Inspection of local mental health authority shows payment errors for inpatient care

A recent inspection of PermiaCare, a local mental health authority servicing West Texas, found discrepancies and errors in payments made to inpatient psychiatric hospitals subcontracted to treat eligible clients. In August 2021, PermiaCare received $449,684 from Texas Health and Human Services (HHS) as part of a two-year contract to provide inpatient mental health private psychiatric services. 

During the two-year contract, 78 clients were hospitalized at subcontracted private mental health hospitals as part of the HHS-funded program. A review of billing records for these clients uncovered 30 errors in payments made by PermiaCare. Specifically, the provider:

• Overpaid a total of $15,569 for eight hospitalizations.
• Underpaid $30,909 for 11 hospitalizations.
• Paid two invoices twice.

PermiaCare provides outpatient services at six West Texas locations with no inpatient facilities, requiring the agency to subcontract with three private psychiatric hospitals authorized to treat patients for five days initially. If patients require additional care, the facility must request authorization from PermiaCare to continue receiving funding for treatment. Inspectors found that of the 52 patients that received continued care, nine were funded without prior approval. Additionally, of the patients who received approval for continued care, 34 were not authorized before the final day of initial treatment, and seven were approved for fewer days than they spent in the facility. 

Following the inspection, the OIG made recommendations to PermiaCare, which they agreed to implement. Specifically, PermiaCare should  

• Strengthen internal controls over payment processes for accurate payment of invoices.
• Review all payments made from the beginning of its contract with HHSC in 2021 to identify and resolve any potential overpayments, underpayments, or duplicate payments.
• Strengthen its internal controls to ensure continued stay authorizations meet contract requirements.