Medicaid errors found in schools

Monitoring by state faulted

School districts using Medicaid funds to pay for therapy and other health-care services for students failed to maintain adequate records supporting the claims, a review by the state Legislative Audit Division found.

The special report by the division, released Tuesday, found that the state Department of Education did not adequately monitor the Medicaid in the Schools Program and that the Department of Human Services did not monitor the school districts reviewed in the report to ensure compliance with record-keeping requirements.

The report also questioned the association of a former director of the program with a nonprofit group that submits Medicaid claims for school districts, saying the relationship "may conflict with ethical guidelines" found in a state law.

Some school districts failed to seek reimbursement from insurance companies for children covered by private policies, which could expose the state to having to pay back the federal government, the report added.

Sen. David Sanders, R-Little Rock, chairman of the state Legislative Joint Auditing Committee's Medicaid Subcommittee, said the report adds to his concerns about whether the Medicaid funds are being spent appropriately.

"It's very disturbing in terms of how poorly it seems that the folks that are charged with carrying out these services, how poorly they're complying," he said.

Human Services Department spokesman Amy Webb said in an email that her department "will be working with the Department of Education and participating school districts to ensure compliance with program provisions."

The Joint Auditing Committee is to discuss the report Friday.

Rep. Kim Hammer, R-Benton and a chairman of the committee, said the report shows "the strong presence of schools becoming dependent upon Medicaid dollars."

He said he wants to make sure the state is not in violation of federal requirements and at risk of owing money to the federal government.

"I'm not saying that the services they are providing are bad, because all the services they are listing there are worthy services, but at the same time you've got to play by all the rules," Hammer said.

According to the audit report, the Medicaid in the Schools Program was created by the Education Department in 2006 and is administered by the Southeast Arkansas Education Service Cooperative in Monticello. The program has satellite offices in Little Rock and Paris, auditors wrote.

The program pays for services such as speech, language and occupational therapy, as well as mental-health services, screenings and case management.

Schools and other providers received $34.6 million under the program in the fiscal year that ended June 30, 2013, according to the report.

The state's overall Medicaid budget this fiscal year is about $5.4 billion, with more than 70 percent of that coming from the federal government and the rest coming from the state.

School districts seeking reimbursement can handle the claims themselves or contract with a vendor to handle the claims, auditors wrote.

In reviewing claims from six districts, auditors reported finding several that lacked adequate supporting documentation, including records showing that service providers had undergone required background checks.

Auditors also found that three districts, all of which hired a vendor to process the claims, failed to obtain consent forms before releasing information on the students to the Medicaid in the Schools Program to determine whether the children qualified for Medicaid.

Failure to obtain the consent forms "may constitute a violation of the Family and Educational Rights and Privacy Act (FERPA)," the report says.

The report also says none of the districts sought reimbursement from private insurance companies for services provided to students covered by those companies' policies, as required by the federal Centers for Medicare and Medicaid Services.

That could expose Arkansas to "a significant financial impact" if the federal agency sought reimbursement from Arkansas, the report says.

In a written response included in the report, Mark Story, chief financial officer with the Human Services Department's Medical Services Division, said the U.S. Department of Health and Human Services has found that the Centers for Medicare and Medicaid Services lacked the authority to impose the requirement for states to seek private insurance reimbursement on behalf of students who are not eligible for Medicaid.

The Education Department said in its response that federal law only requires states to seek third-party reimbursement on behalf of students who are eligible for Medicaid. The Medicaid program does seek reimbursement in those instances, the department said in the response.

The response also said that the department sent a memo to school districts in September reminding them that information on students cannot be disclosed to outside entities for the purpose of Medicaid billing without parental consent.

The report said Tony Boaz, a Southeast Arkansas Education Service Cooperative employee who served as director of the Medicaid in the Schools Program, was also listed as a contact for Innovative Solutions for Educational Partnerships, a nonprofit organization that submits Medicaid claims on behalf of schools.

The nonprofit collected an administrative fee, equal to 8 percent of the Medicaid services reimbursed, and then gave half of the fee to the cooperative, according to the report.

In fiscal 2013, the nonprofit collected $381,061, giving $190,530 to the cooperative, according to the report.

Boaz resigned from the cooperative in January 2013, the report says. In October 2013, the administrative fee was reduced to 4 percent, with the nonprofit keeping the entire amount.

The report says Boaz's association with the cooperative and nonprofit "may conflict" with Arkansas Code 6-24-107, which restricts employees of educational institutions from entering into contracts with those entities.

Attempts to reach Boaz for comment were unsuccessful Tuesday afternoon.

The Education Department said in its response that it will ensure Medicaid in the Schools employees "are aware of the obligations to abide by all state and federal laws and regulations, including those governing the ethical standards of school employees."

A Section on 06/04/2014

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