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Department of Health and Human Services
 

OFFICE OF 

INSPECTOR GENERAL 

PAYMENTS MADE IN ERROR FOR 


PERSONAL CARE SERVICES 


DURING INSTITUTIONAL STAYS 


Daniel R. Levinson
 

Inspector General 


August 2008
 

OEI-07-06-00620
 
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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 OIG’s 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. 
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DESIGN 

 

 

Δ EXECUTIVE SUMMARY 

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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E X E CUTIVE S U MMAR Y 

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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EXECUTIVE SUMMARY 

 

 

EXECUTIVE SUMMARY 
 

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 Medicarepaid 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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Δ EXECUTIVE SUMMARY TABLE OF CONTENTS 

EXECUTIVE SUMMARY ..................................... i 
 

INTRODUCTION ........................................... 1 
 

FINDINGS ................................................. 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 
 

RECOMMENDATIONS ..................................... 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 
 

ACKNOWLEDGMENTS .................................... 24 
 
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Δ INTRODUCTION 

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 beneficiary’s 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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INTRODUCTION 

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 2006–2010 period and $2.6 billion over 

the 2006–2015 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 CMS–64 summary data for 

2002 and 2005. This was the most recent CMS–64 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 2000–2004.” 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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INTROD U C T I O N 

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 Medicaid’s 

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 CMS–64 summary data for 2004. These were the most recent CMS–64 data available 

at the start of our review. 

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INTRODUCTION 

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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INTROD U C T U C T I O N I O N 

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 Mexico—Because 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 Washington—Because PCS providers in these 

three States were allowed to bill using date ranges that included days 

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INTRODUCTION 

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 State’s 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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INTROD U C T I O N 

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 President’s Council on Integrity and 

Efficiency and the Executive Council on Integrity and Efficiency. 

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Δ 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 

The five States that we reviewed 

paid $11.6 million for 29,057 claims 

for PCS that overlapped with the 

dates of institutional stays in the 

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 

Minnesota 

New Mexico 

North Carolina 

Texas 

Washington 

Overlapping Claims PCS Claims Paid in Error 

Number of 

Claims 

Expenditures 

for Claims 

Number of 

Claims 

Percentage 

of Claims 

Expenditures 

for Claims 

Percentage of 

Expenditures 

120 

552 

1,576 

23,773 

3,036 

$117,974 

$303,669 

$146,148 

$8,132,839 

$2,901,640 

34 

451 

1,576 

1,634 

226 

28.3% 

81.7% 

100.0% 

6.9% 

7.4% 

$6,504 

$124,134 

$131,521 

$171,917 

$60,569 

5.5% 

40.9% 

90.0% 

2.1% 

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 Carolina’s 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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FINDINGS 

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 

0% 20% 40% 60% 80% 100% 

Washington 

Texas 

North Carolina 

New Mexico 

Minnesota 

Total 

Medicaid matches 

Medicare matches 

Institutional Payor 

Source: OIG analysis of claims data, 2008. 

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F I NDING S 

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. 

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 the first quarter of 

FY 2006, Minnesota, Texas, and 

Washington paid $11.2 million 

for 26,929 PCS claims that 

overlapped with Medicaid- and 

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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F I NDING S 

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. 

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 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 beneficiary’s 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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FINDINGS 

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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Δ RECOMMENDATIONS 

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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R E C O MMENDA T I O N S 

• 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 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. 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 CMS’s comments 

can be found in Appendix C. 

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Δ APPENDIX~A 

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 1–5 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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APPENDIX ~ A 

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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APPENDIX ~ 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 range—October 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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APPENDIX ~ 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 days - max. 96 hours PCS date range 

PCS could be paid appropriately PCS could not be paid appropriately

Institutional date range 

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APP E N D I X ~ A 

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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APPENDIX A 

 

 

 

Δ APPENDIX~B 

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 who received PCS and Medicaid 

institutional services 

Number of beneficiaries who received PCS and Medicare 

institutional services 

Number of beneficiaries receiving personal care services (PCS) 11,674 

636 

163 

11,130 

951 

637 

75,217 

10,446 

2,895 

141,947 

14,393 

7,473 

53,694 

1,926 

2,450 

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 

institutional services 10,161 24,229 396,480 154,794 12,559 

Expenditures for PCS claims for beneficiaries who also received 

institutional services $4,230,738 $16,471,359 $24,500,100 $39,227,964 $11,445,130 

Medicaid 

PCS claims that overlap with the dates of Medicaid-paid institutional 

stays 41 390 345 14,721 1,235 

PCS claims for services provided during an institutional stay 

paid in error 24 390 345 851 60 

Erroneous payments identified through claims 

review N/A 390 345 N/A N/A 

Erroneous payments identfied through 

timecard review 24 N/A N/A N/A N/A 

Erroneous payments identifed through 

reasonableness tests N/A N/A N/A 851 60 

Claims in which the 

beneficiary was 

institutionalized every day in 

PCS range 

N/A N/A N/A 826 55 

Claims in which more than 

24 hours of services/day were 

billed 

N/A N/A N/A 25 5 

Medicare 

PCS claims that overlap with the dates of Medicare-paid institutional 

stays 79 162 1,231 9,052 1,801 

PCS claims for services provided during institutional stays 

paid in error, identified through reasonableness tests 10 61 1,231 783 166 

Claims in which the beneficiary was 

institutionalized every day in PCS range 7 60 1,025 765 161 

Claims in which more than 24 hours of 

services/day were billed 3 1 206 18 5 

Source: Office of Inspector General analysis of claims data, 2008. 

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Δ APPENDIX ~ C 

Agency Comments 

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APPENDIX ~ C 

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APPENDIX ~ C 

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Δ ACKNOWLEDGMENTS 

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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