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Auditors, State Executive At Odds Over Report Of Millions In Ineligible Medicaid Payments

People sit well spaced along a large u-shaped table.
Kevin Trevellyan
Yellowstone Public Radio
The Legislative Audit Committee receives an audit presentation regarding Medicaid eligibility under the Montana Department of Public Health of Human Services on June 16, 2020.

Montana’s health department distributed between $84 million and $163 million in Medicaid and Child Health Insurance Program benefits to people ineligible for those programs, according to an audit presented to lawmakers June 16. State officials emphatically reject several of the audit’s key findings.

The report found there could be a corresponding hole in the state budget if the federal government tries to reclaim those payments, which came during a two-fiscal year span ending June 2019.

Alexa O’Dell with the Legislative Audit Division told an interim legislative committee that a federal report from January reinforces that possibility.

“It does indicate that because of the increasing improper payment rates nationwide, that there may be a renewed focus on retrieving those improper payments,” O'Dell said.

Most of the audit’s flagged costs came from the state Medicaid program.

The state health department is taking issue with the Legislative Audit Division's methods for calculating Medicaid eligibility. Auditors used income tax data and assert they needed that information to verify case files and form meaningful conclusions.

Meanwhile, state Department of Public Health and Human Services staff say auditors refused supporting evidence provided by the department.

Out of 63 sample cases, auditors found $216,630 in benefit payments to 26 ineligible Medicaid recipients due to income, household size and other factors. Analyzing the same sample, the health department only found $13,546 in benefits to 5 ineligible recipients.

When other data was inadequate, Deputy Legislative Auditor Cindy Jorgenson said her staff divided annual tax records by 12 to determine whether monthly income supported Medicaid eligibility.

However, health department director Sheila Hogan said those calculations ignore dynamic financial circumstances that many Medicaid members face.

“Think of people affected by the current pandemic. By no fault of their own, where would they be if the department only used stale income tax data used by the audit team to determine if they were eligible for health coverage?” Hogan said.

Erica Johnston with the health department said they used 27 data points to determine Medicaid eligibility during the audit time frame, but weren’t legally permitted to use state income tax data.

State Budget Director Tom Livers said the auditors’ use of different records makes their subsequent report “essentially useless” and that he could only think of one explanation to justify their choices.

“The only one I can come up with to explain this process is division approached the audit with a predetermined conclusion that there's rampant ineligibility among Medicaid participants. And then they set out to prove the theory,” Livers said.

Livers said the chances of the federal government collecting ineligible Medicaid payments is “remote, at best.”