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Report finds millions in AHCCCS payments to ineligible people

Arizona’s Medicaid program may spend as much as $57 million a year on ineligible recipients, according to a report by the Auditor General’s Office.

In a review of 279 applications for benefits, the Auditor General’s Office found that the Arizona Health Care Cost Containment System and the Department of Economic Security incorrectly determined that three people improperly received benefits totaling $2,359 over a seven-month period. Based on that review, the agency estimated that AHCCCS pays $3.5 million to $4.8 million per month to people who were actually ineligible for Medicaid benefits.

“Although the number of incorrect eligibility determinations was a small part of the sample cases, they became more important when projected over all Medicaid eligibility determinations AHCCCS and DES performed,” auditors wrote.

The error rate, however, puts Arizona well below the national average.

The audit estimated that the state’s error rate is 1.1 percent, compared to the 6.7 percent average found by a federal audit of 17 state Medicaid programs in 2008. That same audit found a 2.2 percent rate in Arizona at the time.

AHCCCS distributes about $414 million in monthly payments, and is slated receive roughly $1.5 billion in state funding this fiscal year, which ends June 30.

The report said the improperly paid benefits were the result of processing errors by AHCCCS and DES staff. The audit found 16 cases where staffers either miscalculated applicants’ monthly income or where income was not properly reported or verified.

In most of those cases, the errors were not large enough to incorrectly determine that the applicants were eligible for AHCCCS.

But based on the sample, the auditor general’s report said nearly 6 percent of cases are at risk of processing errors that could improperly declare someone eligible for benefits.

AHCCCS Director Tom Betlach told the Auditor General’s Office that his agency will implement recommended changes, including additional training for staff, especially in error-prone areas, and a supervisory review of income requirements.

But Betlach also praised AHCCCS and DES for Arizona’s below-average error rate, which he said was especially significant considering the staffing cuts and increased requests for services the agencies have faced during several years of economic downturn and budget cuts.

“The report recommends sound process improvements that should and will be made. However, the fact that both agencies have carried on through these incredibly challenging times with an eligibility error rate of only 1.11% is a testament to the dedication and professionalism of the staff at AHCCCS and DES,” Betlach wrote.

DES Director Clarence Carter also said he was pleased to learn of the low error rate.

“(We) will continue to work towards improving to an even higher level of accuracy,” Carter wrote in response to the auditor general.

Gov. Jan Brewer said the state would do everything in its power to resolve any problems with AHCCCS providing coverage to ineligible people.

“It’s a one-percent error rate, much better than most states in regard to Medicaid, that we are seeing almost across the country a six- percent error rate. But every dollar counts, and we’re going to do our best to see it rectified,” Brewer said.

The auditor general also recommended that AHCCCS and DES make greater use of electronic citizenship verification, as required by the Affordable Care Act, though the report did not cite any problems with non-citizens receiving benefits.


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