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An audit presented to lawmakers Tuesday found that the state is falling millions of dollars short in recovering overpayments made by Medicaid to health providers belonging to Accountable Care Organizations.

SALT LAKE CITY — An audit presented to lawmakers Tuesday found that the state is falling millions of dollars short in recovering overpayments made by Medicaid to health providers belonging to Accountable Care Organizations.

A conservative estimate finds that $22.7 million in overpayments likely could have been recovered from Accountable Care Organizations between 2013 and 2015, the audit found, but only $265,000 was actually recovered in that time.

The report was prepared by the Office of the Legislative Auditor General and presented Tuesday evening to the Audit Subcommittee of the Legislative Management Committee.

The Office of the Inspector General of Medicaid Services, the report said, "has been unable to provide evidence of independent oversight of (Accountable Care Organizations) which (account for) over 38 percent ... of Utah Medicaid patient expenditures."

The Office of the Inspector General of Medicaid Services "has reported to us that they have experienced pushback from Medicaid and ACOs when (it) has attempted to review them," the audit report went on to say.

"When we asked for evidence or documentation of the pushback, we were given very little," the audit states. "Regardless, the (inspector general) has authority to compel cooperation from Medicaid and the (Accountable Care Organizations), but has never exercised that authority."

Under the Affordable Care Act, Accountable Care Organizations are networks of providers designed with the idea of reducing unneeded replication of patient services through improved coordination, qualifying for federal savings if they can demonstrate they are maintaining high quality of care for patients.

Inspector General of Medicaid Services Gene Cottrell insisted to lawmakers that the office has been moving in the right direction since he took over in 2015.

"I took over an office that was wholly unprepared fo fulfill its oversight role," Cottrell said, adding there were "absolutely no plans in place at all" regarding how to rigorously oversee Medicaid overpayments to providers in Accountable Care Organizations.

Since then, members of his office have been more rigorously trained, he said, and three audits into Accountable Care Organizations are now under way with six more expected to launch within a year.

"We are finding stuff," Cottrell said, though he said he didn't want to go into to much detail about ongoing inquiries. "There is indication that we will find evidence of waste in those audits."

Among all providers, the audit found, the Inspector General of Medicaid Services recovered approximately $6.3 million in Medicaid overpayments in 2017. However, that figure was about $12.1 million in 2012 and steadily declined since, leading the audit report to warn that "diminishing recoveries in fraud, waste, and abuse may soon threaten the (office's) financial return on investment."

Senate President Wayne Niederhauser, R-Sandy, and House Speaker Greg Hughes, R-Draper, who are members of the subcommittee, asked auditors and Cottrell why overall recoveries had been steadily declining.

"(Perhaps providers) began to adjust their systems to make sure these things didn't happen as much and just through that awareness, (recoveries) would drop," Niederhauser said. "Or a scenario could take place where we just weren't as aggressive as we originally were about recovering missed payments."

Cottrell and the auditors had somewhat different views.

"We certainly think that from what we saw ... more aggressive behavior is needed," Matt Harvey, a performance audit supervisor for the Office of the Legislative Auditor General, told the subcommittee.

But Cottrell told legislators that at the time of his office's creation in 2011, "there was a lot of low-hanging fruit out there" to recover, which doesn't exist to the same extent anymore due to improved provider practices.

The audit says "while we believe (the office's) sentinel effect is within reason, we question its effect in areas where the (office's oversight) is conspicuously absent," such as with Accountable Care Organizations.

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Auditors made several recommendations to improve oversight, with the Office of the Inspector General of Medicaid Services agreeing to all but one, which was to relocate within the Office of the State Auditor.

Since the Department of Health is the state body overseeing the state's Medicaid program, putting the Cottrell's office under the state auditor could create "a contractual relationship" between the auditor and the department, the office argued in a written response.

"Such a contractual relationship may hinder future audits of the Department of Health by the Office of the State Auditor," the response states.