Massachusetts Auditor’s Medicaid unit identifies over $27 million in potential cost savings, issues recommendations

BOSTON — Today, State Auditor Diana DiZoglio’s Office released an annual report of the recent work conducted by the office’s Medicaid Audit Unit, from March 2, 2024, through February 28, 2025.

Over the past year, the State Auditor’s Office released three audit reports on the state’s Medicaid program, known as MassHealth, and its compliance with state and federal laws, regulations, and other applicable authoritative guidance. Combined, these three reports identified an estimated $27,259,164 in potential cost savings and provided several recommendations to strengthen internal controls and oversight in MassHealth’s program administration.

MassHealth provides access to healthcare services annually to approximately two million eligible children, families, seniors, and people with disabilities, all with low and moderate incomes. In fiscal year 2024, MassHealth program expenditures totaled $20.1 billion, of which approximately 39% was paid by the Commonwealth. Medicaid program expenditures represent approximately 33% of the Commonwealth’s total annual budget.

The State Auditor’s Office states that they maintain ongoing independent oversight of the MassHealth program and its contracted service providers, with audit reports identifying ways MassHealth can strengthen its controls to prevent and detect fraud, waste, abuse, and mismanagement in the Massachusetts Medicaid program, as well as improper claims for Medicaid services.

The Office uses data analytics in all audits conducted by the Unit. By doing so, auditors can identify areas of high risk, isolate outlier providers, and in many cases perform reviews of 100% of the claims under audit, thus significantly improving the integrity, efficiency, and effectiveness of audits. Moreover, in many cases, data analytics has enabled the Unit to fully quantify the financial effects of improper payments, whether they involve one claim or 10 million claims. The use of data analytics techniques has enabled the Unit to identify greater cost recoveries and savings; isolate weaknesses in claim-processing systems; and make recommendations regarding MassHealth’s system and program regulations to promote future cost savings, improve service delivery, and make government work better.

Released on December 31, 2024, an audit of the Office of Medicaid (MassHealth) —Review of Capitation Payments with Multiple Identification Numbers revealed MassHealth made capitation payments on behalf of members with multiple IDs, with an estimated $3,813,827 in improper billings.

The audit recommends MassHealth require that all members flagged by data matches submit documentation to confirm their identity. If the member does not provide documentation, then MassHealth should either pause the member’s coverage or move the member to its fee-for-service model until it can determine whether the member’s coverage should be terminated. MassHealth should also investigate and resolve all instances where its data matches indicate that a member has been assigned more than one member ID. Moreover, MassHealth should implement a match criterion that focuses solely on Social Security Numbers (SSNs). Because an SSN should be unique to each individual, a targeted match criterion that only includes an SSN would reduce the prevalence of multiple IDs by 19%, based on sample testing.

Released on October 1, 2024, an audit of the Office of Medicaid (MassHealth) —Review of Payment for Telehealth Adult Day Health (ADH) revealed MassHealth paid providers for ADH that it did not authorize and/or that did not have supporting documentation. MassHealth also paid providers for transportation to ADH that it did not authorize and/or that did not have supporting documentation. Moreover, MassHealth paid providers $11,797 for 109 claims for services allegedly rendered to 31 members who were proven to be deceased. In total, the audit identified $465,683 in improper billings.

The audit recommends MassHealth should ensure system edits to prevent payments for ADH without prior authorization are properly implemented; investigate the paid claims identified by OSA and take corrective action as it deems appropriate; investigate for improper documentation of ADH claims from providers that OSA did not review; ensure that system edits to prevent payments for ADH without prior authorization are properly implemented;  investigate the paid claims identified by OSA and take corrective action as it deems appropriate; investigate ADH claims from providers outside the five OSA reviewed for improper documentation; establish monitoring controls to ensure that ADH claims are documented; update its algorithms to cross-reference members’ dates of death with additional data sources and not rely solely on the Department of Public Health’s Vital Statistics file when verifying members’ dates of death; and establish a plan to recoup the $11,797 in overpayments made on behalf of deceased members.

Finally, released on September 4, 2024, an audit of the Office of Medicaid (MassHealth) — Review of Payment for Telehealth Adult Foster Care and Group Adult Foster Care (GAFC) revealed a total of $22,979,654 in improper billings.

The Auditor’s Office stated that the report found MassHealth did not ensure that AFC and GAFC registered nurses / licensed practical nurses and care managers conducted required oversight visits. MassHealth also paid AFC and GAFC providers for services that did not have supporting caregiver / direct care aide log documentation. Moreover, MassHealth paid for AFC and GAFC caregiver / direct care aide services that were incorrectly coded as telehealth.

The audit recommends MassHealth establish effective monitoring controls to ensure that AFC and GAFC providers conduct the required oversight visits for MassHealth members and caregivers / direct care aides. To establish effective monitoring controls, MassHealth should establish a goal for the number of AFC / GAFC providers it will audit each year. MassHealth should investigate and resolve all instances where its data matches indicate that a member is enrolled in another state’s Medicaid program.

MassHealth should also establish an effective monitoring process to ensure that caregivers / direct care aides of AFC and GAFC providers properly document care in their logs. Moreover, MassHealth should add a system control in the Medicaid Management Information System to deny AFC and GAFC caregiver / direct care aide services in a telehealth setting.

The State Auditor’s Office is currently in the process of several more audits of MassHealth’s administration of the Medicaid program and Medicaid service providers’ compliance with state and federal laws, regulations, and other authoritative guidance.

This includes a review of MassHealth claims submitted by providers for durable medical equipment (DME); a review of MassHealth claims submitted by Dental Arts; a review of MassHealth claims submitted for non-emergency transportation; and a review of MassHealth reimbursements for inpatient maternity services provided by University of Massachusetts Memorial Healthcare.

“Our MassHealth audits are designed to identify issues that will help improve programs, enhance delivery, and ensure taxpayer dollars are spent properly,” said Auditor DiZoglio. “These reports over the past year have identified a number of critical issues that need to be addressed. Accordingly, we urge the Administration to swiftly implement our recommendations and will be revisiting these findings, roughly six months from the  audit issuance dates, to track progress.”