Kansas inspector general’s report identifies weakness in financial oversight of Medicaid

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TOPEKA — An audit by the Medicaid inspector general in Kansas identified oversight shortcomings in the state’s home and community based service programs that raised questions of potential overpayment to managed-care companies and control weaknesses at an agency in the administration of Gov. Laura Kelly.

Medicaid inspector general Steven Anderson, who is assigned to the office of the state attorney general, concluded Wednesday the Kansas Department of Health and Environment lacked “an effective system for tracking” beneficiaries in the program.

The assessment covered services delivered to Medicaid enrollees in the home or community from January 2018 through April 2021. The report was submitted to Attorney General Derek Schmidt, Cabinet secretaries at KDHE and the Kansas Department for Aging and Disability Services, and the Legislature’s joint oversight committee for Medicaid.

The state’s Medicaid system, known as KanCare, serves more than 440,000 people. KanCare is a privatized system in which the state contracts with three companies to deliver $3.9 billion in services annually.

Home and community based services, or HCBS services, are offered to people with autism, brain injuries, intellectual or developmental disabilities, physical disabilities, severe emotional disturbances and the frail elderly. Services might include assistance with daily living such as eating, bathing and dressing or could extend to help with managing finances or preparing meals.

Anderson’s report indicated KDHE lacked an effective system of tracking whether Medicaid beneficiaries should be in the home and community based service program. The lapse raised issues of possible overpayment to KanCare contractors that could be of interest to federal Medicaid regulators, he said.

“KDHE does not have an effective system for tracking the redetermination of Medicaid beneficiaries on the HCBS program,” Anderson said in the report. “The number and types of findings identified during the audit indicate control weaknesses.”

In addition, Anderson’s report said the three managed-care companies, or MCOs, failed to fulfill management responsibilities because more than 2,800 people identified as being enrolled in the program didn’t have any payment claims for at least 12 months during the 40-month audit period. Individuals must use HCBS services at least once a month to remain eligible.

The amount of state payments to Kansas MCOs contracted to provide services to these idle beneficiaries totaled more than $193 million, the report said.

“For the scope of this audit,” Anderson’s report said, “MCOs are required by contract to monitor Medicaid beneficiaries’ use of waiver services and make the proper notifications if services are not being used. It appears, based on the number of Medicaid beneficiaries that are not using waiver services for extended periods of time, this oversight function is not being met.”

Meanwhile, the inspector general’s report identified 560 KanCare beneficiaries who had no Medicaid claims other than the monthly charge for an emergency response notification system. If the state had simply paid a rental fee for EMS service for those individuals the cost would have been $55,000.

However, payments to MCOs operating KanCare statewide totaled $8 million to serve the 560 beneficiaries enrolled in Medicaid.

Schmidt and Kelly are both candidates for Kansas governor in 2022. Kelly is seeking re-election as a Democrat, while Schmidt is the presumptive Republican nominee.

Management of Medicaid in Kansas became more politicized during the 2022 legislative session when GOP lawmakers moved to block Kelly from working toward rebidding the $3.9 billion annual contract for KanCare.

A budget provision introduced by Republican legislators would delay that process until after the November election. If passed into law, it would be equivalent to a no-bid, one-year extension of contracts with Sunflower State Health Plan, United Healthcare and Aetna Better Health of Kansas.

KanCare, the state’s privatized system of Medicaid, was launched in 2013 by Republican Gov. Sam Brownback. The objective was to control the state’s expenditures on Medicaid and improve services available to beneficiaries.

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: info@kansasreflector.com. Follow Kansas Reflector on Facebook and Twitter.

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