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Senator seeks independent Medicaid audit authority

By Paul Kostyu

Copley News Service

2004-11-22


COLUMBUS, Ohio - A state senator and the state auditor say Ohio loses from $540 million to $756 million a year because of waste, fraud, error and abuse of the Medicaid program and it's waiting to be recovered.

State Sen. Robert Spada said he will introduce legislation that will give Ohio Auditor Betty Montgomery the authority to independently audit Medicaid providers and to conduct performance audits of the Medicaid program. A 1998 change in state law said the Ohio Department of Job and

Family Services, which administers the Medicaid program, has the sole authority to pick which providers are to be audited. Jon Allen, a spokesman for the department, said recovering the money is not that simple. And, he said, the state is already taking steps to improve how Medicaid dollars are tracked. "We must be diligent in protecting taxpayers' money," Spada said. "I believe these audits have the potential to uncover waste in the system we can no longer afford."

Spada wants the state auditor to look for "efficiencies in the system and cut out waste." Doing so is important to make the Medicaid program "cost efficient and cost effective," Spada said. Allen found two problems with the proposal, which was announced at a press conference Tuesday.

"How is this going to be funded," he said.

And if there is a finding that money has to be recovered, Allen said, the federal government requires that it get reimbursed immediately, not after the money actually has been collected. "There is no money in the Medicaid budget to pay for either of these scenarios," he said. "Financially, the state would be left holding the bag. It's more complicated than saying $600 million is out there. It ignores that a good chunk - about 60 percent - goes to the federal government."

Gov. Bob Taft sent a letter Tuesday to Tommy G. Thompson, secretary of the federal Department of Health and Human Services, asking that the repayment system be changed because it "is onerous and actually punitive to states such as Ohio who aggressively seek to identify and recover such overpayments."

Spada and Montgomery said there was more than enough money to cover the cost of the audits, which would have to be paid by the department, from the millions that would be recovered. To arrive at the dollar amount, they used a federal estimate that 5 percent to 7 percent of every dollar spent on health care is lost on fraud and waste.

From fiscal year 2000 to fiscal year 2004, less than $30 million in Medicaid fraud was reported through Job and Family Services and the auditor's office, Montgomery said. She also said the most recent audit of federal spending in Ohio made 62 comments about improving the system, but 23 of those have been repeated for the past three years.

"Ohio's Medicaid system is the black hole of state government, fast approaching 40 percent of our general revenue budget," she said. "In the face of some of the toughest budget problems in decades, we must continue to address the way in which we can save money to bring efficiencies to the system."

Allen said there already are mechanisms in place through Job and Family Services and the federal Office of Inspector General and Department of Health and Human Services to recover Medicaid dollars. He said the department is the proper place for coordinating audits. Giving Montgomery free reign to conduct her own audits would complicate the process, he said.

"The fact that is lost," Allen said, "is that auditing is one of several methods to control waste and fraud. Our agency and the auditor do data mining by using a computer to look for patterns of abuse."

In fiscal year 2005 the Medicaid budget is $10 billion and it reaches 1.6 million Ohioans, Allen said. He said the department uses a 20-year-old computer program to track Medicaid dollars, but the department is obtaining a new program that will improve that process.

The two largest Medicaid providers who would be subject to audits under the Spada-Montgomery plan are hospitals and nursing homes.

Tiffany Himmelreich, a spokeswoman for the Ohio Hospital Association, said officials had not seen the proposal and could not comment on it.

"We are already pretty heavily audited," said Peter VanRunkle, a lobbyist for the Ohio Health Care Association, which represents nursing homes.

He said 30 to 40 percent of the state's nursing homes are audited every year by Job and Family Services, which contracts the task to private firms. VanRunkle said he didn't think what would be recovered through the Spada-Montgomery proposal would be "worth the cost of doing the audit."

Orest Holubec, a Taft spokesman, said recovering misspent Medicaid money is a "complicated matter especially in terms of payments. The department has an aggressive plan in place."

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