Audit raps Medicaid program for poor safeguards against fraud
Colorado officials vowed to improve oversight of the managedcare portion of the state’s $10 billion Medicaid program after a federal audit found poor safeguards against waste, fraud and abuse.
Federal regulators reviewed the state’s supervision of managed care programs that subcontract with the Colorado Department of Health Care Policy and Financing to provide care to patients.
The audit by the federal Centers for Medicare and Medicaid Services reviewed Medicaid spending at three managed care programs in the state. The review found that from 2014 through 2016 those programs had recovered less than $65,000 in overpayments to doctors, psychologists and other health care professionals billing Medicaid. During those years, the programs conducted just 19 investigations into allegations of waste, fraud or abuse, an amount the auditors found “either low or nonexistent for a managed care program of Colorado’s size.”
The October 2017 audit found that Colorado has a “lack of effective policies and procedures” to guide how the programs should handle investigations, referrals and reporting requirements to the state when there are allegations of fraudulent Medicaid expenditures.
In interviews, Colorado officials disputed some of the audit’s conclusions but said they still were working to put in place the changes the audit recommended.
“We recognize the benefit of audits,” said John Bartholomew, the chief financial officer for HCPF. “They help us become better at our jobs. This one did help us by really hammering home that there could be better coordination. A lot already was underway, but it did wake up additional people in the department, which is great.”
Of the 28 states audited by the federal regulators in the past
three years only three states — West Virginia, Alabama and California — had a poorer track record of overpayment recoveries from managed care providers than Colorado did. In contrast, Missouri collected $31 million in overpayments in three years from three providers reviewed there. In Pennsylvania, state officials recovered $443 million in Medicaid overpayments billed to a sampling of four providers, according to that state’s audit.
Colorado’s audit identified 11 areas for improvement, including the need for a new method to track identified overpayments in managed care programs. The audit also recommended that the state work with providers to bolster their systems for preventing and investigating fraud. In their response, Colorado officials agreed that this year they would overhaul their oversight policies for providers in the Medicaid program and make the other recommended changes.
Bartholomew said only about 5 percent of the state’s Medicaid patients are in managed care plans, and that most health care professionals directly bill Medicaid in the state. He added that unlike many other states, Colorado retains billing responsibility even for managed care programs. Bartholemew said that once direct billing by practitioners is taken into account, Colorado collects about $100 million annually in overpayments through the entire Medicaid system. He stressed that $100 million amount includes fraudulent billing as well as instances when Medicaid accidentally was billed when a patient had other existing insurance.
The managed care providers the federal auditors reviewed were Colorado Access, a local nonprofit health plan that provides physical and behavioral health services; BHI, a behavioral health care program that provides services in Adams, Arapahoe and Douglas counties as well as the city of Aurora; and Denver Health, a local group of doctors, clinics, hospitals, pharmacies and other providers that provide health services in Adams, Araphaoe, Denver and Jefferson counties.
The federal review found that the three managed care programs were responsible for $506 million in Medicaid expenditures in 2016 and had nearly 740,000 enrolled beneficiaries. The program integrity unit at the state’s Medicaid department “often appeared to be uniformed” about managed care provider efforts to prevent fraud, the audit found. In one instance, an overpayment of more than $70,000 was discovered in 2014 by one managed care provider, the audit found, but no referral had been made to the state.
The audit also found that the managed care providers “predominately rely on conducting provider education aimed at changing aberrant billing patterns, which has resulted in a low number of for-cause terminations.” In addition, the managed care providers “perform very minimal audit activities,” the audit further found. In addition, the managed care providers were not following state procedures for suspending payments to suspect doctors. “The state is at risk by failing to suspend payments to providers against whom there is a credible allegation of fraud,” the audit found.
The audit also found that the managed care programs kicked 473 health care practitioners out of their networks in 2014 through 2016, but just two of those were forced out due to cause. The number of practitioners terminated for cause “appeared to be either nonexistent or very low, compared to the number of providers,” the audit found. The managed care programs had nearly 7,000 health care practitioners in their network, according to the audit.