Medicaid paid out a stunning $2.6 billion over five years in payments it agrees were bogus and should be clawed back from the states — but $1.6 billion of it remains uncollected, according to an internal audit.
The Health and Human Services Department inspector general, in a report this month, says the cash was spent between 2010 and 2015 on claims ruled wayward.
The inspector general has issued hundreds of audits looking at the overpayments and works with the Centers for Medicare and Medicaid Services on which payments were so clearly bogus that they should be repaid.
But the government doesn’t have a firm timetable or complete records for clawing the money back, meaning federal taxpayers have been shorted $1.6 billion.
“It is a big number, you’re right about that,” said Don White, a spokesman for the inspector general’s office.
The exact reason for the overpayments and where they occurred geographically were not spelled out in the new report, although the inspector general regularly finds bad payments in period reviews of Medicaid spending.
A report released Thursday, for example, sampled Medicaid spending in California from October 2014 to March 2015 and concluded slightly more than half either didn’t qualify or lacked documentation in their files that would have proved they were eligible.
The inspector general said that sample indicates California paid out $959.3 million in bad payments over that time — with the majority of that cash coming from federal taxpayers.
That audit was not included in the inspector general’s broader calculations about clawing back funds.
Those overpayments were found among two groups of audits.
In the first, stretching from fiscal year 2004 to 2009, the inspector general said Medicaid is still owed $188.6 million.
The second batch of audits, conducted between 2010 and 2015, identified the $2.6 billion in arrears, of which only about $1 billion has been recovered — leaving the $1.6 billion hole.
CMS and the states appear to have conflicting ideas about how to resolve overpayment disputes and the length of time records for which should be maintained, according to the report.
“CMS had not recovered all overpayments covered by this review because its policies and procedures did not include timelines for resolving overpayments when State agencies disagreed with the recommendations,” the inspector general concluded.
The investigators added that Medicaid also expunged some documents detailing money that was paid back.
In a written response to a draft of the audit, CMS officials agreed with the scolding and said they are already moving aggressively to recoup money.
“CMS is committed to achieving more expeditious resolution of these types of issues, as they arise, thereby ensuring Federal funds are repaid in a timely manner,” CMS Administrator Seema Verma wrote. “Lastly, CMS has taken action to clear out a number of potential disallowances that were not issued in the past. Since March 2017, CMS has issued over $590 million in total disallowances. CMS is also exploring modifications to its policies and procedures to ensure timely issuance of disallowance letters.”
CMS officials are negotiating with states on a number of identified overpayments, the report said, although it was unclear what those amounts equaled.
Since President Obama signed the Affordable Care Act in 2010, the federal government assumed the costs associated with expanding a state’s Medicaid rolls on a sliding scale. The federal portion began to recede in 2017, though Washington still is slated to pick up 90 percent of the annual costs beginning in 2020.
Part of the problem appears to be rooted in paperwork, because “CMS did not ensure that states correctly reported Medicaid overpayments,” on federal forms, according to the report.
The report did not address steps the states may consider to recoup overpayments.
Already, Medicaid spending accounts for roughly $1 of every $3 states spend and those costs are not abating. CMS estimates currently predict Medicaid spending will grow by 6.1 percent annually for states and 5.7 percent for Washington.
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