An annual audit found $57 million in "questioned costs" by the Arkansas Medicaid program, meaning the expenses weren't supported by adequate documentation, were made in violation of federal rules or weren't reasonable, state lawmakers learned Friday.
State Department of Human Services officials said they have already gathered the documentation to support most of the expenses made in fiscal 2018 and don't expect the state to have to repay the federal government much, if any, of the questioned amount.
In fiscal 2017, the audit flagged almost $127 million in Medicaid spending. So far, however, the state has only been required to repay about $616,000.
Still, the recent findings caught the attention of members of the Legislative Joint Auditing Committee, who pressed the officials on what the department is doing to improve its compliance with rules on reporting and spending.
"At what point do you think maybe you need to bring in someone that can actually achieve the change that's desired so we get a better result?" the committee's Senate chairman, Jason Rapert, R-Conway, asked Human Services Director Cindy Gillespie.
Gillespie said she had already made changes in the leadership of the department's Division of Medical Services, which administers the Medicaid program.
That included hiring Janet Mann, who had been fiscal director for the Mississippi Department of Health, as the Arkansas Medical Services Division director in January.
Mann replaced Tami Harlan, who was moved to a lower-paying job within the Arkansas Human Services Department.
The department in November also hired Catherine Kelley Silva, who had been a health policy adviser to Gov. Asa Hutchinson, as a deputy director of the Medical Services Division.
Gillespie said Silva has focused on improving how the Medicaid program enrolls health care providers, which would address some of the concerns identified in the audit.
Late last year, the department also created an office of internal controls to work with outside auditors and ensure findings are addressed.
"Please don't doubt that I understand that I do own this, and we are working as hard as we can to fix it," Gillespie said.
The audit covers spending by Medicaid and 14 other state programs that received much of the federal funds flowing into state government during the state fiscal year that ended June 30.
Eight of the programs had questioned costs, with the Medicaid program, which provides health coverage for poor people, accounting for all but about $1 million of the amount flagged.
Within the Medicaid program, the biggest discrepancy -- accounting for $47.3 million in flagged expenses -- was found in quarterly spending reports that the state sends to the federal Centers for Medicare and Medicaid Services.
The reports are used to ensure that states contribute their required share of funding for Medicaid.
In Arkansas, for instance, the state is responsible for 30 percent of the cost of most health care expenses and 50 percent of the program's administrative costs. The federal government pays a greater share for people covered by the state's Medicaid expansion program, known as Arkansas Works.
The federal government covered 94% of the cost of that program last year and is providing 93% this year.
During fiscal 2018, the state's Medicaid spending totaled $7.1 billion, with about $5.5 billion of that coming from the federal government and the state providing the rest.
Jon Moore, a deputy legislative auditor, said auditors were unable to match all of the state spending listed in the reports submitted to the federal government with information in state financial records.
Similar discrepancies have been found in the annual audits for the past four years.
David McMahon, the Human Services Department's chief financial officer for medical services, said the agency has gathered the required documentation and submitted it to Legislative Audit and the Centers for Medicare and Medicaid Services.
In its responses to the audit findings, the department said it has "developed internal controls to ensure reports are accurate and timely filed."
In November, the state also hired Chicago-based Navigant Consulting, at a cost of about $1.6 million a year, to help prepare the reports and improve how the department compiles the information.
An additional $3.6 million in questioned costs stemmed from a lack of documentation that the department had performed required checks, such as background checks and site visits, on health care providers who received reimbursement.
The department said in its response that it has submitted a corrective action plan to the Centers for Medicare and Medicaid Services on improving how it enrolls providers and conducts the periodic checks, which have been required since September 2016.
The department's current provider enrollment process has also been cited as a reason for delays in payments to providers.
Gillespie told the Joint Auditing Committee the department hopes to submit a proposed rule by the end of the year requiring provider applications to be submitted online.
Misty Bowen Eubanks, the department's chief of business operations and interim chief financial officer, said some of the fixes didn't come soon enough to prevent more findings from turning up in the audit of the current fiscal year, which ends June 30.
"Hopefully this [state fiscal year] will be the last year that we would have this," she said.
Last year's audit, covering fiscal 2017, flagged $129.6 million as "questioned costs" across the state, including almost $127 million in spending by the Medicaid program.
Of that amount, the Medicaid program was required to repay $615,728 to the federal government. The state was not required to repay $118,006,432 in questioned costs after satisfying the concerns raised by auditors.
The department is still working to address questions about the remaining $8,337,709 in spending from that year. Those payments were flagged because they were made to providers who failed to meet a 12-month deadline for submitting claims.
The department said it waived the requirement to submit claims on time because problems with its electronic enrollment system prevented babies born to mothers who were on Medicaid from automatically being deemed eligible for coverage.
The glitch resulted in a backlog of thousands of applications for coverage that had to be manually processed while doctors and other providers waited to be reimbursed.
Auditors noted, however, that more than $5.1 million of late payments were made for Medicaid recipients born before October 2013, when the department started using the faulty enrollment system.
A Section on 05/11/2019