Thousands of out-of-state residents could be wrongfully receiving state health care benefits because MassHealth fails to verify their residency while others may be receiving benefits without meeting income qualifications, according to a state audit released Wednesday, October 17.
The lack of verification could be costing the state millions of dollars each year, according to the report from Auditor Suzanne Bump. Based on the magnitude of the program, which has 1.3 million enrollees, “the financial ramifications of MassHealth not performing effective income eligibility verifications for applicants could have an adverse effect on the Commonwealth’s finances,” the report stated.
Too many income and residency claims are left unchecked and taken at “face value,” Bump told the News Service. Asked if program overseers have the resources to verify all of the information submitted by applicants, Bump said, “They have an obligation to under the federal rules and under their own policies.”
“I realize that MassHealth has a very difficult job to do to maintain access to folks that experience a lot of job and residency instability. At the same time you’ve got to weigh that against the finite number of public dollars that support this program,” she said. “I urge MassHealth to find a better balance.”
Bump’s office, which has a Medicaid unit, launched its audit last year. “Obviously, our purpose was not to try to determine how many ineligible people receive benefits, but rather to look at the program’s integrity and raise the flags and help concentrate MassHealth on achieving a better balance,” Bump said.
The price tag for MassHealth — which provides health benefits to low- and moderate-income residents or nearly one in five Massachusetts residents — have increased significantly in the last five years, on average 8.7 percent annually. During the same period, enrollment has grown by more than 26 percent, according to the report. In fiscal 2011, MassHealth paid health care providers more than $12.2 billion, of which 35 percent was state-funded, according to the report.
MassHealth accounted for approximately $12 million in the Martha’s Vineyard Hospital’s gross revenues, or 10 percent of business, Tim Walsh, hospital CEO told The Times in a telephone call Monday.
Mr. Walsh said that under current reimbursement formulas, MassHealth pays the hospital 30 cents on the dollar, meaning private insurers and private pay patients subsidize the difference.
Dr. Julian Harris, the state’s Medicaid director, said of the report, “Some important issues were raised, some we have already taken steps to address.”
Harris said protecting the program’s integrity is “paramount,” adding that MassHealth officials disagree with some policy recommendations made by Bump.
Bump’s office found MassHealth does not verify an applicant’s state residency, relying solely on self-declaration. MassHealth only checks someone’s address when there are conflicts in an applicant’s information. While complying with legal obligations, the policy leaves MassHealth vulnerable to fraud, the auditor’s report found.
In 2010, MassHealth spent approximately $6.5 million on services for 4,643 individuals who were later removed from the program because they were not Massachusetts residents, received benefits from another state, or state officials could not determine where the enrollees lived.
The audit pointed to a case where one woman gave extensive documentation of her Florida residency, and another of a family visiting from Greece on a medical visa, but in both cases MassHealth failed to follow up and investigate the “obvious residency conflicts.”
The auditor’s report said MassHealth officials should ask for a driver’s license, utility bill or other documentation to prove residency, following policies in place in New York, New Hampshire, and California.
Requiring a driver’s license or other forms of residency proof would create barriers for some of the most vulnerable residents to receive benefits, Harris said. He cited homeless people and others in transitional living arrangements who would find it difficult to prove residency, and could wind up being denied health benefits they are eligible for.
“We would not want that person to be penalized, someone who was disabled or was in a transient state of residence, we wouldn’t want them to prevent them from accessing services,” Harris said. “We want to make sure administrative barriers are not put in place that could compromise access.”
Most states do not require Medicaid applicants to prove residency, Harris said.
“We have a great deal of sympathy and understand many MassHealth members have unstable employment and residency. But a failure to follow up and ask even additional questions is a program failure, and it is a failure to follow their own policies,” Bump said.
The auditor’s report also found MassHealth does not comply with state and federal regulations by not verifying an applicants’ self-reported income. A MassHealth recipients’ income is verified roughly one year after they are enrolled in the Medicaid program, and already receiving benefits, according to the audit. In addition, MassHealth does not verify unearned income, such as pension payments, rental income, stock dividends or any lottery winnings by checking information available from the IRS or the state Department of Revenue.
The lack of verification creates potential for someone whose income exceeds requirements to receive benefits for a year before MassHealth is able to remove them, according to the auditor’s report.
The Auditor’s Bureau of Special Investigations identified at least 18 MassHealth recipients who had annual lottery winnings ranging from $8,977 to $159,987, without any change to their state health benefits.
If MassHealth had implemented a data match process, it would have been made aware of these members’ lottery winnings, and been able to change or terminate benefits, the auditor’s report stated.
The auditor recommended MassHealth establish a data match system with DOR and the IRS to verify unearned income, as well as implement a process with the state treasurer to be notified of significant lottery winnings.
Currently, MassHealth does not match recipients with the State Lottery Commission, but plans to discuss the potential of doing so, according to MassHealth’s response in the report.
Harris said many of income verification issues will be fixed when the state launches the Integrated Eligibility System in 2014 — made possible under the federal Affordable Care Act. The Integrated Eligibility system will give states better access to data from the IRS and other federal agencies.
“That system will give us enhanced access to DOR, IRS, and other state and federal databases that will help improve our” verification process, Harris said.
MassHealth officials said eligibility for the Medicaid program is determined annually with recipients demonstrating they meet financial requirements each year.
MassHealth verifies income at the time someone applies by requiring their two most recent pay stubs and requesting their most recent federal tax returns. Harris said they rely more heavily on pay stub information over federal and state tax returns because it is the most recent, reliable information.
“If MassHealth learns that an applicant or member intentionally falsifies any financial information used to determine eligibility, that individual would be referred for further investigation to the program integrity unit,” MassHealth officials responded in the audit report. “If appropriate, a further referral for a fraud investigation is made.”
By relying on pay stubs and not checking federal tax returns in most cases, some people could be underreporting their income, not reporting a second job or leaving off other household income, Bump said.
“When someone is applying for benefits they present their last two pay stubs. Far too frequently it seems MassHealth lets it go at that,” she said.