The Arkansas Department of Human Services improperly accounted for about $43.9 million in Medicaid funds last year, Legislative Audit staff members said Friday at a Legislative Joint Auditing Committee meeting.
At the meeting, department officials said they didn't believe the state would owe the federal government much money -- if any -- once issues regarding the accounting are resolved.
Ultimately, it may be the state that is entitled to additional funds, not the other way around, one department official said.
"It's really my gut feeling that we're going to get money because I think there's some things we need to claim in a different fashion," said Mark Story, chief fiscal officer within the department's division of medical services. "If there are issues, then we can deal with them."
In an interview afterward, Story suggested it's too early to say that the agency messed up the math.
"It's not really an error, necessarily; it's an unreconciled difference," Story said.
During Friday's meeting, legislators expressed dismay that the state didn't know how much it owed or was owed by the federal government for Medicaid, a program that cost $5.3 billion between Arkansas and the federal government in 2014.
"Sam Walton would have fired a bunch of people if they came in here and told us it's $40 million, but we think when we do the evaluation they'll owe us money," said Rep. Kim Hendren, R-Gravette. "How in the world can we run a government or business ... and we don't have an answer to this stuff?"
The finding in the legislative audit report pertains to state reports to the federal Centers for Medicare and Medicaid Services of expenses for the state fiscal year that ended June 30, 2014.
The reports are used to ensure that the state program spent the appropriate amount of federal money for a given time period. The federal government pays about 70 percent of the expenses for many recipients, and 100 percent of the expenses for adults who became eligible for Medicaid under the expansion of the program approved by the state Legislature in 2013.
Of the $43.9 million in Medicaid dollars that have been questioned, the federal share is $30.8 million, auditors said.
Auditors found that state Medicaid officials did not perform required checks of information listed in the reports with financial claims data. As a result, auditors found discrepancies between the amounts listed in the reports and what the claims data indicated.
Greg Crawford, assistant director of managerial accounting at the state Department of Human Services, said the Patient Protection and Affordable Care Act brought changes to how Medicaid is billed, causing confusion.
"There were waivers that the state had for years that went away, became part of the private option," he said. "Some of the errors were not reporting the number in the correct place."
The Department of Human Services has hired two consulting firms to help them sort things out. Navigant, a Chicago company that offers "financial management services," will help identify the accounting errors. Optum, based in Eden Prairie, Minn., will develop more automated software to take care of some of the number crunching. Among other things, the company helps state agencies handle "Medicaid management" and offers assistance with "analytics and health information technology."
"We knew there were some issues with this, but we didn't realize it was to the extent that it was until we worked with our legislative auditors to see it," Story said.
"The goal," he said, "is to revamp the entire process that is used to generate these reports."
Before the expansion and other provisions of the Affordable Care Act took effect on Jan. 1, 2014, "The reports were pretty static," Story said.
"Everything changed after ACA," he said.
With the help of Navigant, state officials plan to reconcile all of the spending reports submitted to the federal agency since the changes under the Affordable Care Act took effect, he said.
Crawford said it's not unusual for a report to result in an "adjustment" of $4 million or $5 million to reconcile the amount of funding received by the state, but he said he expected the Navigant review of the reports to explain most of the discrepancies identified by legislative auditors.
"Unless something has gone really haywire, I'm really comfortable in saying that $30 million is not the issue," Crawford said.
Politics on 06/06/2015