State Auditors Flag Questionable Oregon Health Plan Billing

The state needs a better system to notify the Oregon Health Authority about hospital stays to prevent improper Medicaid billing and payments, an Oregon Secretary of State audit found. 

The audit, released on Wednesday, found that the Oregon Health Plan paid claims for services that patients could not have received because they were hospitalized. These include in-home care and transportation that was billed to the system while patients were occupying hospital beds. 

The audit looked at non-hospital claims made while individuals served under the health plan for low-income Oregonians underwent an extended hospital stay. 

When hospitals provide services to a Medicaid patient, non-hospital claims are usually not allowed. Auditors scrutinized 25 different inpatient stays and found $52,344 in improper Medicaid payments for services like in-home care, non-emergency medical transportation and private duty nurses. Separately, auditors also flagged another $1.6 million in payments as having a “high risk” of being improper. Those payments require more verification.

“Medicaid provides a financial safety net to some of our most vulnerable Oregonians, particularly amidst a global pandemic,”  Secretary of State Shemia Fagan said in a statement. “OHA’s difficult task is to deliver and improve healthcare for over one million Oregonians and remain prudent and efficient with state dollars. Preventing improper payments preserves limited resources so OHA can continue to innovate and build trust with Oregonians.” 

For Secretary of State auditors, their investigation came after a federal watchdog agency recommended they take a look and offered expanded access to federal Medicaid data

In an interview with The Lund Report, Senior Auditor Kathy Davis said when the federal Health and Human Services Office of Inspector General approached the Secretary of State auditors about the review, “we jumped at the chance.”

Audit Focused On Low-Income Program

The audit’s finding focused on one portion of a vast system that provides health care to Oregonians. 

More than 1.3 million Oregonians are in the Medicaid-funded Oregon Health Plan, which provides health care to low-income state residents. 

In 2020, Oregon spent about $11.5 billion on Medicaid, $3.1 billion in state funding and $8.4 billion in federal funding.

That’s more than a third of the entire state budget, which includes other needs such as public safety, corrections and education. 

The audit focused on payments made by the system of regional coordinated care organizations, essentially insurance companies, that the state contracts with to provide care to Oregon Health Plan members through their networks of providers.

The audit’s findings are based on a review of $215 million in payments for individuals who had a combined total of 25 extended hospital stays of three days or longer between January 2017 and February 2020. 

During those 25 hospital stays, there were 134 claims filed to the Oregon Health Plan. Auditors found the health authority improperly paid providers for 118 of the claims. Of the 25 hospital stays audited, 80% had improper payments tied to them, the audit said. 

Auditors acknowledged it’s a small portion of overall Oregon Health Plan expenditures that covered a three-year period with $30 billion in expenditures.

“While the proportion is small, there is still the risk of improper payments, which represent significant dollars that could be redirected to providing services to Oregonians,” auditors wrote.

Auditors found the bulk of improper payments in billings for in-home services, which includes personal care and homecare services people receive in their residence. Some specifics:

  • Forty-two of 49 claims had improper payments, totalling nearly $50,000.
  • In one instance, the client on the Oregon Health Plan lived in an adult foster home, which billed Medicaid. When the person became sick while vacationing in another state, the adult foster home provider continued to bill for care it did not provide, even as the client spent a month and a half in the hospital before dying. The adult foster home provider was paid $15,169 for providing two months and three days of personal care, while the person was on vacation or in the hospital, auditors said.
  • In another instance, a homecare worker submitted three timesheets for improper payments of $2,759 when a client was in the hospital for 38 days.

Auditors also found problems with billing for non-emergency medical transportation, such as for a patient who needs a ride to get kidney dialysis.

For example, the transportation providers would continue to bill the Oregon Health Plan even when the patient was in the hospital and didn’t need a ride to receive kidney dialysis. 

The audit suggested it could be incompetence rather than outright fraud.

“In speaking with agency staff, a possible cause could be that providers are billing based on booked rides, rather than on actual transportation provided,” the audit said.

The audit acknowledged the complexity of the Oregon Health Plan system, which has a sprawling network of providers, different claim types and different systems for processing claims.

Still, they also had recommendations for the authority. 

Those include reimbursing the federal government for the federal portion of the improper payments and developing controls to prevent or detect improper payments for restricted services while an Oregon Health Plan member is hospitalized and integrate timely notification of hospital admissions into claims processing.

Officials' Response Minimized Audit

In a written response, Oregon Health Authority Interim Medicaid Director Dana Hittle agreed to put the two recommendations in place.

At the same time, the health authority minimized the findings of the audit by criticizing the sample size.

“We believe the sample size was too small to provide a representative sample of Oregon’s Medicaid population,” Hittle wrote in a Dec. 8 letter to Audit Division Director Kip Memmott. “During the period of January 2017 to February 2020, the timeframe the audit reviewed, Oregon served an average of 998,056 members each month through its Medicaid program. The scale of the audit was based on a judgmental selection of 25 inpatient hospital stays. This represents approximately .000025% of the average population served by Medicaid during that timeframe.”

As far as OHA’s response, Memmott said, “We have a great collaborative relationship with OHA.” But, he added, “They may have a significantly different risk appetite than we do.”

The Oregon Health Authority has a Program Integrity Audit Unit that audits Oregon Health Plan delivery and billing systems, providers and contractors, Hittle wrote.

“OHA devotes this auditing resource to the areas of greatest financial risk to the Medicaid system, or where there has been an identified need,” the response said. “Not all improper payments are a result of intentional fraud, waste, and abuse.”

The health authority educates and assists providers to improve the system and forwards cases of intentional waste, fraud and abuse to law enforcement and other authorities, including licensing boards, for further action, the letter said.

Nick Budnick contributed to this report.

You can reach Ben Botkin at [email protected] or via Twitter @BenBotkin1.

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