Auditors say Ark. Medicaid paid $1.3 million to ineligible recipients

Arkansas has paid more than $1.3 million in Medicaid dollars to ineligible recipients since 2009, according to an audit released Friday that a top Republican lawmaker said shows the pressing need to reform the $5 billion healthcare program for the poor and disabled.

But the governor and officials from the Arkansas Department of Human Services, which oversees the state's Medicaid program, said the cases reviewed by legislative auditors represented only a small fraction of the roughly 776,000 people in the program.

The findings were part of a report released by the Division of Legislative Audit that had been delayed after DHS officials complained it was being prematurely released and that an early version used questionable methodology to paint the program in a negative light.

According to the report, the error rate among a sample of recipients reviewed by auditors increased from 3.2% in 2011 to 14% in 2012. Auditors reviewed the eligibility of more than 1,100 Medicaid recipients since 2009.

DHS spokeswoman Amy Webb said that jump between the two years was due to auditors changing the types of programs they reviewed for eligibility.

"They had shifted their focus to ... what we consider a complex set of eligibility cases," Webb said.

Auditors also claimed that Arkansas' Medicaid program paid more than $2.6 million to home- and community-based providers without proper documentation in 2011 and 2012. But DHS said legislative auditors based the finding on documents that the state program does not require from providers.

The report was released as Arkansas lawmakers consider whether to expand Medicaid's eligibility under the federal healthcare law. Gov. Mike Beebe, a Democrat, supports the expansion but has faced resistance from the Republican-led House and Senate.

House Majority Leader Bruce Westerman said Friday that he believed the report pointed to larger problems in the state's Medicaid program.

"I think it shows there are issues with the existing program and like I've been saying, we've got to fix what's broken with the existing program before we talk about expanding it," said Westerman, (R-Hot Springs). "We've got to have better internal controls and reporting."

Beebe spokesman Matt DeCample said the report shows areas where DHS needs improvement but that it doesn't point to the need to a larger change to the program.

"You're always going to be working to improve how you provide Medicaid services, but there does not appear to be anything in this audit that would require any type of systemic change before we address expansion," DeCample said.

DeCample said the governor was pleased that DHS had a chance to address its concerns with auditors about the report before it was released.

"It's what you expect to see from a professional outfit like legislative audit and we're glad to see it became much more of a collaborative effort the closer it got to completion," he said.