Audit reveals KDHE mistakenly paid $1.3 million to Medicaid contractors for care of dead people

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TOPEKA — An expansive audit of Kansas Department of Health and Environment’s payments to companies contracted to deliver services under the state’s Medicaid program found $1.3 million in inappropriate compensation for care of people who had actually died.

Steven Anderson, the state’s Medicaid inspector general, said the examination found 25 instances from 2015 to 2020 in which KDHE cut checks for beneficiaries who were deceased. When the report was issued last week, KDHE hadn’t yet recouped the cash from the managed-care companies handling KanCare. Approximately 360,000 Kansans are Medicaid recipients.

In addition, analysis by Anderson of the period from July 2019 and July 2021 showed KDHE had identified $19.2 million improperly paid to the contractors that was subsequently recovered by docking future payments. The mistakes caught by KDHE involved 632 cases in which the state continued making payments after a death. In 56 of those cases, the inspector general’s report said, inappropriate payments had continued for five or more years after the beneficiaries’ demise.

Anderson’s office reviewed the length of time overpaid funds were in possession of MCOs and determined the miscue was equivalent to giving those for-profit companies a $1.5 million cash loan.

The report from the inspector general recommended KDHE “review quality control measures and staff training protocols to ensure they are sufficient to confirm staff members know how to effectively and efficiently identify and process cases involving death of a beneficiaries.”

Apparently many of the mistakes occurred when the company Maximus was under contract from 2016 to 2020 to operate the state’s Medicaid clearinghouse for processing claims. KDHE should consider feasibility of taking legal action against Maximus to recover funds, Anderson’s report said.

In Kansas, KDHE is responsible for administering Medicaid, also known as KanCare. KDHE contracts with three companies to coordinate health care for individuals enrolled in KanCare. The Medicaid inspector general, housed in the attorney general’s office, is responsible for independent and ongoing reviews of the program.

“We have worked hard, in cooperation with the Legislature, to revitalize the office of Medicaid inspector general into a professional, independent reviewer that can promote efficiency in the Medicaid program,” said Attorney General Derek Schmidt. “These audits are products of that important work to reduce fraud and identify cost savings within the Kansas Medicaid, MediKan and State Children’s Health Insurance programs.”

MediKan benefit woes

The inspector general also released a July 30 report outlining challenges facing Kansans interested in reporting Medicaid fraud and recommended ways of improving access to the proper points of contact.

In a third report, also released on July 30, Anderson said 912 MediKan beneficiaries who exceeded the 12-month lifetime eligibility limit between January 2018 and April 2021. Providing benefits beyond the maximum period resulted in the state paying $1.6 million for medical claims for adults 18 to 64 years of age who were  ineligible for the program, the audit said. MediKan is a state-funded initiative providing medical services for people with physical or mental disabilities who wouldn’t qualify for Medicaid.

Kristi Zears, spokeswoman for KDHE, said 457 of the ineligible recipients of MediKan benefits were discontinued before release of the inspector general’s audit. The other 455 improper recipients had been discontinued by July 29, she said.

“We appreciate the work of the Medicaid inspector general and welcome the opportunity to further improve state medical assistance programs,” said Zears, who indicated KDHE’s reporting system would guarantee timely discontinuation of ineligible people.

The inspector general, who is required by state law to report on fraud, waste, abuse and illegal contact, presented the information to Schmidt, KDHE secretary Lee Norman, KDHE Medicaid director Sarah Fertig and the House and Senate members on the KanCare oversight committee. The joint legislative oversight committee’s meeting Tuesday was called off with a tentative plan to convene lawmakers during September.

Under KanCare, the managed care companies receive a monthly payment from the state for each eligible beneficiary enrolled with that company regardless of whether the person incurred medical costs that month.

Sunflower State Health Plan and United Healthcare Community Plan of Kansas have worked in the privatized Medicaid system since implemented in 2013 during the administration of Gov. Sam Brownback. Amerigroup’s contract was allowed to expire by KDHE in 2018 and that troubled company was replaced by Aetna Better Health of Kansas.

Kansas Reflector is part of States Newsroom, a network of news bureaus supported by grants and a coalition of donors as a 501c(3) public charity. Kansas Reflector maintains editorial independence. Contact Editor Sherman Smith for questions: Follow Kansas Reflector on Facebook and Twitter.

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