Speech  Remarks of State Auditor Suzanne Bump at the 2015 Health Policy Commission Cost Trends Hearing

Boston — Good morning. Thank you, Wendy, for that introduction and thank you, members of the Health Policy Commission, for inviting me to be here today.

The primary function of the Office of the State Auditor is to root out waste, fraud, and abuse in state government and to find ways that our state government can work better. Increasingly that work requires the use of sophisticated data analytics tools. They enable us to move past sampling in our audits and other work and get a much broader look across a whole system or activity. This way we can better discern patterns in relationships, get to root causes of operational deficiencies and other phenomena, and propose meaningful recommendations to address these issues. This capability is particularly important to our work in the MassHealth program, and it is that work that I want to address.

The annual report released recently by CHIA  points to a 19 percent spending spike in MassHealth as one of the driving forces behind the 4.8 percent increase in healthcare costs in 2014. This spike is largely attributed to increases in enrollment associated with Medicaid expansion, as well as the problems created by the Health Insurance Connector Authority’s website.

Culling ineligible members from the Medicaid rolls - as is happening now - will help reduce membership and consequently, to some degree, reduce costs. However, a reduction in membership will not resolve the operational issues that plague MassHealth and are another factor in its increased healthcare costs.

An entire division within the Office of the State Auditor is dedicated specifically to auditing MassHealth. At any given time there may be as many as five audits underway. The most recent one was released yesterday. It found that, over a two-year period, one transportation provider was paid at the wheel-chair van rate for clients who were ambulatory and/or were not using the service. Not one of the clients had been deemed medically qualified for wheelchair service, but the company billed under that code and was paid a total of $17 million in 2013 and 2014. It was just closed down in August, after our audit work revealed the extent of the potential fraud.

In the last five years, our audits of the agency have identified more than $624 million in unallowable, questionable or potentially fraudulent spending as well as savings opportunities.

For example, our audit of MassHealth’s administration of its managed care program found that it made more than 1.48 million duplicative fee-for-service payments valued at more than $233 million for claims for services that MCOs had already been paid to cover. The duplicative payments resulted from a lack of clarity in its contracts with the MCO’s as well as inadequate controls over MassHealth’s claim-payment process.

In fact “inadequate controls” is a recurring finding in our MassHealth audits. Inadequate controls can be deficiencies in policies and procedures that render applicants eligible for services, deficiencies that result in duplicative payments, and deficiencies that fail to detect unallowable or even fraudulent claims. Inadequate controls mean we spend money unnecessarily, increasing the overall cost of the program.

Implementation of the recommendations we make in our reports can result in the Commonwealth saving millions of dollars each year in health care costs, but frankly it is a piecemeal approach, when a systemic one is urgently needed.  

I recognize that MassHealth is a multi-faceted program. Access to and the delivery of care will always be paramount in the agency’s mission. Nonetheless, increased attention must be paid by the program to compliance and efficiency.

If we want Massachusetts to maintain its role as a national leader in health care reform and really control costs, MassHealth, for its part, needs to ensure that it has the resources, internal controls and processes in place that will allow it to effectively and efficiently administer the state’s Medicaid program.

We are fortunate in Massachusetts to have some of the best minds and healthcare resources in the country leading the charge towards positive reforms in payment and service delivery. I am encouraged by the progress we’ve made and the healthcare community’s willingness to forge ahead, despite apparent obstacles. I am confident that my office’s continued work with MassHealth will help it better ensure that it operates as efficiently and effectively as possible and I look forward to our continued collaboration.

My goal as the State Auditor is to make government work better, but together, I think we all can make healthcare work better too.

Thank you.