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Significant Federal Audit Findings Among Inherited Medicaid 'Mess,' Director Says

LeadingAge Ohio members have long been sounding the alarm on problems with Ohio’s Medicaid eligibility determination processes. This week, Ohio’s Medicaid Director Maureen Corcoran stated that these issues could leave Ohio with massive penalties from the federal government as a result of a recent audit by the Centers for Medicare & Medicaid Services (CMS). Director Corcoran described the Medicaid program she inherited as “a mess”, pledging to work on the system and take Ohio Medicaid to a place where they have confidence that things are moving forward and these fees can be avoided. 

LeadingAge Ohio has continued to push the state to improve its Medicaid eligibility process. Read on for the full interview with Director Corcoran, published this week in Gongwer News: 

High error rates in Medicaid payments and eligibility determination could lead Ohio to pay massive penalties to the federal government if they aren't fixed, Medicaid Director Maureen Corcoran announced Tuesday.

Those findings, from an audit by the federal Centers for Medicare and Medicaid Services, were among the items detailed by the director in a memo she sent to Gov. Mike DeWine this week documenting problems inherited from the Kasich Administration.

In the bluntly-worded report, Director Corcoran said the Medicaid program she took over as director in 2019 "was a mess."

"The purpose really is to clear the air, to establish the record so that we can set it behind us, continue to work on the problems and move forward," the director said in a conference call with reporters.

The most significant finding deals with the results of the CMS audit of payment error rates. That report indicated that during Fiscal Year 2018, Ohio's rate of payment errors was well above the national average at 44.28% for the Medicaid population and 55.41% for the Children's Health Insurance Program population. The Medicaid rate was last among 17 states in this audit cycle, while the CHIP rate was second to last.

For eligibility determinations, which are done through an IT system called Ohio Benefits, Ohio's error rate was 43.49%, more than twice the national average, Director Corcoran said. The audit found documentation was not properly maintained or stored to verify eligibility. That doesn't mean there were improper payments or that people weren't eligible for benefits, but that the state did not follow administrative processes, she wrote.

"Many of the audit findings relate to delays in making eligibility determinations," she wrote. "Though Ohio Medicaid does not fully agree with CMS's interpretation that some payments do not meet statutory, regulatory, and administrative requirements, the report itself illustrates the magnitude of problems with Ohio Benefits and administrative controls for Ohio's Medicaid program."

Because the findings were part of the state's first audit under the protocol, the state will not face significant financial penalties, paying instead about $88,000, she said.

CMS indicated that the state could have faced a penalty of about $5.9 billion, Director Corcoran said.

"If Ohio exceeds the accepted error rate in the next audit cycle and does not demonstrate 'good faith' to meet the accepted error rate, Medicaid could face significant financial penalties. Because we are already in the sampling time period for the second audit and it will take considerable time to fix the system, our continued collaboration and good faith efforts with CMS will be essential to prevent a future fiscal penalty," she wrote.

While the potential penalty would have been significant, the state is working to ensure ti doesn't have the same problem in the future, the director said.

"The feds have been really clear that this time, this cycle, no state will be required to pay back those funds," she said in the conference call. "Down the line, if we don't remedy this, we could be looking at penalties of that magnitude."

ODM is working with the Department of Job and Family Services, which administers other federal programs that use Ohio Benefits to identify and address issues with the system. The three departments are working to independently reproduce errors from the CMS audit to see if past fixes have addressed them.

"At the most basic level we want to conduct this assessment where all three of the departments are working as a technical team together to evaluate where we stand today so that we're making wise decisions going forward," she said.

Director Corcoran's memo identified other issues with the $1.2 billion Ohio Benefits system, which was implemented in 2013 to comply with the Affordable Care Act. The director said the system produced significant rates of errors.

"Highlighted as a priority for the last administration, numerous components and functionality were added," she wrote. "Unfortunately, it appears that the messaging may have been more important than the basic functioning of the system, which calls into question our ability to trust the data output from the system to make multi-billion-dollar decisions."

Federal regulators informed the director about problems with enrollment the first week she was at the helm of the department, she said.

"We're dealing with this, have been since the very first week we were here," she said.

Other audits have identified significant problems with the Ohio Benefits system. Director Corcoran has repeatedly said it has played a role in the declining enrollment of children in Medicaid and the correlating rise in uninsured children. 

Defects described in the memo include incorrect renewal dates, privacy breaches including members receiving information about other members, and the incorrect linking of newborns to people who are not their actual parents. That included a newborn linked to an 11-year-old child.

Regarding the enrollment declines, Director Corcoran said the department has already undertaken many efforts to address questions of children falling off the rolls when their parents lose Medicaid or private insurance coverage. That includes working with the Department of Insurance to make sure parents who lose coverage are asked about the status of their dependents.

Asked if the enrollment software's problems could cause issues for the pending implementation of work requirements, Director Corcoran said the federal regulators were clear that the errors did not necessarily indicate people received coverage incorrectly. They mostly dealt with the handling of data.

"On the one hand, CMS themselves in this PERM audit is pointing out that even though we've made all these administrative kinds of mistakes, we should not interpret these findings to say that all those people were not eligible," she said. "That is an audit finding but even the feds are being very clear that it doesn't mean that (a member) was not eligible."

"I would not say that we're dealing with junk data," she added.

Despite that, she said the state is being careful about the system as it moves toward implementation of work requirements.

"We're working on the system. If we get up to the point of implementation and we don't have confidence that this is going to be done right, we will pause," she said.

On the federal waiver for work requirements, which was approved several weeks into the DeWine Administration, Director Corcoran said the previous administration did not move quickly.

"By way of background, in June 2017, the budget adopted by the General Assembly required the development of this waiver," she wrote. "The approval of the waiver did not occur until March 2019, after the DeWine Administration picked up the negotiations with CMS. While recognizing that the federal waiver process takes time, this extended period of time of 21 months does not suggest that this was a priority."

The director's memo also hit the Kasich Administration on the implementation of its behavioral health redesign and integration. 

"The implementation was the worst I have seen in my professional career of more than 30 years," the director wrote. "The scope of the changes and the vulnerable nature of the individuals affected made it all the more tragic, particularly while Ohio led the nation with opiate addiction and related deaths."

The prior administration's lack of action in the wake of a report by a 2016 legislative panel on multi-system youth also drew a sharp rebuke. The DeWine Administration and lawmakers developed a plan and included money in the biennial budget (HB 166) for the issue. 

"The prior administration took no action in the years that followed the joint legislative committee's report," she wrote.

The director's transparency drew praise from John Corlett, president and executive director of the Center for Community Solutions, himself a former state Medicaid director, who also stressed the findings don't indicate fraud or abuse.

"This review doesn't show that a single Ohio Medicaid beneficiary did anything wrong or was ineligible for Medicaid, and these findings shouldn't deter anyone from signing up for Medicaid if they are eligible," he said in a statement.

"It's imperative that the Ohio Benefit system be able to determine Medicaid, SNAP, TANF and childcare benefit eligibility accurately and on a timely basis," he added. "It's appalling that even after Ohio spent $1.2 billion on the system, it apparently doesn't."

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