Audit says Utah losing millions to Medicaid fraud, waste

Legislators are appalled over the results of an audit reporting the state Medicaid system is losing millions because of an outdated system.

The state audit released Tuesday found that the Utah Department of Health's Bureau of Program Integrity, which checks for fraud, waste and abuse within the state Medicaid program, is mismanaged and failed on several occasions to follow policy regarding cost-saving methods.

"This is the group supposed to be the watchdog to catch fraud, and we find out they're the most inefficient organization," House Speaker David Clark said at the Legislative Management Audit Subcommittee Tuesday afternoon. "They didn't follow statute. They didn't follow their own guidelines."

The legislative auditor general estimated the state is losing $20.2 million in funding it could recover in its Medicaid program, including $5.8 million from state coffers, because of an ineffective, decades-old, cost-recovery tool. The federal government provides the bulk of Medicaid funding.

Health officials disagree with the audit's findings.

"Implying that if we were doing our job correctly we could pick up an extra $20 million is most unjustified," said Dr. David Sundwall, the health department's executive director. "It's just not possible. They'll be very disappointed if we notch up our efforts and it doesn't turn out that high."

The Surveillance and Utilization Review System, programmed in 1980 and last updated 21 years ago, processes and reviews inappropriate Medicaid payments, but the audit found it doesn't examine 62 percent of providers. The Bureau of Program Integrity administers the system, which reported 9,029 inpatient claims reviewed. However, in an accuracy check, the audit found the system missing about 78 percent of inpatient records.

"Inefficiency and ineffectiveness are hampering cost-recovering efforts," audit supervisor Kade Minchey said in the committee meeting. "The system goes in there and looks for discrepancies and anomalies, such as a physician billing 200 times on one day, but it only looks at 38 percent of providers. We believe they could improve cost recovering from the 1.5 (percent) to 1.7 percent range to 3 percent by our recommendations."

Auditors said improving cost-recovery methods by about 1.5 percent would bring in $20.2 million of funds wasted on fraudulent and unnecessary medical procedures.

Sundwall disagreed, estimating the return of an improved system would be between $1 million and $9 million.

The legislative committee approved a motion for auditors to review the Bureau of Program Integrity and gather statistical information to back up numbers gathered from data sampling.