$193 Million in Illegal Payments  by MassHealth

Deficiencies Similar to Previous MassHealth Audit Findings

 BOSTON, MA — State Auditor Suzanne M. Bump today issued an audit of the behavioral health program at MassHealth, which found that MassHealth paid doctors directly for providing mental health services that should have been paid for by the Massachusetts Behavior Health Partnership (MBHP). MBHP is paid by MassHealth to manage the coordination of care for mental health services for MassHealth members. MassHealth’s payments over a five year period to doctors for services that should have been paid for by MBHP resulted in improper payments of approximately $93 million, and another $100 million in questionable payments for services that should have been included in MBHP’s contract. In the audit, Bump calls on MassHealth to immediately improve its processes to prevent any further improper payments, and determine whether it can recoup any monies paid.

“This audit is the latest example of poor claims administration at MassHealth,” Bump said. “Some of the problems identified stem from MassHealth and its contractors’ different understandings of who is to pay what; other times MassHealth simply acts contrary to its own rules and standards.”

MassHealth has a contract with MBHP to provide behavioral-health care and substance-abuse care for certain MassHealth members at a fixed monthly fee. During the audit period, July 1, 2010 through June 30, 2015, MassHealth paid MBHP approximately $2.6 billion. The contract specifies the types of services and procedures that MBHP must provide to members; however, the audit found that while MassHealth made these monthly payments to MBHP to cover the specified services, it also directly paid doctors approximately $93 million for the same services.

Additionally, the audit found that MassHealth made approximately $100 million in questionable payments for items such as family therapy sessions, behavioral-health counseling, and psychological testing, which are clearly behavioral health in nature, but were not specifically included in the list of services covered by MassHealth’s contract with MBHP. The audit cites MassHealth regulations that require that all behavioral health services be paid for by MBHP.

 Finally, the audit also found that MassHealth paid claims for behavioral health services provided in emergency rooms, rather than referring these claims to MBHP for payment, as required by MassHealth regulations. The audit notes that this practice creates a financial incentive for MBHP to allow its members to seek behavioral-health care in emergency rooms.

 In its response, MassHealth said, among other things, that the Auditor wrongly included in her office’s analysis claims with medical treatment components, which made the agency, and not MBHP, the proper payer. However, Bump noted that those claims were not included in the analysis.

 In 2015, an audit from Bump’s office found similar deficiencies in MassHealth’s administration of managed care organizations (MCO) and related contracts. Similar to MBHP, MassHealth pays these MCOs a fixed-fee to cover the costs of a range of medical services for certain MassHealth members. The 2015 audit found MassHealth unnecessarily paid approximately $233 million to doctors for services that should have been covered under these MCO contracts. In addition, it found that the agency could have additionally saved up to $288 million if its MCO contracts had been more specific as to which services were to be paid for by the contract. If all of that audits recommendations changes were made, they could save the program approximately $10 million annually.

 “As leaders in our state seek solutions to address the growth of MassHealth costs, our audits have shown time and again that the program must improve its contracts to ensure that they cover all appropriate costs, and strengthen their claims process to ensure the program only pays for appropriate claims. This would yield significant costs savings and could prevent the need to raise fees or reduce benefits,” Bump said. “Our initial estimates suggest that the recommended changes identified in this audit alone could save the program up to $27 million annually. It’s my hope that today’s audit will assist policymakers in their efforts to control costs in this important program.” 

In fiscal year 2016, MassHealth paid healthcare providers $14.8 billion for healthcare services for approximately 1.9 million low-and-moderate income individuals. MassHealth is the state’s largest program and accounts for approximately one-third of the state budget.  

 Audit Report – Office of Medicaid (MassHealth) – Review of Fee-for-Servi…


About the Office of the State Auditor
The Office of the State Auditor conducts performance audits of state government’s programs, departments, agencies, authorities, contracts, and vendors. With its reports, the OSA issues recommendations to improve accountability, efficiency, and transparency. The OSA has identified more than $1 billion in unallowable, questionable, or potentially fraudulent spending and saving opportunities for the Commonwealth since 2011. Last year, auditees report implementation of 91 percent of the OSA’s audit recommendations. This year, the office received the Einhorn-Gary Awardfor its success furthering government accountability.