Scores of Medicaid audits still leave holes

To audit or not to audit.

That's a key question the General Assembly will debate after it convenes today for a special session to decide whether to expand Virginia's Medicaid program, a battle that is tying up passage of a two-year state budget.

House Republicans oppose offering the healthcare program to an additional 400,000 poor Virginians, even though the federal government will foot the entire tab at first and pay 90 percent of the cost over the long run. GOP delegates say the federal government can't be trusted to fund its promise and, if it goes back on its word, the state will be stuck with the tab.

House GOP leaders insist that before any expansion occurs, the state's Medicaid system must undergo a two-year external audit to seek efficiencies in a program whose costs have increased by an average of 8 percent a year over the last three decades. Virginia's Medicaid program is projected to cost $8 billion this year.

Gov. Terry McAuliffe, a Democrat, says the state program has already been examined to death and the two-year audit is a ruse by conservatives to scuttle the expansion, which is an option under Obamacare.

"We've had 63 audits," McAuliffe said on Feb. 27 during his monthly radio show on WRVA. "When they say they want an audit, it just means, 'Let's kick the can down the road.'"

All this talk about audits caught our attention. We wondered about the dates, numbers and scope of these probes. So we took a look, and what we found could bolster the arguments of either side in this debate.

McAuliffe is right that Medicaid has had lots of scrutiny. The governor's office sent us a list of  63 examinations since 2002 of the Department of Medical Assistance Services, the agency that runs the state's Medicaid program. Two of the reports were listed twice, so the correct number of examinations is 61. Of them, eight have not yet been published.

We requested copies of the 53 items on the list that have been published and found they overwhelmingly focused on small pieces of Virginia's Medicaid program, verifying that there had been proper accounting of funds paid in and out. They provide insights to some of the specific issues House Republicans want addressed in a new two-year state audit. But few of the reports address the GOP question of whether broad efficiencies can be brought to the program down the road.

The examinations were done by a variety of organizations. Let's take a closer look.

Virginia Auditor of Public Accounts. The state auditor compiles an annual examination of the accounting procedures and internal controls used by all of the agencies and the departments in state government. The Department of Medical Assistance Services, which runs the state's Medicaid program, is considered with 13 agencies and departments reporting to the Secretary of Health and Human Resources.

These broad reports account for 10 of the audits on the list. The sections on DMAS largely examine whether the agency is following rules for Medicaid when it files reimbursement requests with the federal government. For the most part, the Medicaid agency has used proper procedures.

The state also has conducted nine audits of the computer networks and security measures at the Medicaid agency to ensure clients’ personal and health information isn’t improperly shared or hacked. One report on the list -- get this -- was an audit of the accounting standards used by all internal auditors working directly for state agencies, including those at DMAS.

Office of Inspector General. There were 19 audits on the list from the Office of Inspector General, part of the U.S. Department of Health and Human Services. They generally focused on short-term or pilot state Medicaid programs, such as assistance given to Hurricane Katrina evacuees in 2006. The audits checked whether DMAS had accurately documented the number of clients served by these programs and the reimbursements it requested from the federal government.

In some cases, the U.S. government required the state to correct flaws in the programs and repay millions in improperly received reimbursements.

Centers for Medicare and Medicaid Services. The list included 10 federal reviews that sought to ensure the state is not overpaying Medicaid providers. Several of the reports looked at Medicaid fraud and urged the state to tighten controls so that ineligible providers would not be reimbursed. A CMS spokeswoman told us that these reports do not use the rigorous accounting standards necessary to qualify as audits.

Joint Legislative Audit and Review Commission. JLARC, the General Assembly’s watchdog agency, authored four reports examining broad issues such as whether state Medicaid recipients had adequate access to hospitals and medical specialists (they did).

The most significant report, issued in 2012, found that local Departments of Social Services caseworkers were enrolling ineligible Medicaid recipients, costing the state between $18 million and $263 million during the budget year that ended June 30, 2010. JLARC recommended a variety of measures to improve controls, including beefed up training and a better computer system.  

CGI Technologies and Solutions and KPMG. This 2012 audit examined whether DMAS, which oversees the state Medicaid program, had corrected deficiencies pointed out in all other audits during the previous five years. It concluded that DMAS had, for the most part, done a good job.

Others. There's a collection of technical examinations by an assortment of entities looking into DMAS's internal accounting procedures. They recommended minor improvements.

House Republicans say that all of those reviews aren't enough. In February, the House passed a resolution calling for a new two-year audit of the Medicaid agency, to be conducted by the legislatively-controlled JLARC.

The resolution has a lists a number of familiar topic Republicans want JLARC to study. For example, the GOP wants a review of all "current" state Medicaid studies. It also seeks an examination of DMAS’s response to recommendations JLARC made in its 2012 audit that found ineligible people were enrolled in the state Medicaid program.

But the GOP also listed some topics that were not addressed on the previous audits:

• The use of expensive hospital care and long-term facilities in the Medicaid system.

• Non-emergency transportation services offered to Medicaid patients.

• DMAS’s system to identify and locate third parties responsible for Medicaid payments and recovering assets or recipients in long-term care.

The idea for a comprehensive audit of the state’s Medicaid system did not originate from House Republicans. JLARC, in its 2012 report, called for a "central audit plan" that would coordinate the multitude of studies.

It's important to note that JLARC's recommendation was not tied to any decision about whether Virginia should expand Medicaid. When the report was released, Obamacare required all states to broaden their programs. Six months passed before the U.S. Supreme Court ruled that each state must be allowed to decide for itself whether to widen Medicaid.  

It wasn't until this February that House Republicans called for a two-year audit of Medicaid and said they would not consider expansion before the study is completed.