Inconsistencies in State Implementation of Correct Coding Edits May Allow Improper Medicaid Payments

The OIG conducted a study of the implementation of the Correct Coding Edits by state Medicaid programs. 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. The OIG 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. The OIG recommends 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.