Audit assails state Medicaid oversight

OLYMPIA -- The state fails to verify adequately the eligibility of some of its Medicaid clients -- as well as the license records of almost one-fourth of the health professionals the government pays to care for them, according a draft state audit obtained by the Seattle Post-Intelligencer.

Those two conclusions -- based on samplings of the state's $4 billion-a-year Medicaid program -- are the most substantial findings in the state auditor's broad annual review of Washington's use of federal funds, which is expected to be released in about a week, state Auditor Brian Sonntag said.

The report, required by the federal government, contends that the state is not complying with Medicaid requirements of the federal government -- which pays for half of Washington's Medicaid program.

It's up to federal officials to decide whether any non-compliance jeopardizes funding, Sonntag said.

"This is a very substantial amount of public funds. It's a very significant report, and it's one that the state has to respond to," he said. "If this doesn't get cleaned up, then I think it puts the future of these kinds of federal funds at potential risk."

Officials at the state Department of Social and Health Services, which runs Medicaid, yesterday acknowledged concern over the findings. But DSHS argues that the Auditor's Office overstated the seriousness of the problem.

Many of the findings can be explained, the agency said, and steps are being taken to improve the monitoring of client eligibility and provider licensure.

Tom Bedell, deputy assistant secretary of DSHS, said he didn't know whether federal officials will act based on either of the findings.

"This could raise their interest." Bedell said. "And if they come down and ask us for more information, I think once we go through that process, they will end up being OK with the processes we have in place and the improvements we are putting in place."

The report is the latest in a string of audit findings of poor management of money and oversight of eligibility by state social-service agencies.

Last month, a draft report by legislative auditors warned that the state division that oversees the care of the developmentally disabled for DSHS cannot account for millions in state and federal tax dollars it spends. Also in February, Sonntag's office released its findings that the agency that oversees the state's $200 million-a-year Basic Health Plan program for the working poor, the Health Care Authority, is subsidizing care for ineligible people while more than 4,000 Washingtonians are on a waiting list for coverage.

The Health Care Authority is outside DSHS, but DSHS relies on that agency's information to determine whether poor children qualify for Medicaid.

The spate of recent audits proves the need for lawmakers to grant the state Auditor's Office authority to examine the performance of state agencies as well as their books, said Jason Mercier, spokesman for the Evergreen Freedom Foundation, a conservative think tank.

"We've got this entire stack of ... audits from this last year pointing out the problems and the inefficiencies and the unaccountability in state programs, but no hearings have been called," Mercier said. "It's like we're funding these studies and then just shelving them."

Medicaid clients routinely shift among the approximately 70 Medicaid subprograms run by the enormous and unwieldy Medical Assistance Administration under DSHS, lawmakers said.

"Keeping track of them is something else again," said Sen. Pat Thibaudeau, D-Seattle, chairwoman of the Health and Long-Term Care Committee. Thibaudeau said she is confident that the relatively new head of DSHS, Dennis Braddock, will take care of the inefficiencies and lack of accountability. "How we get a handle on 72 programs is a good question. But we have to."

More than 900,000 Washingtonians receive health care from Medicaid, including about 560,000 children, Bedell said. Children take up about one-third of the $4 billion in annual Medicaid spending. The audit focused primarily on children, because they qualify solely based on income -- or whether their parents make less than twice the federal poverty level. Adults also qualify based on medical needs, such as disabilities.

In its review, the Auditor's Office closely examined 60 client families that it suspected did not qualify for Medicaid. It found that 27 exceeded the income-eligibility requirements. The state paid almost $28,000 for health care for those people during fiscal 2001, the period of the audit.

Because that is the finding from a sampling, the Auditor's Office believes it is representative of a substantially bigger problem.

Auditors also found that DSHS conducts an inadequate number of eligibility reviews and, when it does do them, it does not require proof of income. According to the audit, DSHS managers reviewed the conclusions and concurred that 16 of the 27 did not qualify.

But Bedell said DSHS' recent examination of 17 of those cases found only five unqualified client families. Those families have been removed from Medicaid, he said.

The state checked income against quarterly reports by the state Employment Security Division, which DSHS believes is an unreliable test, he added. Also, once children are determined to be eligible, they are eligible for at least a year -- regardless of changes to their parents' incomes, he said.

For its review of the eligibility of health care workers, clinics and hospitals paid by the state, the Auditor's Office closely reviewed the licensing records of 121 professionals.

Auditors found deficient license records for 29 of those, or 24 percent. The state paid those providers nearly $10 million in federal money for the services during fiscal 2001. (State spending was not included in the audit, because it is conducted for the federal government.)

Of the 29, the auditor found that 13 appeared to lack licenses, 11 licenses had expired and five were listed under erroneous names that couldn't be explained by marriages or divorces.

In its own review of the providers included in the audit, DSHS found only one questionable license, Bedell said.

"We think we have procedures in place that adequately address the issue," Bedell said.

Still, DSHS plans to randomly review licenses quarterly and require providers to notify them more promptly of changes in their licenses, he said.

P-I reporter Angela Galloway can be reached at 360-943-3990 or angelagalloway@seattlepi.com

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