Audit: MassHealth should recoup $233M in improper payments


By Andy Metzger


STATE HOUSE — Forking over $233 million that should have been covered by insurers, MassHealth violated state and federal regulations and should seek to recoup the improper payments, according to an audit released Tuesday.

In the largest-dollar audit of Auditor Suzanne Bump’s tenure, the office found another $288 million in “potentially unnecessary” fee-for-service payments that could have been avoided if the agency tightened procedures.

The two figures total more than $500 million and in both cases the auditor’s office found MassHealth received fee-for-service billing for medical procedures done to someone enrolled in a managed care organization that either could have been or was covered under the agreement with MassHealth.

A total of about 1.5 million of the roughly 25.5 million fee-for-service payments on behalf of MCO enrollees during a five-year period were found to be improper. That includes $87.5 million for behavioral health services, $67.5 million for dental and $33.1 million for home health services, along with $3.4 million in drugs, and $16.8 million for treatment at a skilled nursing facility or rehabilitation hospital.

MassHealth runs the state’s Medicaid program where costs are shared by the federal government. Out of the 1.4 million low-income MassHealth individuals, couples and families about half – or 733,644 members – are enrolled in managed care organizations (MCOs).

Rather than paying a fee for each service rendered to a member, at MCOs MassHealth pays a fixed monthly fee and leaves it to the organization to manage health care, with any service not covered by the organization’s contract left to MassHealth.

In general, the auditor found that members enrolled in MCOs had $233 million in covered health care services funded directly by MassHealth between Oct. 1, 2009 and Sept. 30, 2014 – a five-year span.

“MassHealth should take appropriate action to recoup the approximately $233 million we identified in unallowable payments,” and develop systems to detect and reject fee-for-service claims covered by an MCO, the auditor recommended.

In its response, MassHealth conceded about $60 million of the $233 million “represented duplicate payments.”

With the governor and the House and Senate pegging fiscal 2016 MassHealth spending at about $14.7 billion, it is the most expensive state government program. Gov. Charlie Baker has looked to MassHealth for savings, installing Daniel Tsai to lead the program and directing it to re-determine the eligibility of its members.

Boston Medical Center HealthNet Plan, Fallon Community Health Plan, Health New England, Neighborhood Health Plan, Tufts Health Plan-Network Health and CeltiCare all run Medicaid MCOs, though Celticare got into the market after the start of the audit period and was not included in the review.

Various dynamics led MassHealth to pay for a service that should have been covered by an MCO, according to the audit, including a desire on the part of MassHealth to have federal taxpayers cover medical treatment delivered by state agencies.

Mammograms, blood tests, behavioral health and other services provided by state agencies accounted for $43.2 million of the improper billing, according to the audit.

“Regarding these claims, MassHealth stated that the Commonwealth should be reimbursed by the federal government for state agencies’ services provided on behalf of members,” the audit said. “MassHealth stated that this billing practice was a source of revenue for the Commonwealth and that these claims should not be paid through the monthly capitated payments to the MCOs.”

“MassHealth is currently taking steps to update and document its policies and procedures regarding state agency billing and claiming,” MassHealth wrote in a response included within the audit. MassHealth cautioned that if it switched to billing MCOs for all the covered services provided by state agencies it could have an effect on the monthly fees paid to the managed care organizations.

MassHealth said it will address with more specificity what procedures are covered by MCOs, clarify billing policies and “pursue reconciliation, to the extent practical” for fee-for-service claims that should have been paid by an MCO.

About $20 million in improper billing was attributed to MassHealth’s data file being out of date when members enter or leave an MCO. In between when a member joined the MCO and when MassHealth recognized that in its Medicaid Management Information System, medical services were billed on a fee-for-service basis.

Newborns who were enrolled in an MCO retroactive to the time of their birth accounted for about $12 million, MassHealth wrote in response to the audit.

MassHealth did not develop a “master list” of specific procedures to share with MCOs, leaving the organizations to develop their own in-house lists of specific, covered procedures. The lack of specificity led to “potentially unnecessary” payments totaling $288 million during the audit period, Bump’s office stated.

“Proper program management would entail determining and distributing the list of covered services to ensure that duplicate payments are not made,” the audit advised.

MassHealth contended that “the majority” of the $288 million in claims were not duplicate payments, while pledging to improve its processes.

In its response, MassHealth said it is developing a master list “in order to eliminate ambiguity as to who is responsible for payment and to provide clear documentation for contracts and systems edits and instructions for state agencies and MCOs.”