Audit: State Medicaid Agency Fails to Monitor Vendors Contracted for Billing and Overpayments

The state agency for financial administration of Maryland’s  $7.6 billion Medicaid program failed to provide adequate oversight over contracted vendors responsible for billing verification for hospitals, long term care facilities and insurance companies.
An April 2014 legislative audit of the Medical Care Programs Administration (MCPA), an agency in the Department of Health and Mental Hygiene, revealed that audits of hospital records—to verify services being billed were actually provided—were not conducted after 2007.   According to the legislative audit MCPA terminated its contract 2009 contract with the billing auditor in 2012 because the contractor failed to conduct the required number of audits.  The contractor had only audited hospital claims between 2004-2007.   State auditors noted that this is significant because regulations require hospitals to retain claims records for six years leading claim data no longer available for review.
State auditors also found that MCPA did not adequately monitor another vendor contracted to review whether hospital charges were for medically necessary services.  MCPA told state auditors that there was little oversight of the contractor for the last four years due to “staffing shortages.”  MCPA paid this contractor $1.8 million in fiscal year 2013.
MCPA did not perform reviews of patient accounts at long-term care facilities to ensure credit balances due to the state were paid.  MCPA told state auditors that these reviews were suspended in 2003 due to concerns about the accuracy and fairness of the patient account reviews. MCPA reinstated the audits in 2012 but they only cover the time period gong back to 2009.  
MCPA did not adequately monitor the state contractor responsible for enrolling new Medicaid applicants in managed care organizations.   Auditors found that MCPA did not use data available from the state’s Medicaid management database to ensure the contractor complied with the terms of the contract.  The $9 million contract called for the vendor to enroll 80 percent of new Medicaid applicants each month.   The contractor reported to MCPA enrollment rates ranging from 80 to 87 percent on monthly invoices.
Auditors compared the claims submitted by the vendor to verified enrollment data in the state Medicaid database and found that the vendor grossly overstated enrollment data on its invoices.
However, MCPA analyzed enrollment data in response to auditors concerns and found that from 2009 through 20012 the contractor failed to meet its enrollment obligations.  Verified enrollment data shows the actual enrollment percentages for those three years range from 61 percent to 71 percent.  MCPA was able to recover $900,000 from the vendor. 

Despite these failures, MCPA has extended the vendor’s contract through 2015.
State auditors also noted two federal audits of MCPA conducted by the Inspector General of the U.S. Department of Health and Human Services found that the agency owes the federal government $118.5 million for improper Medicaid billing procedures.
Other findings regarding MCPA deficiencies in this audit include:
  • Failed to properly investigate third party health insurance information for Medicaid recipients;
  • Did not have sufficient procedures to maximize recovery of Medicare funding for Medicaid payments;
  • Still needs to address longstanding deficiencies in Medicaid enrollment process;
  • Concerns with agency firewall and network security. 

If the state of Maryland had these kinds of administrative deficiencies pre-Obamacare, how will the bureaucracy handle the 236,000 Medicaid enrollees?

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