Massachusetts audit uncovers $500 million in improper Medicaid payments

state audit revealed Massachusetts' Medicaid program paid more than $500 million in improper or unnecessary payments over the course of five years, most of which came from duplicative claims or services that insurers were supposed to cover through managed care plans. The audit claims that misspent funding originated from claims submitted from October 2009 through September 2014.

The majority of MassHealth members are covered by managed care plans operated by six different health insurance companies. Medicaid provides funding to MassHealth through a monthly fee for each member, which covers contractually agreed upon services, as well as certain services that aren't covered by the managed care plans.

Previously, the Government Accountability Office (GAO) estimated that Medicaid accounted for $17.5 billion in improper payments by the federal government, and indicated that Medicaid managed care plans need better oversight.

The audit found that $233 million of the overpayments were traced back to claims for services that were specifically covered under the managed care organization contracts, including mental health, dental and home health services. Instead, Medicaid paid twice for the same claim by paying the monthly fee along with the improper claim.

State auditor Suzanne M. Bump recommended MassHealth recoup the $233 million and implement a system that can detect and deny claims for covered services. Just last year, MassHealth implemented fraud detection software featuring predictive analytics that allowed the health insurance exchange to recoup $2 million worth of improper payments in just six months.

The remainder of the money--more than $288 million--was attributed to services insurers said they would cover even though they were not explicitly outlined in the contract. The state identified these payments as "potential savings" rather than duplicative payments, but recommended that MassHealth develop a master list of procedure codes in order to accurately parse out claims that are not covered.  

MassHealth disagreed with the audit's findings, arguing that only $60 million in payments were improper, but acknowledged the need for improved record-keeping, according to The Boston Globe. The Massachusetts Association of Health Plans, which includes the six MassHealth insurers, also told the Globe the audit "provides an incomplete picture of the Medicaid program over the last five years."

For more:
- here's the Massachusetts state audit
- read The Boston Globe article