Auditor: State giving millions to ineligible Medicaid providers

Report cites lax procedures for making sure health care providers enrolled in $14 billion program qualified to be there

N.C. State Auditor Beth Wood

The state agency overseeing North Carolina’s Medicaid program has failed to ensure that only authorized medical providers can participate in the government-run health program. A new state audit report concluded hundreds of millions of tax dollars have flowed to providers — doctors, nurses, and other medical service practitioners  — who shouldn’t have been allowed to participate in Medicaid.

Some of the ineligible providers put patients in danger. The providers received Medicaid payments even though they faced disciplinary action for substance abuse, alleged sexual misconduct, health care fraud, or debilitating mental health issues.

The report, released Thursday by State Auditor Beth Wood, found the Division of Health Benefits at the N.C. Department of Health and Human Services: 

  • Did not identify and remove enrolled providers from the Medicaid program who had their professional license suspended or terminated.

  • Allowed all providers who had professional license limitations to remain enrolled in the Medicaid program.

  • Did not ensure that its contractor verified all professional credentials during the Medicaid provider enrollment re-verification process.

  • Did not require its contractor to verify provider ownership information during the Medicaid provider enrollment re-verification process.

Wood reviewed some of the highlights here.

A 2019 report by the U.S. Government Accountability Office said states’ failure to screen Medicaid providers accounted for more than one-third of the estimated $36.3 billion in improper Medicaid payments the previous year.

The audit covered the fiscal year running from July 1, 2019-June 30, 2020. More than 90,000 providers were enrolled in North Carolina that year.

Auditors sampled three groups of providers: Those whose applications were approved that year; providers whose applications were due for renewal and were re-upped; and providers who had been disciplined by their state licensing board. Auditors used “generally accepted government auditing standards” to check out several hundred of the roughly 83,000 in the first two groups and all 66 disciplined providers.

Auditors didn’t use scientific or statistical methods for the groups partially sampled, so those findings aren’t considered a representative survey.

But of the 66 disciplined providers, 26 had suspended or terminated licenses — eight for substance abuse; six for unprofessional conduct; two for sexual misconduct or inappropriate behavior with women; and one each with a felony conviction for health care fraud and with a “mental condition that, if left untreated, may impair his ability to practice clinical medicine.”

Fourteen of the 26 were removed from the state’s approved provider list after auditors told state officials of their findings.

Even so, roughly 2,400 Medicaid patients received treatment from the unlicensed providers. Twenty-one unlicensed providers got more than $1.6 million in Medicaid payments that year.

Of those groups partially sampled, the six providers who lacked proper credentials got more than $11 million from Medicaid; the 21 who failed to disclose potential conflicts or other ownership issues that would have disqualified them from providing Medicaid services got $74.6 million.

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Wood’s recommendations included immediately removing unqualified providers from the Medicaid list and more aggressively following up on disciplinary actions and potential misconduct by people on the list.

In the department’s response, state Health Secretary Dr. Mandy Cohen agreed with the recommendations but said they overstated how much unauthorized money providers received. Cohen said COVID-19 hindered some oversight functions. Because of the pandemic, many states either didn’t update their licensing databases or let providers with expired or suspended licenses keep practicing. She said NCDHHS will roll out a “strategic enhancement” of its verification systems by July 2023.