The state’s Office of the Legislative Auditor (OLA) issued a new report this morning with the title:
Department of Human Services: Outstanding Provider Debt in Minnesota’s Medicaid Program
The full 32-page OLA report is available here.
In short: the Auditor has documented the failure of the state Dept. of Human Services (DHS) to collect more than $40 million in overpayments made to Medicaid providers going back almost 20 years.
To oversimplify: DHS oversees Medicaid in Minnesota on behalf of the Feds. From time to time, past payments to Medicaid providers get adjusted downward (for various reasons) and become overpayments.
DHS’ practice is to deduct past overpayments from future claims made by providers. But if a provider stops participating, then DHS doesn’t bother (for various reasons) to collect debt balances from former providers.
The OLA investigated 59 former Medicaid providers (mostly long-term care facilities) and documented over $40 million in unrecovered overpayments (report, PDF page 10).
But whistleblowers believe that the total $ amount is much bigger, perhaps exceeding $300 million.
The OLA documents how DHS doesn’t bother with unpaid debt accounts below $1,000 or more than six years old. And a policy of ignoring providers who have quit the program creates obvious bad incentives. The OLA explains, quoting an old court case (PDF pp. 15-16):
As the Minnesota Supreme Court recognized nearly 40 years ago, such an “interpretation of the statute and regulations would enable any provider who commits fraud or abuse in submitting claims to insulate himself from recovery by terminating his provider status.”
As we’ve seen with the unrelated Feeding Our Future case (overseen by a different state agency), many sketchy providers appear to have escaped justice and kept the money simply by closing up shop and vanishing once the scandal broke.
We’ve updated the tracker to add this new scandal:
