Audit Finds $15 Million in Inappropriate Payments from MassHealth

Bump Calls on MassHealth to Address Systemic Problems in Program

13087792_1088268567878421_77092779637880312_nBOSTON, MA — Auditor Suzanne M. Bump today released an audit that found that, during a roughly five-year period, MassHealth  inappropriately paid $15,201,854 for adult foster care (AFC) and group adult foster care (GAFC) services for members in long-term care facilities (LTC), which is prohibited by MassHealth’s own rules. AFC and GAFC programs provide assistance with activities of daily living, including eating, dressing, laundry, and meal preparation, to elderly and disabled MassHealth members, which allows those members to continue to live independently in a community-based setting, and thus avoid the high costs of paying for those members to live in a long-term-care facility, such as a rest home.

 The audit found that in 2013, MassHealth issued a letter to AFC and GAFC providers informing them that, despite guidelines to the contrary, it would pay for GAFC services for individuals in LTC facilities until it could enact regulations for the GAFC program. This letter stated that although MassHealth “does not allow GAFC services to be delivered to members living in Rest Homes, Group Homes [or] nursing facilities,” it would nonetheless continue to pay for these services for members in LTC facilities. An email sent days later clarified that MassHealth would also pay for these services for any new members living in LTC facilities. Three years after the letter and subsequent email, Masshealth has still not enacted regulations and thus continues to pay for these services.

“Essentially, MassHealth created and sustained a loophole that allowed GAFC providers to receive inappropriate payments. When MassHealth pays for GAFC and long term care services for a single member, it is in-effect, paying for 26 hours of care each day for that member,” Bump said of the practical impact of these inappropriate payments. “MassHealth, like all state agencies, must have consistent regulations that guide how their programs should operate and how funds can be spent. When agencies make informal policy decisions, such as this letter and email, that contradict existing guidelines, it creates confusion and uncertainty, and provides opportunities for inappropriate payments that cost taxpayers money.”

The audit demonstrates that rest homes are required to provide 24-hour-a-day assistance with activities such as eating, dressing, and bathing. These are the same services that GAFC providers are tasked with providing to members for two hours each day. During meetings with rest home staff, one employee told an auditor from Bump’s office that GAFC services give rest home personnel a respite from their required responsibilities. While MassHealth does not have specific regulations for GAFC payments, it has guidelines that require these providers to meet all regulations of the AFC program, which prohibit these services when the member is a resident of a nursing facility or rest home.

The audit found that 80 percent of the improper payments were made to seven GAFC providers at 20 rest homes. One owner of a GAFC provider received more than $1.3 million in improper payments for MassHealth members residing in a rest home he also owned. During the audit period, MassHealth paid approximately $1.3 billion for AFC and GAFC services for 30,408 members.

The audit was initiated as a result of a referral from the Office of the State Auditor’s Bureau of Special Investigations (BSI). BSI investigates complaints of fraud in the Commonwealth’s public benefits programs. BSI identified this problem using advanced data analysis tools; however, because of MassHealth’s letter and email, which told providers that they would continue to pay for these services despite MassHealth’s guidelines to the contrary, BSI could not pursue claims of fraud.

“At a time where the state faces an uncertain fiscal future, and policymakers and other agencies are finding ways to do more with less, this audit shows another instance of MassHealth failing to put proper controls in place to ensure they’re spending funds with integrity and accountability,” Bump said. “MassHealth owes it to the residents of the Commonwealth to address these systemic problems.”

In fiscal year 2015, MassHealth paid healthcare providers $13.6 billion. Massachusetts receives a reimbursement from the federal government for 50 percent of most services provided to MassHealth members. MassHealth expenditures account for roughly 38 percent of the state’s total annual budget.


Audit Report – Office of Medicaid (MassHealth) – Review of Paid Claims w…