Office of the State Auditor--Annual Report Medicaid Audit Unit
March 15, 2016 · Office of the State Auditor - Annual Report Medicaid Audit Unit · Read the full official report (PDF) ↗
Published March 15, 2016 Audit covers March 14, 2015 – March 15, 2016 Under Suzanne M. Bump · 2011–2023
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“This report details findings that identified more than $550 million in unallowable, questionable, duplicative, unauthorized, or potentially fraudulent billings—a return of over $472 for every dollar of funding in our Medicaid Unit.”
Read the plain-English breakdown
This is the Massachusetts State Auditor's annual report on its Medicaid Audit Unit for March 14, 2015 through March 15, 2016.
“The Office of the State Auditor (OSA) receives an annual appropriation for the operation of a Medicaid Audit Unit (the Unit) for the purposes of preventing and identifying fraud, waste, and abuse in the MassHealth system and making recommendations for improved operations.”
State law required the Auditor to report on MassHealth audit findings, recovery efforts, MassHealth's responses, and recommendations to improve recovery of money owed to the state.
“The state’s fiscal year 2016 budget (Chapter 46 of the Acts of 2015) requires that OSA submit a report to the House and Senate Committees on Ways and Means by no later than March 15, 2016 that includes (1) “all findings on activities and payments made through the MassHealth system”; (2) “to the extent available, a review of all post-audit efforts undertaken by MassHealth to recoup payments owed to the commonwealth due to identified fraud and abuse”; (3) “the responses of MassHealth to the most recent post-audit review survey, including the status of recoupment efforts”; and (4) “the unit’s recommendations to enhance recoupment efforts.””
MassHealth is a very large part of the state budget, so mistakes, waste, or fraud can involve large amounts of public money.
“Medicaid expenditures represent approximately 38% of the Commonwealth’s total annual budget.”
For ordinary residents, the report is about protecting taxpayer money and improving oversight of a healthcare program that serves low- and moderate-income people, seniors, children, families, and people with disabilities.
“The Massachusetts Executive Office of Health and Human Services administers the state’s Medicaid program, known as MassHealth, which provides access to healthcare services annually to approximately 1.9 million eligible low- and moderate-income children, families, seniors, and people with disabilities.”
The Auditor found large improper or questionable payments, and MassHealth reported that it had acted or planned to act on most recommendations.
“Auditees reported action or planned action on 87% of our audit recommendations, which will improve operational efficiency and effectiveness.”
MassHealth said it would keep working on fixes, seek some recoveries, and recoup as much as legally and practically possible after research and due process.
“MassHealth stated that it would recoup the maximum amount that due process and proper claim research allows.”
The report says the audit recommendations and MassHealth's corrective actions should create ongoing yearly savings of $20 million to $25 million.
“These audit recommendations and MassHealth’s corrective actions will result in perpetual annual savings of $20–25 million.”
Fee-for-service means MassHealth pays for each service claim separately; this matters because the report found payments that should have been covered by managed-care organizations instead.
“Our audit found that MassHealth improperly paid providers, including state agencies and public hospitals, $233,208,842 for FFS claims for services that should have been paid for by members’ MCOs.”
7 figure(s) pending source verification - not shown
What the Auditor checked
- Partially Report Medicaid Audit Unit findings, post-audit recoupment efforts, MassHealth responses, and recommendations to enhance recoupment efforts.
- Did not comply Determine whether MassHealth properly administered personal care attendant services in accordance with applicable federal and state requirements.
- Did not comply Determine whether MassHealth properly administered non-emergency ambulance transportation in accordance with applicable federal and state regulations.
- Did not comply Determine whether MassHealth paid for mobility-assistive equipment in accordance with state regulations, maintained effective system edits, and monitored payments to identify billing irregularities and potentially fraudulent claims.
- Did not comply Determine whether MassHealth disallowed fee-for-service claims for managed-care-organization enrollees for services that should have been covered by the MCOs.
- Partially Determine whether MassHealth met statutory benchmarks for transitioning members into alternative payment methodologies.
What the Auditor found
Why it matters: MassHealth made unallowable, duplicative, excessive, and unauthorized payments totaling more than $4.1 million.
Standard: Applicable federal and state requirements for MassHealth personal care attendant services.
3 recommendations
- Maintain current member death dates and implement system edits to prevent and deny post-death PCA claims.
- Deny PCA applications and claims when members also receive individual or group adult foster care funded by MassHealth.
- Use system edits and monitoring to deny excessive PCA service units and investigate repeated unauthorized night-hour billing.
Agency response & Auditor reply
Agency: "MassHealth will seek recovery of $92,000 in claims that were paid for dates of service that occurred after a member’s date of death."
Why it matters: No significant deficiencies were identified.
Standard: Documentation requirements supporting MassHealth radiology claims.
Why it matters: MassHealth processed millions in questionable transportation payments and could not ensure vulnerable members were protected from drivers or attendants with disqualifying criminal records.
Standard: Medical Necessity Form requirements and Criminal Offender Record Information check requirements for transportation providers.
3 recommendations
- Ensure providers maintain properly completed MNFs and consider periodic site visits.
- Notify ambulance providers of CORI requirements, remind them periodically, and monitor compliance.
- Update enrollment data promptly and develop procedures to detect and deny duplicate non-emergency medical transportation payments.
Agency response & Auditor reply
Agency: "MassHealth has reached out to the MCOs that made these payments to help prevent future issues."
Why it matters: MassHealth lost potential cost savings and paid improperly authorized, duplicate, excessive, unbundled, and unauthorized repair claims.
Standard: State regulations, MassHealth regulations, and the DME and Oxygen Payment and Coverage Guideline Tool. ( 130 CMR 409.402 )
Why it matters: The Commonwealth paid twice for the same services and made additional potentially unnecessary fee-for-service payments.
Standard: Managed-care organization contracts and MassHealth internal controls over covered service codes.
Agency response & Auditor reply
Agency: "MassHealth stated that it would recoup the maximum amount that due process and proper claim research allows."
Why it matters: MassHealth delayed the opportunity to improve healthcare quality and control healthcare costs.
Standard: Section 261 of Chapter 224 the Acts of 2012. ( Section 261 of Chapter 224 the Acts of 2012 )
Why it matters: All payments to Rite Way during the audit period were questioned, including potentially fraudulent or improper payments for ambulatory members and unsupported claims.
Standard: State regulations and MassHealth policies for medically necessary, properly authorized wheelchair-van transportation.
1 recommendation
- Do not bill for ambulatory members, maintain required forms, and add controls to prevent claims for hospitalized members or members who did not receive medical services.
Agency response & Auditor reply
Agency: "Rite Way has not yet been sent its six-month follow-up survey, as the audit was issued in October; thus we do not have an update on the status of this case."
Why it matters: MassHealth paid for transportation that was not properly authorized, and Cataldo could not be certain drivers with disqualifying criminal records lacked access to vulnerable members.
Standard: State regulations requiring properly completed MNFs and annual CORI checks.
1 recommendation
- Maintain properly completed MNFs, review criteria, perform initial and annual CORI checks, create a formal policy, train staff, and monitor compliance.
Why it matters: MassHealth paid physician rates for services performed by nurse practitioners, causing overpayments.
Standard: MassHealth regulations requiring proper provider identification and SA modifier code use for non-independent nurse practitioner services.
1 recommendation
- Repay overpayments, correctly identify E/M service providers, use required modifier codes, and document services performed by non-independent nurse practitioners.
Why it matters: MassHealth overpaid Northgate for routine cases billed as high-complexity services and for nurse practitioner and physician assistant services billed at physician rates.
Standard: MassHealth E/M procedure code and modifier code requirements.
1 recommendation
- Repay overpayments, independently review billing-agent claims, and train medical staff on electronic health record software and E/M coding.
Verified dollar findings
Money paid out that the audit found should not have been - overpayments, unallowable and nonreimbursable charges, improper claims.
Estimated or sample-projected amounts - shown separately because they are not a hard-identified dollar figure.
Identified dollar findings that do not fall in a named band.
Prior findings revisited
"According to the survey results completed, of 23 recommendations, MassHealth reported that it has acted, or will act, on implementing 20: 4 are fully implemented, 10 are in progress, and 6 are planned."
"MassHealth responded that it has fully implemented the audit’s major recommendation: to establish a process to obtain FFP for eligible inmates who become hospital inpatients and to reactivate eligible inmates’ benefits upon release."
"Three recommendations from the audit were reported as fully implemented."
"MassHealth reported that two recommendations were “in progress.”"
"Concerning the recommendations listed as “in progress,” MassHealth is working to develop a master list of service codes to denote the services that the MCOs are contractually required to deliver, as well as the non-MCO-covered and MassHealth-excluded services (as specified in the MCO and CarePlus contracts)."
"Three recommendations were reported as “in progress.”"
More audits of this entity
Other Office of the State Auditor reports on Office of the State Auditor - Annual Report Medicaid Audit Unit , including the prior audits referenced above.
- Office of the State Auditor - Annual Report Medicaid Audit UnitMassHealth / Medicaid · March 15, 2017
- Office of the State Auditor-Annual Report Medicaid Audit UnitMassHealth / Medicaid · March 15, 2013
- Office of the State Auditor - Annual Report Medicaid Audit UnitMassHealth / Medicaid · March 13, 2015