Virginia’s Medicaid payouts seen needing more oversight

Local departments lax, probe finds

RICHMOND — Virginia needs to massively improve how it monitors payments in its Medicaid program, according to a report released Tuesday by the General Assembly’s investigative arm. The recommendation comes as the state girds for a possible 425,000 additional enrollees as a result of President Obama’s health care overhaul.

Local social services departments that mistakenly enroll people who should not be eligible pose the largest risk to improper payments in Virginia’s Medicaid program, costing the state between $18 million and $263 million in fiscal 2009, according to a report presented Tuesday by the Joint Legislative Audit and Review Commission (JLARC).

The wide range was attributable to the fact that analysts found many cases in which recipients were terminated from the program because of a lack of necessary documentation, though it was possible they were eligible at the time they applied, the report said.

Analysts said part of the problem with the enrollment errors was that processes and standards for determining Medicaid eligibility are outdated and inconsistent throughout the state.

“What we’ve got is a building that’s 50 years old that we’ve done no maintenance on, and we have to fix it before the roof falls in,” Ashley Colvin, project leader for the study, said outside a commission meeting during which the report was presented.

JLARC was tasked by the General Assembly in 2010 with studying opportunities for waste, fraud, and abuse in the program, which spent a total of $7.2 billion in federal and state funds on nearly 1 million recipients in fiscal 2011.

Provider and recipient fraud totaled just $6.1 million, or 0.3 percent of state expenditures for the health care program for low-income individuals, in 2009.

The report noted that the state Department of Medical Assistance Services (DMAS) had just a 0.7 error rate in paying out claims, equating to $32 million in estimated improper payments in 2009, and the department identified 91 percent of improper payments missed in the prepayment review.

But oversight of local departments by the state Department of Social Services is “limited,” the report said, and “reviews of eligibility determinations by regional staff are infrequent and do not identify systemic errors.”

Local departments, for example, do not consistently redetermine the eligibility of Medicaid recipients every 12 months, as federal law requires.

Department of Social Services Commissioner Martin D. Brown, however, disputed the notion that local departments do not properly monitor systemic errors, though he wrote in a response letter that “we remain committed to doing more.”

The report delivered a number of recommendations, including suggesting that the Department of Social Services develop automated systems that allow caseworkers at local departments to verify the financial assets of Medicaid applicants.

The governor and General Assembly have already provided funding to begin a project to create a modern, more customer-friendly eligibility and enrollment system for all of Virginia’s social services programs — not just Medicaid.

DMAS and local departments are working on a new eligibility system to serve as a backbone for all social services supplied by the state. In the interim, the department and DSS are working to engage an independent contractor to look at errors at the local level, according to Secretary of Health and Human Resources William A. Hazel Jr.

In the meantime, the state is preparing to add more than 400,000 people to its Medicaid rolls as part of federal health care reforms.

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