News: Quick Takes

State audit finds $100 million in Medicaid errors at DHHS

State Auditor Beth Wood at a Local Government Commission meeting in January. (CJ photo by Dan Way)
State Auditor Beth Wood at a Local Government Commission meeting in January. (CJ photo by Dan Way)

The state Department of Health and Human Services improperly paid more than $100 million in Medicaid claims during fiscal year 2018, State Auditor Beth Wood reported.

An audit released Monday, April 8, highlighted a series of errors and weaknesses in DHHS operations. Some were repeat findings from earlier audits and weren’t corrected despite recommendations from the auditor.

Auditors noted the overpayments to providers, along with benefits paid to ineligible recipients, reduced the money available to pay for Medicaid recipients’ services.

The department processed more than 84 million payments totaling $7.93 billion in 2018. Auditors’ samples found some claims lacked documentation to show the services were rendered. Others contained medical coding errors which resulted in underpayments.

“As a result, the Department overpaid an estimated $71.7 million that could have been used to provide additional services to other eligible beneficiaries or reduce overall program costs,” the audit stated.

Errors resulted from clerical mistakes and inadequate documentation. The same findings were noted in a 2017 statewide audit.  

Auditors recommended DHHS management to analyze each error and implement corrections immediately.

The audit also cited DHHS for a projected $29.1 million in Medicaid payments for ineligible beneficiaries resulting from incorrect and inadequately documented eligibility determinations.

The same finding also was documented in the 2017 statewide audit. Auditors alerted DHHS in a January 2017 report to shortcomings in deciding who’s eligible to receive Medicaid benefits. The 2017 report found county Departments of Social Services had error rates ranging from 1.2 percent to 18.8 percent for new eligibility, and 1.2 percent to 23.2 percent for eligibility redeterminations. A 2017 law mandated corrective action.

In another finding, auditors stated DHHS inadequately monitored some contractors responsible for $11.4 billion in Medicaid services to 19,247 providers.

General Dynamics Information Technology was cited in particular. It had a contract to perform prior approvals of Medicaid services, products, and procedures, but DHHS failed to conduct quality assurance reviews of the contractor’s work.

Nor did DHHS consistently follow a plan to review the state’s Local Management Entity-Managed Care Organizations to detect fraud, and report cases to DHHS. The LME/MCOs provide mental health services and other programs to Medicaid recipients.

The audit contained three other findings:

  • The department didn’t report all information for $2.6 million in federal funding awarded to public schools and the N.C. Partnership for Children for pre-kindergarten services. Sixteen of the 79 contracts were audited. It’s possible the money didn’t follow federal guidelines, the audit stated.
  • Inaccurate household information for the Low Income Home Energy Assistance Program was reported to the federal government. The errors could result in lower benefits for impoverished households and vulnerable populations.
  • Information systems security deficiencies were found. “Security risks are given the highest priority by the Department, and corrective actions will be monitored,” DHHS said in response.