Audit finds overspending for Medicaid, transportation expenses

By Tim Hoover

Source: KCS
Credit: The Kansas City Star
Tuesday, October 4, 2005
Edition: METROPOLITAN, Section: METROPOLITAN, Page B1

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JEFFERSON CITY - The state of Missouri could save millions of dollars by properly bidding and monitoring Medicaid services for medical equipment and non-emergency transportation, according to an audit released Monday.

The report released by state Auditor Claire McCaskill followed an announcement last week by Attorney General Jay Nixon that his office had settled a fraud case against the company that has been providing non-emergency transportation for Medicaid recipients to places like doctors' offices and pharmacies.

In that case, Lake St. Louis-based Medical Transportation Management Inc. agreed to pay the state $2.4 million after Nixon's office alleged the company had overbilled or fraudulently billed the state for Medicaid clients' trips to medical providers.

The actions of McCaskill and Nixon, both Democrats, come at a time when a Republican-led commission of lawmakers is studying how to restructure the state's Medicaid program, which covers nearly 1 million people. The GOP-controlled legislature earlier this year eliminated Medicaid coverage for about 90,000 people, and much of the debate on the issue has centered on fraud by recipients.

McCaskill said Monday there is not enough emphasis on fraud by providers.

"The vast majority ... of Medicaid fraud that has been found has been ... perpetrated by providers, not by recipients," she said. "Frankly, I think it is tiresome to most Missourians to continue to have this rhetoric that the Medicaid problem should be borne on the backs of recipients."

Deborah Scott, a spokeswoman for the Department of Social Services, said the agency does not give any more weight to fraud by providers than it does to fraud by recipients.

"We have always viewed the issue of waste, fraud and abuse from both ends of the spectrum," Scott said.

Though McCaskill's audit examined practices that occurred under Democratic Gov. Bob Holden's administration, she said Republican Gov. Matt Blunt's administration has not corrected some of the problems she pointed out.

McCaskill's audit examined a 15-month period ending in March of 2004 in which the state paid Medical Transportation Management $44.1 million, of which at least $19 million was gross profit. The audit said the state did not properly monitor the contract with the company to determine whether it was finding the most appropriate transportation at the lowest cost.

In fact, the report said, the contract with the company often gave it an incentive to use the most expensive mode of travel, obtaining taxi rides for Medicaid clients or encouraging recipients to drive themselves and be reimbursed for mileage. Those options frequently were not the cheapest for taxpayers, the audit noted.

In one case, the company reimbursed a client $3.60 for a 24-mile trip and then charged the state $98.44 for administrative services on the trip, the report said. During the 15-month period, the company made an 87 percent gross profit on mileage reimbursements, the report said.

The state has put the contract for medical transportation out for re-bid and has received seven bids, which officials are reviewing now.

The Department of Social Services last year put the contract out for re-bid, and the state awarded the contract to LogistiCare Solutions LLC of Atlanta. However, the state then voided the contract after Medical Transportation Management argued there were technical irregularities in the bidding process.

The state has been contracting with Medical Transportation Management on a month-to-month basis since then.

Carol Rosse, director of corporate marketing for the Lake St. Louis company, called the results of McCaskill's report erroneous because the audit was based on a time before the company was operating under a stricter contract.

The company "has done everything in its power to make the non-emergency medical transportation program more cost efficient," Rosse said.

McCaskill's report also said the contract did not have controls to ensure that the trips were for Medicaid-related purposes. For one three-month period, there were 14,500 transportation claims that had no corresponding Medicaid claims filed with the state, the report said.

The audit also said that the new contract proposal the state was developing could be flawed because it was based on "historically high" costs in previous contracts with Medical Transportation Management. Scott said the previous rates were just one factor in developing the new contract, and Commissioner of Administration Mike Keathley said there would be a substantial savings over previous contracts.

The audit also found that Missouri could save $5.4 million a year if it competitively bid its medical equipment services.

Missouri paid more than its eight surrounding states for 41 percent of the pieces of equipment reviewed in the audit. In one example, a prosthetic device that four other states paid $1,830 for cost Missouri $2,440.

The department is considering taking competitive bids on the equipment, Scott said.

To reach Tim Hoover, call 1-(573)-634-3565 or send e-mail to thoover@kcstar.com.

First glance

Though a recent report examined practices that occurred under Democratic Gov. Bob Holden's administration, she said Republican Gov. Matt Blunt's administration has not corrected some of the problems she pointed out.

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