A state audit has determined that North Carolina improperly paid $835 million to Medicaid providers last year, but the state Department of Health and Human Services says that number is inflated.
The assessment is in a state audit report released Monday. Each year, the auditor reports on state agencies’ administration of major federal programs. Medicaid is government health insurance for low-income children and some of their parents, the elderly and the disabled. The federal government pays about two-thirds of the cost, and the state picks up the rest.
DHHS processed about 127 million claims for payments totaling $11 billion last year, according to the audit. Auditors looked at a sample of 396 payments and found errors in 50 of them, with total overpayments of $4,288. The errors amount to $835 million when projected to cover the entire caseload, the audit said.
DHHS spokeswoman Kendra Gerlach challenged that figure in a statement, saying the cost was lower.
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The department also said its performance has improved, citing the audit’s finding of a 13 percent error rate. Although DHHS said its error rate wasn’t that high, contending that some of the items were not mistakes, it noted that the 13 percent rate is lower than the 24 percent reported in the previous year’s audit. That audit did not estimate the cost of errors over all Medicaid claims payments.
“Over the last three years, the department has made significant progress improving its operations, and we remain committed to continual improvement,” Gerlach wrote. “We value the role that audits can play in further enabling us to do so. This annual audit will be used by the department to continue on this path of improved effectiveness.”
According to the audit, 19 of the 50 errant claims didn’t have the correct paperwork, 15 payments were to providers who were not eligible to render services, and 11 payments did not reflect a retroactive Medicaid rate cut.
In its formal response, DHHS said it looked at the 50 claims the audit cited for errors and agreed with 31. The agency did not count the claims caught up in the rate change as mistakes. Reprocessing those claims began more than a year ago and will continue until the end of this year, DHHS said.
The agency recalculated the estimate of the overpayment total, using its findings, and came up with a projected error of $690 million.
When DHHS deducts the 19 claims it said were not mistakes, the error rate drops to 7.8 percent.
The department is moving to shore up its procedures related to documentation and other problems highlighted in the audit, Gerlach said.
Additionally, the audit found that 57 percent of a sample of 117 provider records had multiple errors, and 12 percent of providers with licenses suspended, surrendered or revoked were not deleted from the Medicaid claims processing system.
In its response, DHHS said it expected to have an automated process working by this month to remove from the claims payment system all providers who have lost their licenses.