Overview
MassHealth does not write off uncollectible amounts from its accounts receivable balances even though there are thousands of accounts receivable that are at least 2, and sometimes more than 10, years old and are therefore unlikely to be collected. Unless its accounts receivable balances are accurate, MassHealth is not ensuring that its accounts receivable records represent amounts that can reasonably be expected to be collected, which could impact its ability to effectively manage the accounts receivable process.
As of December 31, 2017, MassHealth had 30,948 uncollectible accounts, totaling approximately $12.76 million, that were at least 2 years old and sometimes more than 10 years old:
|
Ages of Accounts Receivable |
Number of Accounts Receivable |
Amount of Accounts Receivable |
|
2–3 Years |
13,116 |
$1,729,061 |
|
3–5 Years |
6,338 |
1,991,911 |
|
5–10 Years |
11,106 |
3,753,517 |
|
More Than 10 Years |
388 |
5,286,499 |
|
Total |
30,948 |
$12,760,988 |
Authoritative Guidance
Under Section 9.08 of Title 815 of the Code of Massachusetts Regulations, state agencies are allowed to write off, or remove from their financial records, any debts that they have determined to be uncollectible once they have submitted a request for the write-off to the Office of the Comptroller of the Commonwealth and this request has been approved.
Reasons for Issues
MassHealth has not established policies and procedures for how to determine when accounts receivable may be uncollectible and when to remove or write off these accounts from its records.
Recommendation
MassHealth should develop policies and procedures regarding how it will determine when to write off accounts receivable that it has deemed uncollectible, as well as monitoring controls to ensure that these policies and procedures are adhered to.
Auditee’s Response
MassHealth disagrees that it is “not ensuring that its accounts receivable balances are accurate,” as stated in the . . . draft audit report. The accounts receivable balances are accurate with the exception of the subset of uncollectible accounts. MassHealth actively pursues the collection of all its accounts receivables, generally by offsetting them against MassHealth payments for claims. Providers can submit these claims sporadically over many years. Only after MassHealth has exhausted all collection attempts will the accounts receivables be deemed uncollectible and written off. . . .
MassHealth agrees that it should formalize its policies and procedures for determining when accounts receivables are deemed uncollectible and written off. We will also implement monitoring controls to ensure adherence to these policies. MassHealth has commenced a weekly workgroup to discuss, develop, and document new policies and procedures regarding writing off provider debt. The workgroup will engage with the Office of the Comptroller to ensure that the policies and procedures under development align with the Commonwealth’s best practices for uncollectible debt write offs.
Auditor’s Reply
We found that MassHealth does not write off uncollectible amounts from its accounts receivable balances and consequently, as stated above, its accounts receivable records are not accurate. Although MassHealth may make reasonable efforts to collect these amounts, our issue is not with the collection of these funds; rather, it is with the fact that MassHealth does not write off uncollectible amounts, even when they are more than 10 years old and therefore are clearly unlikely to be collected.
Based on its response, MassHealth is taking measures to address our concerns regarding this matter.
| Date published: | October 18, 2019 |
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