Arkansas is establishing a new "payment integrity unit" within the Department of Human Services to help ensure Medicaid funds are being spent properly by providers, while a separate state office with a similar mission has unfilled jobs.
The announcement came on the same day as a report emerged showing that Medicaid costs rose sharply as states opened the program to more people.
The Human Services Department will hire a unit head, a vendor manager, a clinical expert and two new analysts to staff the payment-integrity unit, which will focus on finding "systematic waste" by providers by looking at Medicaid payment data, according to a news release from Gov. Asa Hutchinson.
In August, Hutchinson said he wanted to improve the "integrity" of Medicaid in order to keep the private option. The private-option Medicaid expansion program, passed by the state in 2013, allows the use of federal Medicaid funds to purchase private insurance for low income Arkansans from a state-run exchange.
A division manager and support specialist will be hired within the independent Office of the Medicaid Inspector General to coordinate with the new unit.
But even with the new unit, the state won't have the same number of Medicaid investigators as in years past.
When Sen. David Sanders, R-Little Rock, wrote legislation that created the Office of the Medicaid Inspector General in 2013, 33 people were transferred to it from the now-defunct program-integrity unit that operated within the Human Services Department. The program-integrity unit also sought to reduce Medicaid fraud.
The Medicaid inspector general's office recouped more than $2 million in fiscal 2014 and more than $3 million in fiscal 2015, according to a report. In fiscal 2014, the state and federal government spent $5.3 billion on Medicaid in Arkansas. Fiscal years end June 30.
Act 1499 of 2013 sought to create a more efficient and accountable structure for Medicaid-fraud detection, reorganize and streamline the state's process for combating Medicaid fraud and maximize the recovery of improper payments.
"We thought that this restructuring was needed both to look at the program-integrity function on the outside of the agency, but to have the opportunity to turn the tables and look at the operations of Medicaid internally," Sanders said. "It's a very powerful office. It's a very significant and consequential office."
That Medicaid inspector general's office now has 24 people on staff, said Elizabeth Smith, Medicaid inspector general.
Attrition and the state hiring freeze left the office below capacity, but she's working to fill the vacancies, she said.
"The Office of the Medicaid Inspector General's job is to detect fraud, waste and abuse," she said. "We conduct investigations. We find it through a number of ways."
Those include computer models that show which providers are paid unusually large amounts.
Arkansas Attorney General Leslie Rutledge, who has 22 staff members in her office's Medicaid Fraud Unit, also acts on tips from the public and the Medicaid inspector general's office. She said she helps prosecute health care providers who double bill, look for kickbacks and provide unnecessary services.
Hutchinson said in a news release that there's room to improve. States such as Florida, Georgia and Arizona recover a larger percentage of Medicaid funds than Arkansas.
"Among the seven elements of health care reform that I outlined to the legislative task force was improving the integrity of the Medicaid program," he said. "This is an important step in that direction."
J.R. Davis, a Hutchinson spokesman, said the new positions in the Human Services Department will complement the Medicaid inspector general's office.
"Based on what we have learned since the changes were made in 2013, it's important to have positions within DHS, independent of Medicaid, to implement new policies that impact provider payments," Davis said in a statement.
DHS spokesman Amy Webb said the new payment-integrity unit is different from the program-integrity unit dissolved by Act 1499.
"Before, our program-integrity unit had a broader focus," she said. "We fixed these issues, say a policy that allowed for something to be billed for legally when it wasn't really necessary, when we came across them, but that group wasn't constantly looking for those issues."
And Sanders said he supported the governor's plan.
"There are integrity functions that have to take place in the agency, but I think it's very important to continue to have the Office of Medicaid Inspector General," he said. "It is both internal and external to the agency."
Ensuring people don't take advantage of the program is important to controlling costs, he said.
Also on Thursday, the Kaiser Family Foundation released a report that shows Medicaid spending rose 14 percent in fiscal 2015.
That was mostly because of the Medicaid expansion program. Enrollment climbed an average 18 percent and total spending was up an average 17.7 percent in expansion states. In nonexpansion states, enrollment climbed 5.1 percent and costs increased 6.1 percent.
The Kaiser Family Foundation did not break out costs by state.
About 234,000 were approved for coverage under Arkansas' expanded Medicaid program at a cost of $491.83 per person during September, according to the Human Services Department.
If those numbers held steady for a year, the program would cost $1.4 billion. The federal government is paying 100 percent of the cost until 2017. By 2020, states will pay 10 percent.
According to the Kaiser survey, of the 29 states with Medicaid expansion programs, Arkansas is one of three that does not use managed-care organizations to coordinate care for people with chronic and complex conditions.
The federal government also says managed-care programs save more money than they cost.
However, the report noted that Arkansas is one of two states that pay health care providers as a group when a patient has a health circumstance such as a pregnancy or heart attack.
In fiscal 2015, the report notes, Arkansas was the only state to eliminate a benefit. The state imposed limits on nonemergency transportation for nonmedically frail adults.
Metro on 10/16/2015