Audit Finds State Backed off on MA Fraud Investigations Under Doyle Administration

MacIver News Service | December 20, 2011

[Madison, Wisc…] A legislative audit of the State’s Medcaid program found that under the final term of the Doyle Administration there was a clear reduction in fraud investigation efforts.

The reported number of investigations of potential recipient fraud declined from 2,166 in FY 2006-07 to 1,424 in FY 2010-11, the audit found.

The fraud investigation reduction coincided with a dramatic increase in the number of recipients as the state expanded eligibility for their MA programs.

Total Medical Assistance expenditures increased from $5.0 billion in fiscal year (FY) 2006-07 to $7.5 billion in FY 2010-11, primarily because the number of recipients increased from 870,201 in January 2007 to 1.2 million in January 2011.

From FY 2006-07 through FY 2010-11, 18,338 individuals (20.7 percent of all new recipients) received benefits within their first month of moving to Wisconsin.

Source: Legislative Audit Bureau

The audit found DHS has increasingly relied on vendors to provide administrative support to the program, and vendor payments increased from $66.2 million in FY 2006-07 to $114.8 million in FY 2010-11. DHS has not always adequately assessed costs before contracting with vendors, and its extensive reliance on vendors raises concerns about DHS’s ability to provide adequate program oversight. We include recommendations for DHS to improve its contracting and oversight practices.

“DHS’s budgeting and financial management practices have not kept pace with the growth and increasing complexity of the Medical Assistance program,” according the LAB. “[A]nd DHS has not been able to readily produce the type of management information that is desired by legislators and needed for effective management.”

The audit found:

  • Wisconsin’s Medical Assistance recipients totaled 1.2 million in January 2011
  • Medical Assistance expenditures increased from $5.0 billion in FY 2006-07 to $7.5 billion in FY 2010-11
  • DHS paid vendors $411.9 million for administrative support services from FY 2006-07 through FY 2010-11
  • From FY 2006-07 through FY 2010-11, at least 8,975 investigations of potential recipient fraud were conducted
  • Additional efforts are needed to budget for and record Medical Assistance expenditures
  • Total Medical Assistance expenditures increased from $5.0 billion in FY 2006-07 to $7.5 billion in FY 2010-11. However, 87.0 percent of this increase was funded with federal revenue. Expenditures of state funds increased from $2.1 billion to $2.4 billion during the same period

The audit made several policy recommendations. The state should:

  • Develop separate accounting codes for administrative expenditures for the MedicalvAssistance and FoodShare programs
  • Ensure it has adequate funding for contractual services before authorizing expenditures
  • Use bids to solicit the most appropriate and effective administrative services at the most competitive price
  • Review existing contracted services to identify whether cost savings could be achieved by using state employees
  • Consider the potential benefits of enrolling recipients into HMOs in a more timely manner
  • Account for all Medical Assistance expenditures in determining total program costs
  • Develop a more detailed biennial budget request and financial reporting structure to allow it to routinely budget and account for all Medical Assistance costs by subprogram

In addition, the audis states the LAB “recommends that DHS report to the Joint Legislative Audit Committee by January 14, 2013, on how implementation of the federal Patient Protection and Affordable Care Act will affect both participation and costs in Wisconsin’s Medical Assistance program.”