Michigan Auditor General’s Performance Audit reveals Michigan Improperly Spent $160 Million on Medicaid

A performance audit of the Michigan Medicaid Home Help Program (HHP) revealed that Michigan improperly spent a total of $160 million over a three-year period caring for Medicaid beneficiaries needing in-home personal care services. The $160 million figure cited accounts for approximately 17.9 percent of the total HHP expenditures from October 1, 2010 through September 30, 2013.

HHP allows Medicaid beneficiaries with functional limitations resulting from a medical or physical disability or cognitive impairment to receive personal care services in their homes. The audit, conducted by the Michigan Auditor General, concluded that the Michigan Department of Community Health (DCH) and Department of Human Services (DHS) were not effective in operating Medicaid’s HHP in accordance with select laws, rules, regulations and policies.   The audit report identified two material conditions. First, it was determined that DCH and DHS did not obtain or timely obtain sufficient documentation, including provider service logs or invoices, provider and client verification, and DHS adult service worker reviews, in order to ensure that providers had delivered the services paid for through the preauthorized payment process. The audit report estimated that this failure resulted in DCH improperly paying providers $146.4 million.

Secondly the report noted that DCH and DHS failed to ensure that adult service workers timely completed six-month reviews, annual redeterminations and other required monitoring contacts with clients and providers. This resulted in an inability to ensure clients were receiving timely and appropriate care and an inability to verify the quality of the services being provided. Moreover, without this documentation by adult service workers, there was an increased risk of client and provider fraud. The report notes that DCH could be liable for repaying the federal share of the Medicaid payments made in cases that were not monitored in accordance with the established procedures.

In addition to the 2 material conditions, the report identified 11 reportable conditions including the failure to ensure Medicaid HHP clients met the applicable eligibility criteria, the failure to ensure agency providers met the requirements necessary to receive the higher agency pay rate, and the failure to establish effective controls to prevent or recover payments made for HHP services when clients were hospitalized or admitted to nursing facilities. In addition, the failure to verify the accuracy of information included on documentation sent to the Unemployment Insurance Agency (UIA) in connection with provider unemployment claims may have resulted in the UIA improperly paying providers unemployment insurance benefits. The audit report also identified over 3,700 convicted felons employed as individual providers and recommended DCH and DSH consider conducting criminal history checks as well as require agencies to conduct criminal history checks for their employees and subcontractors.

The Lansing State Journal reported that spokespeople from both the DCH and DHS generally agree with the audit findings and take the findings seriously, but have questions regarding the estimated amount of improper payments, citing the small sample size used in the extrapolation. The DCH spokeswoman indicated that DCH is already in the process of recouping payments from providers where it can.

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