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Tennessee’s Medicaid program may owe feds $767 million

Federal authorities looked into $2 billion of the state's claims, $1.1 billion of which — including a federal share of $767.5 million — exceeded the amount allowed by federal Medicaid rules.

(CN) — Tennessee may have to repay as much as $767 million to the federal government after an audit found that the state’s Medicaid program overbilled and didn’t keep proper documentation for certain claims between 2009 and 2014.

The program, called TennCare, provides health care for about 1.5 million Tennesseans, or 20% of the state’s population, including 50% of births and 50% of children. Its members are primarily low-income pregnant women, children and individuals who are elderly or have a disability.

Under a 2002 Medicaid waiver, the Centers for Medicare and Medicaid Services allowed the state to claim the unpaid costs of care that public hospitals took on as a result of caring for Medicaid beneficiaries and uninsured patients as certified public expenditures in order to share those costs with the federal government.

A report released this month by the U.S. Department of Health and Human Services Office of Inspector General sought to determine whether Tennessee complied with federal requirements after the state claimed the same amount — $373.8 million — each year between 2010 and 2013, indicating it may have not calculated the expenditures for those years as required.

Auditors looked into $2 billion in certified public expenditures, $909.4 million of which was supported by documentation. But about $1.1 billion — which included a federal share of $767.5 million — exceeded the amount allowed by federal Medicaid requirements.

The state has refuted much of the report’s findings.

Some key findings included in the report were that TennCare did not properly adjust claim estimates to actual costs when it learned the hospitals were overpaid, erroneously submitted claims for mental health patients who were ineligible to receive aid and did not collect patient-level data for those patients who were uninsured.

As a result, the inspector general’s office made multiple recommendations, including refunding the federal government or providing supporting documentation for the uninsured patients in order for auditors to verify that those patients were, in fact, eligible for aid, and to establish policies to ensure compliance with federal requirements.

TennCare Director Stephen Smith said the agency disagreed with nearly all of the recommendations, claiming they are “based on faulty reasoning … and would have a detrimental impact on the more than 1.5 million Tennesseans who rely on Medicaid for benefits and services, as every dollar of the funds in question was utilized to serve Tennessee Medicaid members as part of the operation and delivery of the TennCare program."

In a letter responding to the audit and included in the report, Smith pointed out that it’s unreasonable for the audit to reach back more than a decade into the past — after two governors and their administrations took and left office — and after several years had already passed.

“How far is too far?” he asked. “Is there any point in time that OIG would position as too far? For example, at one point during the audit examination, OIG auditors requested information from 2003 – nearly 20 years ago.”

Auditors clarified that 2009 was the earliest year for which state officials said they hadn’t yet adjusted the expenditure estimates to correct overpayments, and 2014 was the most recent year for which the state had completed its calculations of actual expenditures.

TennCare did agree that a contractor it used made a miscalculation of about $22 million in overpayments, but it noted that it already corrected that error.

Ultimately, it will be up to the Centers for Medicare and Medicaid Services to review the inspector general’s report and determine whether the state will have to repay the money, a process Smith said the state “looks forward to” and “is confident in its ability to counter OIG’s findings and recommendations.”

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