The U.S. Department of Health and Human Services' Office of the Inspector General (OIG) is investigating Minnesota's Medicaid managed care payment rates to HMOs between 2008 and 2009.
In a letter to the Minnesota Department of Human Services, Sheri Fulcher, the OIG's Midwest regional inspector general for audit services, said the watchdog agency will be trying to determine whether "capitation rate setting for Minnesota's Health Care Programs was reasonable, allocable and allowable" during 2008 and 2009.
News of the probe follows lingering concerns over some of the payment rates for Minnesota's managed care organizations, operated by HMOs, after former Minnesota Hospital Association General Counsel David Feinwachs told state lawmakers in February he thought the rates had been manipulated.
Now state lawmakers are calling for hearings early next year to examine the payment rate process for 2008 and 2009 plans, under the administration of former Republican Governor Tim Pawlenty.
"We want to make sure that either we're not skimming money off, going into line someone's pockets, or that we're not overpaying or underpaying," said state senator Sean Nienow, a Republican from the central Minnesota city of Cambridge, in a KSTC-TV report. Nienow earlier this year spearheaded legislation creating regulator audits for the state's managed care program.
The information and documents the OIG is seeking from Minnesota include correspondence between Medicaid managers, compliance officers and external review organizations, previous audit reports and the spreadsheets and analyses used for rate determinations. The OIG's audit is also coming after a series of Medicaid controversies and allegations involving Minnesota.
In April, the Congressional committee on oversight and reform released a report on the Medicaid program alleging that some states are gaming federal Medicaid appropriations, with Minnesota as "a stunning example." Minnesota, the report contends, "was intentionally lowering the rates paid to the managed care companies for plans outside the Medicaid program and increasing the rates within the Medicaid managed care program," in an "accounting trick" that maximizes federal reimbursements.
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Last year, the nonprofit HMO UCare, started by the University of Minnesota Medical School in 1984, paid $30 million to the state Medicaid program as part of a donation to help in times of budget crises, with Minnesota's share of Medicaid nearing $4 billion. The payment left Iowa Republican Senator Charles Grassley and others asking if some of that should go the federal government. UCare said it was using some its reserves as part of its public service mission.
In addition to UCare, other Medicaid HMOs in Minnesota include Blue Cross Blue Shield of Minnesota's Blue Plus, Bloomington-Minnesota-based integrated delivery network HealthPartners and the Minnetonka-based Medica.
A recent audit of the Medicaid HMOs found that the organizations are generally using sound financial practices. Still, there are a number of things going forward we might want to make sure are changed," Minnesota Human Services Commissioner Lucinda Jesson told Minnesota Public Radio, citing concerns over the HMOs lobbying, marketing and advertising.
The current Governor, Democrat Mark Dayton, ordered the audit after securing an agreement with the MCOs that any profits offer 1 percent would be returned to the state.