DSHS may owe millions

OLYMPIA – Washington may have to repay up to $32 million in federal funds it spent on medical care for illegal immigrants, state auditors said Thursday, in two reports detailing nearly $1 billion in “questioned costs.”

The audits covered the state Department of Social and Health Services and the state’s $6.2 billion Medicaid program. DSHS is by far the largest state agency, with 17,000 employees and a budget of about $8 billion a year.

“We’re talking a substantial amount of public dollars – federal and state money – and the ability of those dollars to be accounted for,” said State Auditor Brian Sonntag.

“The sad thing is the number of repeat violations,” said Bob Williams, a former state lawmaker who now heads up the conservative Evergreen Freedom Foundation. “There’s no excuse for this.”

DSHS officials agreed with some of Sonntag’s findings but disputed others. Many of the situations are not as clear-cut as the audits suggest, they said. The agency, they said, is moving quickly to improve its cost controls and fraud detection.

“That gets lost,” said state Medicaid director Doug Porter. “The auditor’s told to go out and find things that are weaknesses.”

Among the audit findings:

“The state is improperly using federal tax dollars to pay for routine medical care for illegal immigrants, when only emergency care should be covered. Of $103 million the state paid to health care providers in fiscal year 2005 for treatment of illegal immigrants, auditors found millions of dollars in billing codes for cosmetic dentistry, eye exams, contraception, carpal tunnel syndrome, ingrown nails, acne and hearing exams.

“State workers are not consistently verifying Social Security numbers for people applying for Medicaid health coverage. “Further,” one audit report states, “the Department does not heed federal alerts notifying staff of invalid Social Security numbers.”

“The state is paying widely-varying prices for the human growth steroid Somatropin. Auditors say that the state paid from $47.79 to $5,061 per dose, “at the same dose and even the same provider.”

“Washington’s Aging and Disability Services Administration isn’t making sure that complaints of abuse, neglect, financial exploitation and death at residential care facilities for the elderly, disabled or developmentally disabled get investigated according to federal guidelines. In most cases, auditors found, the state relies on the facilities to do their own investigations.

“The state has paid for two people to have sex-change surgery since 2000, with three other people currently appealing the state’s denial of their requests to pay for sex changes.

“ DSHS doesn’t have sufficient safeguards to prevent people from getting state-paid medical care by using a dead person’s Social Security number. In Medicaid billings from fiscal year 2005, auditors said they found hundreds of instances of medical bills charged on behalf of dead people.

“DSHS made duplicate payments totaling nearly $117,000 to social service providers.

State Rep. Bill Hinkle, R-Cle Elum, said he wasn’t surprised by the findings. Political leaders must find the will, he said, to make tough changes.

“I think it’s hilarious that the Democrats want to talk about universal health care when we can’t even do Medicaid,” said Hinkle. He’s calling for creation of a state inspector-general office to police fraud and improper spending.

”(New DSHS head) Robin Arnold-Williams, to her credit, is doing the best she can,” said Hinkle. “But she’s new, and she’s inherited a mess.”

Sonntag also praised Arnold-Williams, saying that she’s made the agency much more cooperative with his auditors. She’s responsive, he said, and aggressive in trying to address problems.

But most of the problems cited by auditors are not as black and white as they sound, DSHS officials said Thursday.

Federal rules, for example, specify that federal dollars can only be spent on medical care for undocumented aliens in medical emergencies. But they don’t define well what constitutes an emergency, said Porter. If a roofer, say, falls and breaks his arm, that’s clearly an emergency. But, Porter said, it’s unclear if it’s still an emergency when he goes back six weeks later to have the cast removed.

Of the $32 million in questioned spending, he said, “We think they were services that people desperately needed, and we felt obliged to pay for them. We’ve erred on the side of trying to be reasonable.”

As for the wildly different prices paid for Somatropin, he said, the differences were due to different strengths, packaging and other factors. (The auditor’s office, however, disputes this.)

And the sex-change operations? Medicaid is required to pay for “medically necessary” treatment, Porter said. Until about three years ago, sex-change surgery was a covered procedure. But the state now refers people who feel they’re the wrong gender to psychotherapy and hormone treatment, which Porter said have proven equally effective treatments. A few people have appealed that decision. The state is resisting, but if they win their cases, Washington will likely have to pay for additional sex-change surgeries.

Contrary to what the audit reports say, state workers do check Social Security numbers for people seeking Medicaid coverage, Porter said. But a federal directive, he said, also prohibits the state from refusing coverage to people who won’t provide a number.

Lastly, another DSHS official disputed the audit finding that DSHS isn’t ensuring that complaints about residential care – including nursing homes, boarding homes, adult family homes – are investigated properly. Yes, the facilities investigate their own complaints, said quality assurance administrator Sheldon Plumer, with the Aging and Disability Services Administration. But the state reviews those investigations and often requires more information. In about 5 percent of the cases, he said, the state will do its own investigation.

“We analyze their investigation,” he said. “We don’t just go in and see whether they’ve done one.”