December 10, 2018 Audit finds budget cuts limited Health Department’s ability to combat fraud

Baton Rouge, Louisiana, Dec 10, 2018 - In its most recent audit of the Louisiana Department of Health, the Legislative Auditor cited several instances in which reductions to the health agency’s budget limited the effectiveness of its Medicaid fraud detection efforts.

In its report, Oversight of Surveillance and Utilization Review (SURS), the auditor concludes that the total number of cases for improper payments identified by Medicaid were reduced from 900 annual cases to 600 cases in 2016, due, in part, to budget cutbacks that changed several anti-fraud contracts.

According to the report, from fiscal year 2012 through 2015, the Department required its contractor to investigate a minimum of 900 annual suspected fraud cases. However, only 600 cases were required beginning in 2016. The auditor recognized this was a result of budget cuts that reduced the agency’s fraud surveillance contracts.

In a second instance, the auditor reported the Department’s ability to investigate possible fraud in its managed care program (which represents 85 percent of all Medicaid payments) was restricted due Act 568 of the 2014 legislative session. This Act prevents the Department’s Recovery Audit Contractor from auditing Louisiana’s five managed care organizations. Unable to comply with related federal Medicaid requirements as a result of this law, the Department was forced to get permission from the Centers for Medicare and Medicaid Services not to be held to this requirement.

Even though overpayments in the managed care program could not be reviewed by a Recovery Audit Contractor, the agency successfully increased its own fraud analysis and subsequent investigations.

According to Medicaid Director Jen Steele, “Our SURS unit had a greater than 200 percent increase in closed managed care provider cases between 2017 and 2018. In 2017, we closed 31 cases, but increased this to 95 cases in the most recent fiscal year.

“This was the result of increased analysis of managed care encounter data, which LDH will continue to do to identify fraud, waste and abuse,” Steele added.

The audit also indicates the Department needs to tighten oversight of its anti-fraud efforts through system improvements and better data analysis.

“We have no objections to the audit findings,” added Steele, “as we had already identified these weaknesses and had already implemented corrective actions prior to this audit being released.”

One such action was to hire a contractor to assist with pursuing fraud, waste and abuse cases. Medicaid now has a tool in place that prioritizes those cases with the most potential to identify fraud, waste and abuse instances.