MassHealth Squandered More Than $500 Million, Audit Finds

The state Medicaid program squandered more than $500 million through unnecessary payments or missed savings opportunities in its managed care program, according to an audit released Tuesday.

The review by State Auditor Suzanne Bump found MassHealth, the state Medicaid program, made $233 million in unnecessary payments for medical services that should have been covered by managed care organizations between October 2009 and September 2014. The audit also says the state could have saved $288 million more through more detailed structuring of managed care contracts.

Bump said that during the five years covered by the audit, MassHealth paid managed care organizations about $12 billion to provide health services to 1.6 million members. Managed care organizations are private health care insurers that agree to fixed, per-member rates to administer and pay for specific categories of health care claims on behalf of MassHealth.

Those included nearly 1.5 million duplicative fee-for-service payments valued at more than $233 million for claims that the managed care organizations had been paid to cover.

According to the audit, the payments were made because MassHealth didn't maintain a master list of medical procedure codes that managed care organizations must cover. As a result, MassHealth's claims system was incapable of identifying and preventing payments for services already funded under contracts with the managed care organizations.

"To avoid paying for health services twice, MassHealth must know exactly what it should and should not pay for and have a claims processing system that can follow those rules," Bump said in a statement accompanying the audit. "It is troubling to see this amount of inefficiency."

In a response to the audit, MassHealth said it believed that $127 million of the $233 million payments questioned by Bump were appropriate.

About $20 million in improper payments were caused by MassHealth's failure to update members' information in its database promptly, according to the audit. Another $43 million was for services like blood tests and immunizations provided by state agencies that MassHealth believes were not eligible for coverage by managed care organizations.

The audit also found that because MassHealth did not maintain a master list of required medical procedure codes, managed care organizations developed their own lists. Comparing the lists from managed care organizations to MassHealth payment data, auditors found more than $288 million in MassHealth payments for services that were not required under contract.

MassHealth officials agreed that there there's a need for more specific procedural codes.

"MassHealth is actively engaged in developing the master list recommended by (the audit) in order to eliminate any ambiguity as to who is responsible for payment," the agency said in a statement accompanying the audit.

Associated Press writer Bob Salsberg contributed to this report.


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