Audit of the Office of Medicaid (MassHealth) - Review of Accounts Receivable

This is a State Auditor performance audit of MassHealth’s provider accounts receivable from January 1, 2015 through December 31, 2017.

“OSA has conducted an audit of MassHealth’s accounts receivable from providers1 for the period January 1, 2015 through December 31, 2017.”

The Auditor reviewed whether MassHealth was properly managing provider debts that might never be collected, especially whether it wrote off uncollectible balances.

“The purpose of this audit was to determine whether MassHealth effectively manages its accounts receivable with regard to write-offs of uncollectible accounts receivable.”

If MassHealth keeps old uncollectible debts on its books, its records may not show how much money can realistically be recovered.

“Unless its accounts receivable balances are accurate, MassHealth is not ensuring that its accounts receivable records represent amounts that can reasonably be expected to be collected, which could impact its ability to effectively manage the accounts receivable process.”

MassHealth is a major public program serving about 1.9 million Massachusetts residents, so accurate financial tracking matters for public oversight and state budget management.

“MassHealth provides access to healthcare services for approximately 1.9 million eligible low- and moderate-income children, families, seniors, and people with disabilities annually.”

The Auditor found that MassHealth did not effectively handle uncollectible accounts receivable and should create formal rules for when to write them off.

“MassHealth does not effectively administer its uncollectible accounts receivable balances.”

MassHealth agreed to formalize its write-off process, add monitoring controls, and work with the Comptroller on best practices.

“MassHealth has commenced a weekly workgroup to discuss, develop, and document new policies and procedures regarding writing off provider debt.”

The issue was not that MassHealth failed to collect everything; it was that it kept very old, likely uncollectible debts in its records instead of removing them through an approved write-off process.

“Although MassHealth may make reasonable efforts to collect these amounts, our issue is not with the collection of these funds; rather, it is with the fact that MassHealth does not write off uncollectible amounts, even when they are more than 10 years old and therefore are clearly unlikely to be collected.”

Accounts receivable means money owed back to MassHealth, such as overpayments or costs later offset by Medicare payments.

“Accounts receivable can result from various activities, such as general overpayments because of human error, retroactive decreases in payment rates, Medicare payments that offset some of the costs billed to MassHealth, and payments made to service providers that have been questioned because of audits.”