The Nebraska state auditor has found what he calls "gross mismanagement" in the state's Medicaid Health Insurance Premium Payment Program (HIPP), with the state Department of Health and Human Services "flagrantly disregard(ing) its own regulations."
The premium payment program, which lets states buy private coverage for Medicaid recipients, led to "years of wasting large sums of taxpayer money," Nebraska auditor Mike Foley said in a media release.
The "most glaring error," Foley said, was the DHHS's failure to perform a cost-benefit analysis on the roughly 660 participants in the program, because the premium payment program, created by Congress in 1990, specifies that the private insurance should be less expensive than traditional Medicaid coverage.
Over the 2.5 years covered by the audit, from July 2010 to February 2013, DHHS spent $6.5 million on private health insurance for the recipients without determining if covering them in Medicaid would have been cheaper. In one case, Foley said, a program administrator approved payments for premiums of more than $9,600 per month.
In other cases, for program recipients who were employed, DHHS paid the larger employer's share of the premiums rather than the employee share. The audit found several cases of overpayment to Mediciad beneficiaries, with one receiving $20,000 in overpayments and another $38,000.
The health insurance premium program, which Nebraska adopted in 1994, is supposed to pay private insurers directly or reimburse beneficiaries for their premium payments (typically doing the latter, according to the audit). From a sample of 70 cases, the audit found "numerous instances" of beneficiaries who paid no premiums but were receiving payments from DHHS. One case resulted in a beneficiary receiving some $29,000 in reimbursements for premiums she never paid.
DHHS also erred in paying thousands of dollars for dental, vision, disability and life insurance, even though those are outside the scope of the health insurance premium payment program, the audit found.
DHHS largely left management of the program to one worker for several years, who "operated under inadequate supervision," the audit said. "Each month, she prepared a spreadsheet of pending reimbursements, and DHHS accounting staff blindly made the payments without verifying their accuracy or legitimacy."
Accounting practices for tax administration were also problematic, the audit argued. Of the 70 beneficiary cases sampled, 41 had their premium contributions automatically deducted from their pre-tax payroll and then were reimbursed by Medicaid. But "it appears those health insurance reimbursement amounts should have been included as employee income," the audit said, and that could potentially lead to the Internal Revenue Service demanding back taxes from the recipients.
For its part, the DHHS said it is overhauling the premium payment program. "We recognize there were incorrect payments, and we continue to look into those and pursue collection of overpayments," Vivianne Chaumont, director of Medicaid and long-term care at DHHS, said in media release.
"After the review of all cases, we will issue a report on the results and provide recommendations about whether HIPP should continue," Chaumont said. "HIPP is no longer a federal mandatory program. In addition, this area of Medicaid is changing in light of expanded managed care. We will look at the data and make a determination."