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Oregon Health Authority Disputes Auditor’s Allegations It Misused Medicaid Funds

An audit by the Oregon Secretary of State’s office found that health officials may not have adequately checked to see if people met Medicaid requirements before enrolling them in health plans. But the health authority says the audit missed key context, including a federal waiver governing Medicaid renewals.
May 17, 2017

Two powerful Oregon agencies are butting heads over whether the state is using federal Medicaid dollars correctly.

In an auditor alert issued Wednesday, the Secretary of State’s office accused the Oregon Health Authority of providing Medicaid benefits to people ineligible to receive those benefits – at a possible cost of $72 million or more.

But the health authority disputes some aspects of the claims, which it says shows a misunderstanding of how Medicaid enrollments are handled in the state. And a number of state legislators in Salem have also cried foul, accusing the auditor’s report – issued shortly after an Oregonian article made similar accusations – of political bias, though others expressed concern about the audit.

Here’s what the Oregon Secretary of State Dennis Richardson said in his agency’s Auditor Alert:

The Oregon Health Authority May Be Providing Medicaid Benefits to Ineligible Recipients

During the course of audit work, we detected a risk where a substantial number of current Medicaid recipients may be ineligible to receive assistance. As of May 1, 2017 preliminary analysis by the Oregon Health Authority (OHA) has identified approximately 86,000 individuals, representing about 8% of the State’s entire Medicaid population, who have not undergone the federally required annual benefit eligibility determination process. About 14,100 people have been sent renewal notifications but have not returned applications. The preliminary analysis did not clearly identify why the remaining 71,600 have not been redetermined.

Failure to timely and properly validate ongoing benefits could have significant fiscal impact. Medicaid benefits are funded by both federal and state monies. Providing Medicaid benefits to ineligible recipients may place federal funding to Oregon in jeopardy and result in a misuse of state monies. In Oregon, most Medicaid recipients receive medical services through enrollment in provider networks called Coordinated Care Organizations. At an average monthly cost of $430 per enrolled client, coverage for these individuals costs about $37 million per month. OHA needs to take expedient action to appropriately process renewals for these individuals to ensure they are eligible for assistance.

Next Steps and Recommended Actions

The Secretary of State’s Office recognizes the complexity of this effort and the substantive work burden it has placed on OHA. The Secretary of State’s Office will be issuing two audits this year examining Medicaid related matters. The first audit to be released during the spring will discuss controls in place for two critical Medicaid information systems. A subsequent audit examining improper Medicaid payments will be issued later in the year. The scope of the Medicaid

improper payment audit will include follow-up work on the issue discussed herein. In addition to the Secretary of State’s work on this issue, we recommend OHA and the State Legislature consider the following actions:

  1. OHA should work with the federal regulatory authorities to ensure federal Medicaid funding is not jeopardized while OHA resolves these eligibility determination issues.
  2. The Legislature should require OHA to report on its efforts to resolve these issues and fiscal impacts to the Legislature no later than September 30, 2017.

The Oregon Health Authority’s Response:

While the Oregon Health Authority (OHA) appreciates the Secretary of State’s shared commitment to ensuring that the right Oregonians get the health care and benefits they deserve, we are concerned with the assertions that were contained in today’s “Auditor Alert” which contain preliminary information and does not provide the entire context for the renewal and eligibility process for the Oregon Health Plan (OHP).

Federal law says that all individuals are considered eligible until a Medicaid redetermination process is complete. It is important to note that all recipients on the Oregon Health Plan today have been deemed eligible at some point in time. It is also important to understand that if an OHP member has been deemed ineligible for benefits, they must be informed of the decision and given opportunity to respond, prior to termination of benefits.

The process to transition from the Cover Oregon failure to the new ONE eligibility system has taken over three years and is still underway, however, we are in the final stages of that transition and the subsequent clean-up of cases. As part of this final clean-up of cases, there are a number of individuals who OHA has identified as needing further analysis to determine what action, if any, is necessary. We are in the process of finishing up this analysis and are on track to complete it by May 31, 2017. At that time we will be able to clearly understand the number of Oregonians that still need to go through the redetermination process to ensure they remain eligible for Medicaid benefits. It is important to understand that just because a redetermination is not complete, does not indicate that they are ineligible for Medicaid.

During the lead up to the Medicaid expansion in 2014 and the subsequent Cover Oregon failure, Oregon asked the Center for Medicare and Medicaid Services (CMS) for a waiver to pause Medicaid eligibility renewals so that no OHP members would lose access to health coverage while Oregon stood up the new ONE system. This waiver and four subsequent waivers were approved by CMS and the state until June 2016. OHA resumed the redetermination process using the state’s new ONE system for eligibility in March 2016. Since this time, OHA has entered 733,695 cases as of May 1, 2017 into the ONE system.

Due to poor data quality in Cover Oregon and OHA’s older legacy data systems, OHA had to contact each OHP member to complete a paper application. The paper application was then manually entered into the ONE system. This process took over two years to complete. What now remains are the final redetermination cases that are more complex in nature due to reasons that include multiple eligibility criteria and household circumstance. OHA anticipated that significant clean-up would be required once we reached the end of the transition into the

ONE system. OHA has reported on this process on multiple occasions to the Governor, the Oregon Legislature and CMS throughout the last three years.

OHA has added capacity through outside contractors to assist and support in completing the final renewals. We are continuing to work with the Governor, the Oregon Legislature and Secretary of State’s office to answer questions about this process and ensure that everyone who is eligible for OHP gets the care and benefits they deserve. Oregon has made tremendous progress on reducing the uninsured rate and transforming our health systems and we are in the final stages of finalizing the transition to the new eligibility system which will provide an improved enrollment process for all Oregon Health Plan members.

House Republican Leader Mike McLane issued a statement about the audit alert:

This news is disconcerting on many fronts. But frankly, our state government’s incompetence with taxpayer money never ceases to amaze me. Lawmakers and the public deserve a full accounting for what led to such a significant failure of management and oversight.

Rep. Dan Rayfield, D-Corvallis, chairman of the Joint Budget Subcommittee on Human Services, also issued a statement:

We absolutely need to clean-up our enrollment data, fix the problems in our process to determine Medicaid eligibility, and hold the right people accountable for any waste, fraud, or abuse in this system. That’s exactly what legislators have been working on for months in several public hearings. Unfortunately, political ploys aimed at grabbing headlines before the full information is available will only serve the politicians who are pointing fingers – not the Oregonians who need access to affordable health care or the genuine efforts to solve the complex problems facing our state.

Reach Courtney Sherwood at [email protected]. Chris Gray contributed reporting to this story.