Report  Annual Report Medicaid Audit Unit for March 2, 2022 through March 1, 2023

The Office of the State Auditor (OSA) receives an annual appropriation for the operation of a Medicaid Audit Unit (the Unit) for the purposes of preventing and identifying fraud, waste, and abuse in the MassHealth system and making recommendations for improved operations. The state’s fiscal year 2023 budget (Chapter 126 of the Acts of 2022) requires that OSA submit a report to the House and Senate Committees on Ways and Means by no later than March 1, 2023 that includes (1) “all findings on activities and payments made through the MassHealth system;” (2) “to the extent available, a review of all post-audit efforts undertaken by MassHealth to recoup payments owed to the commonwealth due to identified fraud and abuse;” (3) “the responses of MassHealth to the most recent post-audit review survey, including the status of recoupment efforts;” and (4) “the unit’s recommendations to enhance recoupment efforts.”

For fiscal year 2023, the appropriation for the Unit was $1,358,812. This amount represents an approximately 3.5% increase over the Unit’s fiscal year 2022 appropriation of $1,312,862. OSA submits all costs (direct and indirect) associated with running the Unit to the Executive Office of Health and Human Services (EOHHS) to be included in its quarterly filings with the Centers for Medicare & Medicaid Services for federal cost sharing. In federal fiscal year 2022, OSA submitted a total of $1,393,248 to EOHHS for consideration for the state’s program integrity, allowing the state to obtain a 50%, or $696,624, reimbursement of these costs.

This report, which is being submitted by OSA in accordance with Chapter 126 of the Acts of 2022, provides summaries of the following three performance audits of MassHealth: telehealth services paid for by MassHealth, MassHealth’s Continuity of Operations Plan, and the Delivery System Reform Incentive Payment Program.

It also provides summaries of audits conducted of two MassHealth dental providers.[1]

This report details potential missed cost savings of $91,852,881 in the administration of telehealth services, as well as $4,591,628 in improper payments to dental providers for undocumented services. It also describes corrective actions MassHealth is taking in response to three audits issued at least six months ago for which follow-up surveys have been completed. MassHealth and the two MassHealth providers who were audited reported actions or planned actions on 13 (100%) of our 13 audit recommendations, which will improve operational efficiency and effectiveness.

[1].     These five audits were conducted under the oversight of former State Auditor Suzanne M. Bump. Auditor DiZoglio took office on January 19, 2023.

EOHHS administers the state’s Medicaid program, known as MassHealth. This program provides access to healthcare services annually to approximately 2.3 million eligible low- and moderate-income children, families, seniors, and people with disabilities. In fiscal year 2022, MassHealth paid more than $19.8 billion to healthcare providers, of which approximately 35% was funds paid by the Commonwealth. Expenditures, including administration costs, for the Medicaid program represent approximately 32% of the Commonwealth’s total annual budget.

Heightened concerns over the integrity of Medicaid expenditures were raised in January 2003, when the US 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. At that time, GAO estimated that between 3% and 10% of total healthcare costs were 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 Massachusetts Legislature and the Governor, this proposal was acted upon favorably and has continued to be funded 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 identified 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 analytics 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 integrity, efficiency, and effectiveness of our audits. Moreover, in many cases, data analytics has enabled the Unit to fully quantify the financial effects of improper payments, whether they involve 1 claim or 10 million claims. The use of data analytics 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 recommendations regarding MassHealth’s system and program regulations to promote future cost savings, improve service delivery, and make government work better.