-17, October 10, 2014. 
26 The eight States that reported they had implemented some, but not all six, of the 
required NCCI edit categories were Delaware, Louisiana, Maine, Missouri, New Jersey, 
New Mexico, North Carolina, and Ohio. 
 
 
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Louisiana reported that it was in the process of implementing the edits 
from one of the four edit categories that it had not yet implemented.  The 
remaining four States did not indicate whether they were planning to 
implement their unimplemented edits.  States that did not implement all 
required NCCI edits may have been improperly paying for Medicaid 
services that should have been denied by NCCI edits.  For example, 
among the eight States that did not implement all required NCCI edits, the 
test claims results from six of the States showed that they would have paid 
for some services that should have been denied by NCCI edits that they 
did not implement.  
Most States did not use all of the NCCI edits correctly 
Of the 49 States that implemented the NCCI edits into their claims 
processing systems, 47 did not use all of the NCCI edits correctly.  These 
States reported practices that were inconsistent with the NCCI program 
requirements and/or incorrectly processed one or more test claims.27  Only 
two States  Indiana and Montana  reported following all of the NCCI 
program requirements that we reviewed and demonstrated correct use of 
the NCCI edits by correctly processing all applicable test claims.  States 
that do not use all of the NCCI edits correctly may be improperly 
processing Medicaid claimsincluding paying for services that should be 
denied or denying payment for services that should be paid.  Figure 
3 describes the ways in which States incorrectly used the NCCI edits and 
the number of States in each category. 
Figure 3:  States Incorrect Use of NCCI Edits 
Description  Number of States 
Did not use all medically unlikely edits correctly  35 
Did not use all procedure-to-procedure edits correctly  29 
Did not use the edits in the required order  18 
Did not update the edits as required  13 
Incorrectly used NCCI edits in at least one way  47* 
Source:  OIG analysis of States survey responses and test claims results, 2015. 
*Column sums to more than 47 States because many States incorrectly used the NCCI edits  
in more than one way. 
 
27 See Appendix D for a full list of States test claims results.  See Appendix E for a full 
list of States reporting on adherence to selected NCCI program requirements. 
 
 
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Incorrect use of medically unlikely edits 
Thirty-five States did not use all of the medically unlikely edits in a 
manner consistent with NCCI program requirements.  We found two main 
problems associated with States use of medically unlikely edits:   
1) not denying payment for all units of service on claims that trigger 
medically unlikely edits and 2) not correctly using medically unlikely edits 
on claims with date spans.  The first problem arose when States did not 
program the medically unlikely edits in their claims processing systems to 
deny payment for all units of service, as required.  Instead, these States 
programmed the medically unlikely edits to deny payment for only those 
units of service above the medically unlikely value.  Some of these States 
reported that they were aware that their use of the medically unlikely edits 
did not align with NCCI program requirements, but reported that they used 
the edits in this way to avoid having providers rebill the Medicaid program 
for denied services.  However, CMS believes that denying payment for all 
units of service incentivizes providers to correctly code future claims.28 
The second problem arose when States did not program their claims 
processing systems to divide the units of service on the claim by the 
number of days in the date span before using the medically unlikely edits.  
Instead, many States denied payment for the service if the units of service 
exceeded the medically unlikely value without adjusting for the date span, 
possibly denying payment for eligible services. 
Incorrect use of procedure-to-procedure edits 
Twenty-nine States did not use all of the procedure-to-procedure edits in a 
manner consistent with NCCI program requirements.  The main problem 
with States use of procedure-to-procedure edits involved not following 
NCCI program requirements for using modifiers.  This included paying 
for services that should be denied and denying payment for services that 
should be paid.  State officials reported various reasons for misusing edits 
on claims with modifiers; among them, misunderstanding program 
guidance about when modifiers should allow claims to bypass NCCI edits 
and allowing some, but not all, modifiers to bypass NCCI edits. 
Incorrect order of NCCI and State edits 
Eighteen States did not use the NCCI edits on claims before using State 
edits, as required.  When State edits are used before NCCI edits, they may 
alter the claim by denying payment for one or more services.  These 
changes could cause claims to bypass NCCI edits when they should not.   
 
28 CMS, Fact Sheet: Updates on the Medicaid National Correct Coding Initiative 
Methodologies, p. 4-5.  Accessed at http://www.medicaid.gov on August 12, 2015. 
 
 
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Incorrect updating of NCCI edits 
Thirteen States did not comply with NCCI program requirements for 
updating the NCCI edits.  Five of the thirteen States reported that they did 
not download the Medicaid NCCI files from the Medicaid Integrity 
Institute Web site, as required.  Instead, they downloaded and 
implemented the less comprehensive public NCCI edit files available for 
provider education on the Medicaid.gov Web site.  Five other States 
reported that State officials did not download the NCCI edit files 
themselves, as required.  Instead, claims processing contractors 
downloaded and implemented the NCCI edit files independently.  
According to CMS, only States should have access to the files on the 
Medicaid Integrity Institute Web site. 
The remaining three States reported that they did not download and begin 
using the quarterly edit files on the first day of each calendar quarter, as 
required.  Rhode Island reported that it did not implement any quarterly 
edit files, and gave no explanation.  Maryland reported that it implemented 
the quarterly edit files, but took 4-6 months to implement them, and 
Missouri reported that it updated the edit files once per year.  Officials 
from Maryland and Missouri attributed the delays to resource constraints.   
Most States did not report NCCI cost savings to CMS 
as required, and the estimates that were reported had 
limited value 
As of August 2015, 48 States had not reported NCCI cost savings 
estimates to CMS every quarter, as required.  Of these States, 23 had 
reported cost savings estimates for some, but not all, quarters and 25 had 
never reported cost savings estimates.  Some State officials explained that 
they had technical challenges or were unaware of the reporting 
requirement.  Only one State  Mississippi  consistently reported their 
quarterly cost savings estimates to CMS.  See Appendix F for a full list of 
States and the number of cost savings reports they submitted to CMS. 
According to our review, States reported cost savings estimates had 
limited value in terms of measuring actual cost savings from the NCCI 
edits.  See Figure 5 for an illustration of these limitations.  Estimating 
NCCI cost savings is difficult because the NCCI edits deny services 
before the final payment amount is determined.29  Because of this, States 
estimate cost savings in different ways.  Some States reported measuring 
 
29 Claims processing systems use an algorithm at the end of claims processing to 
determine how much a State Medicaid agency will pay for approved Medicaid services.  
This is referred to as the paid amount.  NCCI edits deny services before the paid amount 
is calculated. 
 
 
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cost savings using the amount billed by the provider.  This approach may 
overestimate cost savings because the amount that Medicaid pays for a 
service is typically less than the amount billed by the provider.  
Differences in estimation methodologies may be one reason that States 
reported a wide range of cost savings.  For example, in the first two 
quarters of 2015, States individual estimates of cost savings ranged from 
as little as $55,000 to as much as $127 million per quarter.  States lack of 
reporting, and the limitations of the cost savings estimates that were 
reported, inhibit CMSs ability to develop a meaningful estimate of 
national NCCI cost savings to report to Congress. 
Figure 5:  Summary of NCCI Cost Savings Data Limitations and Impact  
NCCI Cost Savings Data Limitation  Impact 
   
NCCI edits deny services before the  Unable to determine cost savings from the 
payment amount is determined  denied service
 
States estimate cost savings in different  Cannot compare savings across States or 
ways  calculate a national total
 
 
Savings may be overestimated, because 
Some States measure savings using the 
billed amounts typically exceed what 
amount billed by the provider 
Medicaid pays 
Source:  OIG analysis of States cost savings reports and survey responses, 2015. 
Eleven States voluntarily used NCCI edits on claims 
paid under managed care  
Although managed care covers nearly three-quarters of Medicaid 
enrollees, CMS generally does not require States to use NCCI edits on 
claims paid under managed care.30  However, 11 States chose to use NCCI 
edits on managed care claims (see Appendix G for a list of these States).  
Among the 11 States, many reported that they decided to use the NCCI 
edits on managed care claims to ensure correct coding and to make their 
claims processing consistent across their Medicaid programs for both  
fee-for-service and managed care.  Other States reported that they applied 
the NCCI edits to managed care claims to achieve cost savings.  Officials 
from 9 of the 11 States reported no challenges to using the NCCI edits on 
 
30 CMS, Medicaid Managed Care Enrollment Report:  Summary Statistics as of July 1, 
2011.  Accessed at http://www.medicaid.gov/Medicaid-CHIP-Program-Information/By 
-Topics/Data-andSystems/Downloads/2011-Medicaid-MC-Enrollment-Report.pdf on 
July 16, 2015. 
 
 
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managed care claims.  Officials from the other two States reported that the 
only challenge was getting their managed care organizations to implement 
the edits in a timely manner. 
 
 
 
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CONCLUSION AND RECOMMENDATIONS 
According to CMS, edits that are not implemented or working properly are 
a primary cause of improper payments.  When used correctly by States, 
NCCI edits automatically deny Medicaid payments for services that do not 
meet basic medical or billing standards.  However, the effectiveness of the 
NCCI edits was limited because some States had not fully implemented 
the edits and most did not use all of the edits in a manner consistent with 
NCCI program requirements.  Although some States reported that they 
unintentionally used the edits incorrectly, other States reported that they 
were aware that their use of the edits was not consistent with 
requirements, and gave a variety of reasons for this.  States inconsistent 
implementation and use of the edits may reduce their ability to promote 
correct coding by providers and prevent improper Medicaid payments.  
Further, States lack of reporting of cost savings estimates, and the 
limitations of the estimates that were reported, inhibit CMSs ability to 
meaningfully estimate national NCCI cost savings. 
To address these deficiencies, we recommend that CMS:   
Take appropriate action to ensure that States fully implement 
the NCCI edits 
CMS should take appropriate action to ensure that the 10 States that have 
not implemented edits from all six required edit categories do so.  
Appropriate actions may include corrective action plans, assessing 
penalties, and/or offering incentives to States that have not fully 
implemented the NCCI edits.  
Provide technical assistance to States to ensure that they use 
the NCCI edits correctly 
As part of its ongoing efforts, CMS should provide targeted technical 
assistance to ensure that States understand and follow NCCI program 
requirements concerning the issues identified in this report.  CMS may 
wish to vary its assistance depending upon whether States are 
unintentionally misusing the edits or have chosen not to use the edits 
correctly. 
Issue guidance to States on how to estimate NCCI cost 
savings and take steps to ensure that States report as required 
In order to develop a meaningful estimate of national NCCI cost savings 
that it can include in its report to Congress, CMS should issue guidance to 
ensure that all States estimate cost savings in a consistent way.  CMS 
should also take steps to ensure that States report those estimates as 
required.   
 
 
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Examine whether using the NCCI edits on claims paid under 
managed care is beneficial, and if so, take appropriate action 
CMS should assess the impact of using the NCCI edits on claims paid 
under Medicaid managed care.  This could include identifying the number 
of denied services, examining changes in provider billing, or if feasible, 
estimating cost savings.  If CMS identifies an overall benefit, it should 
encourage States to use the NCCI edits on managed care claims and could 
share best practices from States on how to do so. 
 
 
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AGENCY COMMENTS AND OIG RESPONSE 
CMS concurred with all four of our recommendations.  In its comments, 
CMS stated that it would work with States to support their implementation 
of the NCCI edits and explore the use of incentives and other efforts to 
bring States into compliance.  In addition, CMS stated that it would 
reevaluate its current technical assistance process and explore the barriers 
and challenges to State compliance with NCCI requirements.  CMS noted 
that it recently consolidated the Medicare and Medicaid NCCI programs 
into a single program in order to increase the technical assistance that 
CMS can offer to the States.  CMS further stated that it would work with 
States to develop and implement a methodology for estimating cost 
savings from the Medicaid NCCI similar to the methodology used to 
measure savings from the Medicare NCCI program.  Finally, CMS stated 
that it will explore the current policies and processes for managed care 
claims processing and identify opportunities to improve the NCCI 
program with regard to managed care claims.  The full text of CMS 
comments is provided in Appendix H. 
 
 
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APPENDIX A   
Detailed Test Claims Methodology 
We asked each State to process a set of 34 test claims through its Medicaid 
claims processing system to verify whether States were using 34 selected 
NCCI edits correctly.  Fifty States submitted test claims results based on 
testing conducted during the period from November 1  15, 2014.31   
We worked with CMS to develop the test claims methodology.  CMS 
officials used their program knowledge to select the 34 edits.  They chose 
edits related to services that they expected most State Medicaid programs 
to cover.  The test claims were designed to test edits from all three 
categories of medically unlikely edits (with and without date spans), and 
all three categories of procedure-to-procedure edits (with and without 
modifiers).  Services on 25 of the test claims should have been denied by 
an NCCI edit, and 9 claims included modifiers or date spans that should 
have allowed the services to be paid.  Because these edits were 
purposively selected, our results cannot be projected to the population of 
NCCI edits.  However, because the edits are implemented as part of a 
large edit category data file and then automated, a single incorrectly 
processed test claim may indicate that a State is misusing other, similar 
edits.  Appendix B provides a list of the test claims and expected results.   
For each test claim, we provided the States with basic information that 
mirrored actual Medicaid claims, such as the service type, procedure code, 
date of service, and units of service.  States then ran the claims through 
their claims processing systems test environments, which simulate what 
would have happened if they were real Medicaid claims.  States submitted 
to OIG an electronic print-out of the results of the processed test claims.  
For example, if a service would have been denied by an NCCI edit, the 
test claim results included a message indicating which service was denied 
by an NCCI edit.  If the test claim would have been paid, the test claim 
results showed the amount that the provider would have been paid for the 
service(s).  
We reviewed States test claims results and compared them to the 
expected results, according to NCCI program requirements.  We then 
assigned each test claim result to one of the following categories: 
  Correctly processed:  the result matched the expected result 
according to NCCI program requirements (i.e., payment for the 
 
31 Utah officials reported that they tried to run our test claims through their claims 
processing systems test environment, but were unable to process them because of system 
limitations.  Therefore, we excluded Utah from our test claims analysis. 
 
 
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correct service(s) were denied by an NCCI edit, or the correct 
service(s) were paid, as expected); 
  Incorrectly processed:  the result did not match the expected result 
according to NCCI program requirements (i.e., payment for a 
service was denied by an NCCI edit when it should not have been, 
or a service was paid when it should have been denied by an NCCI 
edit);  
  Not tested:  our test claim did not test the intended NCCI edit for 
one of several reasons.  These reasons include:  1) the State paid 
for the tested service using a payment method to which the NCCI 
edits did not apply (e.g., many States pay for outpatient hospital 
services using revenue codes), 2) the service was not covered by 
the States Medicaid program, or 3) a technical issue prevented 
testing whether the NCCI edit worked as intended. 
We shared these initial test claims determinations and the expected results 
with each State.  We gave States an opportunity to provide explanations 
for any incorrectly processed test claims.  We evaluated States responses, 
consulted with CMS as needed, and made adjustments to our 
determinations when appropriate.   
After we finalized our test claim determinations, we calculated the number 
of test claims that each State processed correctly and incorrectly.  We 
excluded test claims results that we coded as not tested.  We also 
calculated the number of States that incorrectly processed one or more test 
claims designed to test procedure-to-procedure edits or one or more test 
claims design to test medically unlikely edits.  For these calculations, we 
excluded States that did not implement the associated edit categories.  For 
a full list of States and their test claims results, see Appendix D. 
 
 
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APPENDIX B 
Test Claims and Expected Results 
Claims to Test Practitioner Procedure-to-Procedure Edits 
Test Claim   Provider Type  Code32  Modifier  From Date  To Date   Units of Service  Expected Result 
58554     10/2/2014  10/2/2014  1 
57106 should be denied with 
1  Practitioner  
NCCI denial message 
57106     10/2/2014  10/2/2014  1 
57282     8/2/2014  8/2/2014  1 
56810 should be denied with 
2  Practitioner  
NCCI denial message 
56810     8/2/2014  8/2/2014  1 
72255     1/15/2014  1/15/2014  1 
72255 should be denied with 
3  Practitioner  
NCCI denial message 
72240     1/15/2014  1/15/2014  1 
24100     5/6/2013  5/6/2013  1 
64417 should be denied with 
4  Practitioner  
NCCI denial message 
64417  RT  5/6/2013  5/6/2013  1 
47420     7/7/2013  7/7/2013  1 
47420 should be denied with 
5  Practitioner  
NCCI denial message 
47600     7/7/2013  7/7/2013  1 
59400     1/15/2014  1/15/2014  1 
6  Practitioner   Both codes should pay 
99213  25  1/15/2014  1/15/2014  1 
49550  59  1/15/2014  1/15/2014  1 
7  Practitioner   Both codes should pay 
49505     1/15/2014  1/15/2014  1 
90723     9/23/2013  9/23/2013  1 
90636 should be denied with 
8  Practitioner  
NCCI denial message 
90636     9/23/2013  9/23/2013  1 
                  (Continued on page 22) 
 
 
 
32 The five character codes and descriptions included in this document are obtained from 
Current Procedural Terminology (CPT), copyright 2013 by the American Medical 
Association (AMA).  CPT is developed by the AMA as a listing of descriptive terms and five 
character identifying codes and modifiers for reporting medical services and procedures.  
Any use of CPT outside of this document should refer to the most current version of the 
Current Procedural Terminology available from AMA.  Applicable FARS/DFARS apply. 
 
 
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Claims to Test Outpatient Hospital Procedure-to-Procedure Edits 
 Units of 
Test Claim   Provider Type  Code  Modifier  From Date  To Date  Expected Result 
Service 
58660     10/2/2014  10/2/2014  1 
Outpatient  49400 should be denied with 
9 
hospital  NCCI denial message 
49400     10/2/2014  10/2/2014  1 
57010     8/2/2014  8/2/2014  1 
Outpatient  56810 should be denied with 
10 
hospital  NCCI denial message 
56810     8/2/2014  8/2/2014  1 
72265     1/15/2014  1/15/2014  1 
Outpatient  72265 should be denied with 
11 
hospital  NCCI denial message 
72255     1/15/2014  1/15/2014  1 
24110     5/6/2013  5/6/2013  1 
Outpatient 
12  Both codes should pay 
hospital 
64417  RT  5/6/2013  5/6/2013  1 
45990     7/7/2013  7/7/2013  1 
Outpatient  45990 should be denied with 
13 
hospital  NCCI denial message 
45333     7/7/2013  7/7/2013  1 
59510     1/15/2014  1/15/2014  1 
Outpatient 
14  Both codes should pay 
hospital 
99214  25  1/15/2014  1/15/2014  1 
49501     1/15/2014  1/15/2014  1 
Outpatient 
15  Both codes should pay 
hospital 
49520  59  1/15/2014  1/15/2014  1 
90748     9/23/2013  9/23/2013  1 
Outpatient  90743 should be denied with 
16 
hospital  NCCI denial message 
90743     9/23/2013  9/23/2013  1 
Claims to Test Durable Medical Equipment Procedure-to-Procedure Edits 
 Units of 
Test Claim   Provider Type  Code  Modifier  From Date  To Date  Expected Result 
Service 
Durable  L0454     9/3/2014  9/3/2014  1 
L0455 should be denied with 
17  Medical 
NCCI denial message 
Equipment  L0455     9/3/2014  9/3/2014  1 
Durable 
L0472     1/15/2014  1/15/2014  1 
Medical  L0468 should be denied with 
18 
Equipment  NCCI denial message 
L0468     1/15/2014  1/15/2014  1 
Durable 
L1846  LT  8/4/2013  8/4/2013  1 
Medical 
19  Both codes should pay 
Equipment 
L1845  RT  8/4/2013  8/4/2013  1 
Durable 
L5840  RT  11/15/2013  11/15/2013  1 
Medical  L5826 should be denied with 
20 
Equipment  NCCI denial message 
L5826  RT  11/15/2013  11/15/2013  1 
              (Continued on page 23) 
 
 
 
 
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Claims to Test Practitioner Medically Unlikely Edits 
Units of 
Test Claim   Provider Type  Code  Modifier  From Date  To Date  Expected Result 
Service 
All units of service (UOS) of 
21  Practitioner   A4566     10/2/2014  10/2/2014  3  A4566 should be denied with 
NCCI denial message 
All UOS of 92570 should be 
22  Practitioner   92570     10/2/2014  10/2/2014  2  denied with NCCI denial 
message 
All UOS of 31612 should be 
23  Practitioner   31612     1/1/2014  1/1/2014  2  denied with NCCI denial 
message 
24  Practitioner   97012     1/15/2014  1/19/2014  7  All  UOS of 97012 should pay 
All UOS of 97026 should be 
25  Practitioner   97026     1/15/2014  1/19/2014  8  denied with NCCI denial 
message 
All UOS of 92921 should be 
26  Practitioner   92921     10/5/2013  10/5/2013  3  denied with NCCI denial 
message 
Claims to Test Outpatient Hospital Medically Unlikely Edits 
Units of 
Test Claim   Provider Type  Code  Modifier  From Date  To Date  Expected Result 
Service 
All UOS of A4290 should be 
Outpatient 
27  A4290     10/2/2014  10/2/2014  3  denied with NCCI denial 
hospital 
message 
All UOS of 35045 should be 
Outpatient 
28  35045     10/2/2014  10/2/2014  3  denied with NCCI denial 
hospital 
message 
All UOS of 27193 should be 
Outpatient 
29  27193     1/15/2014  1/15/2014  2  denied with NCCI denial 
hospital 
message 
Outpatient 
30  97022     1/15/2014  1/19/2014  7  All  UOS of 97022 should pay 
hospital 
All UOS of 97028 should be 
Outpatient 
31  97028     1/15/2014  1/19/2014  8  denied with NCCI denial 
hospital 
message 
All UOS of 92925 should be 
Outpatient 
32  92925     10/5/2013  10/5/2013  3  denied with NCCI denial 
hospital 
message 
Claims to Test Durable Medical Equipment Medically Unlikely Edits 
Units of 
Test Claim   Provider Type  Code  Modifier  From Date  To Date  Expected Result 
Service 
Durable  All UOS of L5629 should be 
33  Medical  L5629     1/15/2014  1/15/2014  3  denied with NCCI denial 
Equipment  message 
Durable 
34  Medical  A7014     9/4/2013  9/10/2013  9  All  UOS of A7014 should pay 
Equipment 
Source:  CMS, 2014. 
 
 
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APPENDIX C   
States That Reported Not Implementing Edits From All Six 
NCCI Edit Categories 
Unimplemented Procedure-to-Procedure  Unimplemented Medically Unlikely 
Edits?  Edits?  Number of 
State  Durable  Durable  Unimplemented 
Practitioner  Outpatient  Medical  Practitioner  Outpatient  Medical  Categories 
Equipment  Equipment 
1.   Illinois              6 
2.   Oklahoma              6 
3.   Louisiana              4 
4.   New Jersey              4 
5.   Maine              3 
6.   Missouri              3 
7.   Ohio              2 
8.   Delaware              1 
9.   North Carolina              1 
10. New Mexico              1 
Source:  OIG analysis of States survey responses and correspondence, 2015. 
 
 
 
 
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APPENDIX D   
States Test Claims Results 
Correctly  Correctly 
Number of  Number of  Correctly  Correctly 
Number of  processed all  processed all 
test claims  test claims  processed all  processed all 
STATE  edits not  procedure-to- medically 
correctly  incorrectly  test claims with  test claims with 
tested  procedure test  unlikely test 
processed  processed  modifiers?  date spans? 
claims?  claims? 
AK  9  0  25     
AL  23  3  8         
AR  15  1  18         
AZ  14  7  13           
CA  15  1  18       
CO  19  0  15     
CT  12  4  18       
DC  27  6  1         N/A* 
DE  28  5  1         
FL  21  2  11         
GA  25  1  8         
HI  12  9  8             
IA  16  7  11       
ID  28  2  4         
IN  28  0  6     
KS  27  5  2             
KY  24  0  10     
LA  15  8  11        N/A  N/A 
MA  24  2  8         
MD  6  5  23         
ME  17  9  8        N/A  N/A 
MI  21  3  10           
MN  28  1  5         
MO  5  10  19        N/A  N/A 
MS  25  4  5             
MT  27  0  7     
NC  18  1  15     
ND  19  0  15     
NE  25  1  8       
NH  25  2  7       
NJ  7  12  15         
NM  22  1  11     
NV  17  8  9           
NY  21  3  10         N/A 
OH  20  1  13     N/A 
OR  14  2  18       
PA  6  7  21           
RI  8  4  22           
SC  N/A  4  14         
SD  33  0  1     
TN  32  2  0           
TX  16  1  17       
UT  N/A  N/A  N/A  N/A  N/A  N/A  N/A 
VA  23  0  11     
VT  24  2  8         
WA  22  5  7         
WI  28  0  6     
WV  24  2  8           
WY  22  4  8           
 
Source:  OIG analysis of States survey responses, test claims, and correspondence, 2015. 
 
*For some States, certain test claims results categories were not applicable (N/A).  For example, if they related to an edit category that the 
State did not implement. 
 
 
 
 
 
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APPENDIX E 
State Reporting on Adherence to Selected NCCI Program 
Requirements 
State  Reported  Reported  Reported  Reported using  Reported using  Reported 
correctly using  correctly  correctly using  the edits in the  the correct edit  updating the 
procedure-to- denying all units  medically  correct order?   files when  edits as 
procedure  of service with  unlikely edits on  updating the  required? 
modifiers?  medically  claims with date  edits? 
unlikely edits?  spans? 
AK           
AL       
AR           
AZ       Unclear*     
CA   N/A**     
CO         
CT           
DC    N/A  N/A     
DE           
FL         Unclear   
GA       
HI         
IA         
ID       N/A     
IN       
KS         
KY         
LA     N/A  N/A        
MA         
MD         Unclear  Unclear    
ME   N/A  N/A  N/A     
MI       
MN           
MO   N/A  N/A   Unclear    
MS         
MT       
NC         
ND           
NE       
NH       
NJ               
NM         
NV         
NY    N/A      
OH    N/A      
OR       
PA             
RI        Unclear    
SC       N/A   
SD           
TN             
TX         
UT             
VA       N/A   
VT       Unclear   
WA         Unclear   
WI         
WV         
WY         
Source:  OIG analysis of States survey responses, 2015. 
 
*For some States, we were unable to determine whether their reported process was consistent with NCCI program requirements.   
 
**For some States, certain requirements were not applicable (N/A).  For example, some States do not allow Medicaid claims to have 
date spans. 
 
 
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APPENDIX F 
Number of Quarterly Cost Savings Estimates States Submitted 
to CMS, by Year 
State  2012  2013  2014  2015*  Total 
AK  0  0  0  0  0 
AL  4  4  3  2  13 
AR  0  0  0  0  0 
AZ  4  4  3  2  13 
CA  4  4  4  1  13 
CO  0  3  3  1  7 
CT  0  0  0  0  0 
DC  0  0  0  0  0 
DE  0  0  0  0  0 
FL  0  0  0  0  0 
GA  0  0  0  0  0 
HI  4  4  3  2  13 
IA  4  4  2  1  11 
ID  0  0  4  1  5 
IN  0  0  0  0  0 
KS  3  3  3  2  11 
KY  4  0  0  1  5 
LA  1  4  4  2  11 
MA  0  0  0  0  0 
MD  0  0  0  0  0 
ME  0  0  0  0  0 
MI  0  0  0  0  0 
MN  4  4  4  0  12 
MO  0  0  0  0  0 
MS  4  4  4  2  14 
MT  4  4  2  0  10 
NC  4  4  3  2  13 
ND  4  3  0  0  7 
NE  4  4  3  1  12 
NH  0  0  0  0  0 
NJ  0  0  0  0  0 
NM  0  0  0  0  0 
NV  1  4  4  1  10 
NY  0  0  0  0  0 
OH  0  0  0  0  0 
OR  0  0  0  0  0 
PA  4  4  3  2  13 
RI  0  0  0  0  0 
SC  0  0  0  0  0 
SD  3  4  3  2  12 
TN  0  0  0  0  0 
TX  0  0  0  0  0 
UT  4  2  0  1  7 
VA  0  2  3  2  7 
VT  4  4  2  0  10 
WA  1  4  4  2  11 
WI  0  0  0  0  0 
WV  0  0  0  0  0 
WY  4  3  0  0  7 
Source:  OIG analysis of quarterly cost savings estimates that States submitted to CMS covering the 
period of January 2012 to August, 2015.   
*At the time of our data collection, States should have submitted two quarterly estimates in 2015. 
 
 
Inconsistencies in State Implementation of Correct Coding Edits May Allow Improper Medicaid Payments                       27 
(OEI-09-14-00440)                   
   
   
APPENDIX G 
States That Reported Using NCCI Edits on Managed Care 
Claims 
State 
Arizona 
Florida 
Iowa 
Indiana 
Kansas 
Kentucky 
Louisiana 
Massachusetts  
South Carolina 
Tennessee 
Vermont 
Source:  OIG analysis of States survey  
responses, 2015. 
 
 
Inconsistencies in State Implementation of Correct Coding Edits May Allow Improper Medicaid Payments                       28 
(OEI-09-14-00440)                   
  AAPPPPEENNDDIIXXHH 
AAggeennccyy CCoommmmeennttss 
.,.,.......""s. 
(:"4 ~
{  DDEEPPAARRTMTMENETNTObFFHHEEAALLTTHH&&HHUUMMAANNSbE1RiRVVlICCEESS  CCeelnlttSetrSs ffoorr MMeeddliccsatree && MMeeddiiccaaiidd SSeerrvviicceess 
\~:5~ 
220000 IInnddeeppeennddeerntccee AAvveennuuee SSWW 
WWaasshhiinnggttoonn,, DDCC 2200220011 
MMAARR ZZ99 22001166 
TTOO:: 	 DDaanniieell RR.. LLeevviinnssoonn 
IInnssppeeccttoorr GGeenneerraall 
FFRROOMM:: 	 AAnnddrreeww MM.. SSllaavviintt  /S/
AAccttiinngg AAddmmiinniissttrraatotorr 
SSUUBBJJEECCTT:: 	 OOffffiiccee ooff IInnssppeeccttoorr GGeenneerraall ((OOIlGG)) DDrraafftt RReeppoorrtt:: ""IInnccoonnssiisstteennccieiess iinn SSttaattee IImmpplleemmeennttaattiioonn 
ooffCCoornreecctt CCooddiinngg EEddiittss MMaayy AAllllooww IImmpprrooppeerr MMeeddiiccaaiidd PPaayymmeennttss"" ((OOEE1l--0099--1144--0000444400)) 
TThhee CCeenntteerrss ffoorr MMeeddiiccaarere && MMeeddiiccaaidid SSeerrvviicceess ((CCMMSS)) aapppprreecciaiatetses tthhee ooppppoorrtutunnityity ttoo rreevviieeww aanndd 
ccoommmmeenntt oonn tthhee OOffffiiccee ooff tthhee IInnssppeecctotorr GGeenneeraral'sl's ((OOlIGG)) ddrraafftt rreeppoorrtt.. CCMMSS ttaakkeess sseerriioouuslsyly iittss 
rreessppoonnssibibiliitlyity ffoorr tthhee aaccccoouunntatabbiliitlyit,y, ffiissccaall iinntteeggrritiyty,, aanndd ffuunnddiinngg oofftthhee MMeeddiiccaaidid pprrooggrraamm.. 
CeMMSS ccoonnttiinnuuoousulsyly wwoorrkkss ttoo rreedduuccee aanndd pprreevveenntt iimmpprroopperer MMeeddiiccaaidid ppaayymmeenntst.s. AAss oonnee ppaarrtt ooff 
CeMMSS'1 pprrooggrraamm iinntteeggrritiyty ssttrraatteeggyy,, CeMMSS wwoorrkkss wwiitthh ssttaatteess ttoo iimmpplleemmeenntt aauuttoommaatetded ccllaaiimmss 
pprroocceessssiningg ssaaffeegguuaardrsds ccaalllleedd eeddiitts~ ttoo pprreevveenntt iimmpprrooppeerr ppaayymmeenntsts.. TThhee AAffffoorrddaabblele CCaarree AAcctt 
((AACCAA)) rreeqquuiirreedd aallll ssttaatteess ttoo iimmpplleemmeenntt tthhee MMeeddiiccaaidid NNaattiioonnaall CCoorrrreecctt CCooddiinngg IInniittiiaatitvivee ((NNCCCCII),), 
wwhhiicchh uuttiilliizzeess eeddiittss bbyy OOccttoobbeerr 22001100.. TThheessee eeddiittss aauuttoommaatitciaclalylly ddeennyy ppaayymmeenntsts ffoorr iinneelliiggibiblele 
aanndd iinnccoorrrreecctltyly ccooddeedd sseerrvviicceess ffoorr MMeeddiiccaaidid ffeeee--ffoor-Mseervrivciece ccllaaiimmss aanndd pprroommootetses nnaattiioonnaall ccootr1re'ecctt 
ccooddiinngg mmeetthhooddoololgoigeises ffoorr MMeeddiiccaaidid ccllaaiimmss,. CCMMSS pprroovviiddeess gguuiiddaannccee aanndd tteecchhnnicicaall aassssiisstatanncece ttoo 
-..ssttaatteess oonn tthhee iimmpplleemmenetnattaiotnion ooff tthhee NNCCCCII eeddiittss aass nneeeeddeedd aanndd rreecceenntltyly ccoonnssoolildidataetded tthhee MMeeddiiccaarere 
..aannddM: Medeidciacidaid NNCCCCII pprrooggrraammss iinnttoo aa ssiinnggllee pprrooggrraamm iinn oorrddeerr ttoo iinnccrreeaassee tthhee tteecchhnnicicaall aassssiisstatanncece 
CeMMSS ccaann ooffffeerr tthhee ssttaatteess .... CCMMSS wwiillll ccoonnttiinnuuee ttoo wwoorrkk wwiitthh ssttaatteess ttoo mmaakkee ssuurree tthhaatt tthhee NNCCCCII 
eeddiittss eeffffeecctitviveleyly bbeenneeffitit tthhee MMeeddiiccaaidid pprrooggrraamm.. 
CCMMSS iiss ssttrroonngglyly ccoommmmitittetded ttoo pprrooggrraamm iinntteeggrritiyty eeffffoorrtsts iinn MMeeddiiccaaidid.. IInn aaddddiittioionn ttoo tthhee NNCCCCIT,, 
CCMMSS iiss iinnccrreeaassiningg iittss rroollee iinn MMeeddiiccaaidid pprroovvidideerr eennrroolllmlmenetnt tthhrroouugghh aaddddiittiioonnalal gguuiiddaanncece aanndd 
oouuttrreeaacchh ttoo ssttaatteess ffoorr ccoommpplilaianncece wwiitthh AACCAA rreeqquuiirreemmenetnst,s, ccoonndduucctitningg ccoollllaabboorartaivtieve aauuddiittss 
tthhrroouugghh AAuuddiitt MMeeddiiccaaidid IInntteeggrritiyty CCoonnttrraacctotorsr,s, wwhhiicchh ccoonndduucctt ppoosstt-p~apyamymenetnt rreevviieewwss ooff MMeeddiiccaaidid 
ccllaaiimmss,, rreevviissiningg tthhee SSttaattee PPrrooggrraamm IInntteeggrritiyty rreevviieewwss ttoo iinncclluuddee mmoorree iinn--ddeeppthth aannaallyyssisis ooff ssttaattee 
pprrooggrraamm iinntteeggrritiyty iissssuueess,, aanndd bbuuiillddiningg ssttrroonnggeerr rreellaattiioonnshsihpisps wwiitthh ssttaatteess ttoo uunnddeerrsstatnadnd cchhaalllleennggeses 
aanndd iimmpprroovvee iinnffo0r1mmataitoinon sshhaarriinngg tthhrroouugghh oouurr SSttaattee LLiiaaiissoonnss.. 
OOIIGG's's rreeccoommmmenednadtiaotniosns aanndd CCMMSS'' rreessppoonnsesses aarree bbeellooww:: 
OOIIGG RReeccoommmmenednadtaiotino:n: 
TThhee OOIIGG rreeccoommmmenednsds tthhaatt CCMMSS ttaakkee aapppprrooppriraiatete aaccttiioonn ttoo eennssuurree tthhaatt ssttaatteess ffuullllyy iimmpplleemmenetnt tthhee 
NNCCCCII eeddiittss.. 
IInnccoonnssisistetencniceises iinn SSttaattee IImmpplleemmeenntattaiotinon ooff CCoorrrreecctt CCooddiinngg EEddiittss MMaayy AAllllooww IImmpprrooppeerr MMeeddiiccaaidid PPaayymmeenntsts  2299 
((OOEEIl--0099-1-144-0-00404404)0) 
/S/  
   
 
 
Inconsistencies in State Implementation of Correct Coding Edits May Allow Improper Medicaid Payments                       30 
(OEI-09-14-00440)                   
   
   
ACKNOWLEDGMENTS 
This report was prepared under the direction of Blaine Collins, Regional 
Inspector General for Evaluation and Inspections in the San Francisco 
regional office, and Michael Henry, Deputy Regional Inspector General.  
Abby Amoroso served as the team leader for this study, and Rosemary 
Rawlins served as the lead analyst.  Central office staff who provided 
support include Althea Hosein, Joanne Legomsky, and Melicia Seay.  
We would also like to acknowledge the contributions of other Office of 
Evaluation and Inspections staff, including Joyce Greenleaf.   
Inconsistencies in State Implementation of Correct Coding Edits May Allow Improper Medicaid Payments                       31 
(OEI-09-14-00440)                     
Office of Inspector General
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This statutory mission is carried  out through a nationwide network of audits, investigations,  
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