Our audit found that Oregon Health Authority (OHA) recovery efforts are appropriate and reasonable, but the agency should strengthen efforts to detect and prevent improper payments in Oregon’s $9.3 billion per year Medicaid program. Prevention of improper payments is more cost-effective than attempting to recover improper payments. We also found that delays in processing eligibility for thousands of Oregon’s Medicaid recipients resulted in millions of dollars of avoidable Medicaid expenditures, a critical issue the agency failed to disclose until raised in a May 2017 Auditor Alert. Furthermore, OHA did not timely disclose relevant information, which impeded our audit work. OHA’s new management has been more proactive and transparent in addressing these issues.
An improper payment is defined by the federal government as “any payment that should not have been made or was made in an incorrect amount (including overpayments and underpayments) under statutory, contractual, administrative, or other legally applicable requirements or where documentation is missing or not available.”
Purpose of Audit
The primary purpose of the audit was to determine if the Oregon Health Authority could improve processes to prevent, detect, and recover improper Medicaid payments. The secondary purpose was to follow-up on OHA’s progress to resolve issues we raised in our May 2017 Auditor Alert.
Within the context that Medicaid is a very complex and challenging program to administer, we found:
- OHA has gaps in procedures for preventing certain improper payments. Insufficient management of the agency’s processes for identifying and resolving payment and eligibility issues, prioritization of staffing resources, and efforts to address technology issues put taxpayer dollars at risk.
- OHA lacks well-defined, consistent, and agency-wide processes to detect certain improper payments, especially related to coordinated care. We identified approximately 31,300 questionable payments based on our review of 15 months of data. OHA needs to continue researching these claims to determine how many were improper; OHA reported that only a small percentage were improper based on preliminary research of 2,700 claims.
- OHA recovery efforts appear appropriate and reasonable, but may be underutilized due to OHA’s limited procedures for detecting improper payments.
- OHA reported completing the action plan to determine eligibility for the remaining backlog of 115,200 Medicaid recipients. Approximately 47,600 (41%) were deemed ineligible as a result, although this figure may decrease slightly through the end of November. Failure to address this issue in a timely fashion resulted in approximately $88 million in avoidable expenditures.
Drawing from national leading practices, our report includes eight recommendations to OHA focused on strengthening efforts to detect and prevent improper payments. Oregon Health Authority agrees with our recommendations. The agency’s response can be found at the end of the report.