Improper Medicaid payments to ineligible recipients cost Virginia anywhere from $18 million to $263 million in 2009 and “major investments” are needed to shore up the system, according to a new state audit.
The audit also found that some Virginians eligible for care were erroneously turned down — as much as 25 percent of all denials and cancellations — which could have limited access to medical care for needy citizens.
The Joint Legislative Audit and Review Commission released a report Tuesday that details the risk of improper payments in Medicaid programs, a federal-state joint program that provides medical care to low-income and disabled residents. It also provided 26 suggestions for improving the system, including stricter oversight, more internal controls and expansive data analysis.
At $7.1 billion in fiscal year 2011, Medicaid is the largest single program in the budget. In 2009, the number of applications for Medicaid assistance flooded state agencies assigned to determining eligibility as thousands of individuals lost their jobs and health insurance, said Virginia Secretary of Health and Human Resources Bill Hazel, named to the post by Gov. Bob McDonnell in 2010.
Fraud accounted for $6.1 million in improper payments, mostly at the hands of medical providers. Agency errors in calculating eligibility resulted in $18 million in improper payments and a lack of documentation to prove eligibility could have caused cost the state another $235 million, although that number is difficult to pinpoint and is likely inflated. Recipients may have filed an application without the necessary documentation or left a spot on the form blank, but that doesn’t mean they weren’t eligible.
Errors also cost the federal government at least $26 million and possibly as much as $397 million.
Because the most complicated — and often the most expensive — applications are processed manually, human error accounts for most of the problems, the report found. More automation and data verification is needed to cut down on those mistakes, the report said, and state health departments are already implementing some of those practices.
“We’re examining our processes; we’re examining our information technology to reduce these problems,” Hazel said.
