Office of the State Auditor - Annual Report Medicaid Audit Unit

This is the Massachusetts State Auditor’s annual report on its Medicaid Audit Unit, covering work from March 15, 2014 to March 13, 2015.

“This report, which is being submitted by the OSA in accordance with the requirements of Chapter 165, provides summaries of two OSA audits involving (1) MassHealth’s claims for emergency medical services provided to nonqualified aliens and (2) an examination of state policies and practices regarding Medicaid coverage for inmate inpatient healthcare costs.”

The unit exists to look for fraud, waste, and abuse in MassHealth and to recommend ways the program can run better.

“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.”

MassHealth is a huge public program serving about 1.5 million people, and Medicaid spending makes up a major share of the state budget.

“Medicaid expenditures represent approximately 34% of the Commonwealth’s total annual budget.”

For taxpayers and MassHealth members, the audits are meant to reduce improper payments, improve oversight, and help public healthcare dollars go where they are supposed to go.

“Auditees reported progress on implementing 91% of our audit recommendations, which will improve operational efficiency and effectiveness.”

The biggest completed finding was that MassHealth paid about $35.1 million for non-emergency services under a program meant to cover emergency care for certain nonqualified aliens.

“Our audit found that MassHealth paid questionable or unallowable medical claims totaling $35,137,347 during our audit period for non-emergency services provided to members of the Limited Program.”

MassHealth and other agencies reported that most recommendations were being worked on, including recovery efforts, system edits, referrals, and data improvements.

“According to the survey results, of 11 recommendations, agencies reported that action is in progress on implementing 10.”

The report says fixing systemwide controls can matter more than individual recoveries because it can prevent future problems across Medicaid-funded programs.

“Consequently, while measures such as referrals to law enforcement for prosecution, recommending restitution, and other remedial actions against individual Medicaid vendors are typical results of OSA audits and serve as a deterrent, the systemic changes made by MassHealth as a result of OSA audits, in many instances, have a more significant effect on the overall efficiency of the operation of Medicaid-funded programs.”

“Data mining” means the auditors used software to review all claims instead of only a sample, so they could spot unusual billing patterns and estimate the full dollar impact.

“By so doing, our auditors can review 100% of a service provider’s claims, thus significantly improving the efficiency and effectiveness of our audits.”