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Background on the Medicaid Audit Unit, March 15, 2019 - March 14, 2020

An overview of the the work of the Office of the State Auditor's Medicaid Audit Unit and its effort to make the program work better.

Table of Contents


EOHHS administers the state’s Medicaid program, known as MassHealth, which provides access to healthcare services annually to approximately 1.9 million eligible low- and moderate-income children, families, seniors, and people with disabilities. In fiscal year 2019, MassHealth paid more than $16 billion to healthcare providers, of which approximately 50% was Commonwealth funds. Expenditures, including administration costs, for the Medicaid program represent approximately 39% of the Commonwealth’s total annual budget of approximately $42 billion.

Heightened concerns over the integrity of Medicaid expenditures were raised in January 2003, when the United States Government Accountability Office (GAO) placed the US Medicaid program on its list of government programs that are at “high risk” of fraud, waste, abuse, and mismanagement. GAO has estimated that between 3% and 10% of total healthcare costs are lost to fraudulent or abusive practices by unscrupulous healthcare providers. Based on these concerns, OSA began conducting audits of Medicaid-funded programs and, as part of its fiscal year 2007 budget proposal, submitted a request to establish a Medicaid Audit Unit within its Division of Audit Operations dedicated to detecting fraud, waste, and abuse in the MassHealth program. With the support of the state Legislature and the Governor, this proposal was acted upon favorably and has continued in subsequent budgets. Since that time, OSA has maintained ongoing independent oversight of the MassHealth program and its contracted service providers. Audit reports issued by OSA have continued to identify weaknesses in MassHealth’s controls to prevent and detect fraud, waste, abuse, and mismanagement in the Massachusetts Medicaid program as well as improper claims for Medicaid services.

OSA uses data mining in all audits conducted by the Unit. By so doing, our auditors can identify areas of high risk, isolate outlier providers, and in many cases perform reviews of 100% of the claims under audit, thus significantly improving the efficiency and effectiveness of our audits. Moreover, in many cases, data mining has enabled the Unit to fully quantify the financial effects of improper payments, whether they involve one claim or 10 million. The use of data-mining techniques has enabled the Unit to (1) identify greater cost recoveries and savings, (2) isolate weaknesses in MassHealth’s claim-processing system, and (3) make meaningful recommendations regarding MassHealth’s system and program regulations to promote future cost savings, improve service delivery, and make government work better.

Date published: March 13, 2020

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