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Medicaid costs need better oversight, audit says

OLYMPIA — The state needs to a better job of checking its Medicaid managed care programs for cost overruns, the state auditor's office said today.

A limited audit of the Health Care Authority's system to check doctors and other specialists in eight high-risk areas showed overpayments estimated at $17.5 million in 2010. Other tests showed billing error rates for administrative costs of 8 percent and 12 percent in samples from two of the largest organizations.  Those overpayments could have raised the costs to those managed care organizations, but they also could have cost the state more for higher premium rates in 2013 when the rates are calculated based on past costs. 

Because the audit was limited, and there were underpayments as well as overpayments within the areas examined the auditor's office couldn't say if the net result was an overpayment in the systems as a whole. "We cannot conclude that 2013 premiums paid by the state were higher or lower than they should have been," the audit says.

The Health Care Authority needs contracts with its managed care organizations that allow the agency to monitor data thoroughly, and to recover overpayments when they are found, auditors said. It should also give the organizations clearer guidance on the data it sends to an actuary and have a more comprehensive monitoring system.

Better controls are becoming more important, auditors said, because Medicaid coverage is expanding under federal health care reforms and most of the people being added to the system will have managed care. The audit studied services that predated the Affordable Care Act.