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Oregon Health Authority Wastes Millions and Governor Brown Has No Clue

Oregon now owes the federal government at least $74 million for spending Medicaid dollars on hundreds of ineligible people, some of whom are no longer alive. The worst part? Governor Brown claims she had no clue her own agencies are wasting millions of dollars right under her nose.

Oregon overpays more than $74 million for Medicaid, governor kept in the dark


Hillary Borrud and Jeff Manning

The Oregonian

November 1, 2017

The financial quagmire at the Oregon Health Authority continues to deepen.

On Tuesday, the agency’s new chief financial officer, Laura Robison, acknowledged that Oregon wrongly paid Oregon health care organizations roughly $74 million in federal Medicaid money from 2014 to 2016.

The state could be on the hook to repay all of that plus take an additional hit of unknown size for other misspending of federal health money, officials told The Oregonian/OregonLive.

Top officials at the health authority, including then-director Lynne Saxton, knew about the overpayments for months, including some who learned of it more than a year ago. But they withheld that information from the public and, according to Gov. Kate Brown’s spokesman, from the governor as well.

Brown, who ousted Saxton over other misdeeds, said through a spokesman she didn’t learn of the overpayments until Oct. 17, when she was notified by new agency Director Pat Allen.

“The previous OHA administration did not inform the Governor’s Office of this issue prior to October 17, which Governor Brown finds unacceptable,” said spokesman Chris Pair.

The $74 million in overpayments occurred because the health agency paid health care organizations it contracted with to serve certain senior citizen Medicaid patients inaccurate, excessively high rates, Robison said.

Robison said in an interview Tuesday that the agency also paid health care contractors an undetermined amount to provide health care to people who’d been retroactively deemed ineligible for Medicaid. She said the agency is still trying to get a handle on how much money it incorrectly dispensed. As an example, Robison said the state may have continued to pay for health coverage for people after they died.

The agency’s new top managers are still trying to get their arms around the extent of the two-part problem. But they’ve already taken steps to tighten health authority operations, Robison said. They have drastically reduced the number of employees with authority to retroactively terminate Oregonians’ Medicaid eligibility, from approximate 1,900 people to 16.

“These issues landed on my desk essentially on my arrival at (the Oregon Health Authority), and I’ve made it a priority to get these fully scoped and resolved as soon as possible,” Robison said. “We don’t understand all the reasons this was happening.” Robison said she learned of the problems from another health authority employee.

Oregon’s $74 million of wrongful payments occurred in the cases of patients old enough to qualify for Medicare and poor enough or otherwise qualified for Medicaid, she said. Medicare pays first and should have been used to cover the vast majority of those patients’ costs. Instead, Oregon charged the federal government — and paid Oregon firms contracted to manage those patients’ Medicaid services — as much as if those patients had had no other insurance.

Federal officials caught the first problem in 2016 and required Oregon to repay $10 million, according to Robison and public records released by the state. Now, it appears Oregon may have to repay the balance, she said. It might choose to try and recover some or all of the money from the health care agencies formed to administer Medicaid payments, known as coordinated care organizations.

The latest revelations about the health authority could give new political ammunition to opponents of Obamacare, who characterize it as a wasteful program the country can’t afford. They could also fuel opposition to new health care taxes the Oregon Legislature narrowly passed earlier this year to close a hole in the state’s Medicaid budget and stabilize the state’s insurance market. Voters will decide in a January special election whether to keep or overturn those taxes.

In a statement released Tuesday, Brown linked the problem to the state’s failed Cover Oregon insurance exchange, a project of her predecessor John Kitzhaber. That portal failed to launch as intended in fall 2013, and the state is still trying to build an effective system to determine whether people are eligible for Medicaid and enroll them in benefits.

The health authority has struggled for years to manage the prodigious flow of $8 billion a year from Medicaid into Oregon. Since the Affordable Care Act liberalized qualifying standards, the ranks of Oregonians on the program for the low-income have swelled from 600,000 to more than a million, or one in four.

The state spent $166 million to automate Medicaid enrollment and eligibility with mixed results. The agency admitted earlier this year it had been handing out Medicaid money to some 115,000 Oregonians unsure of whether they actually qualified for the program. By August, the state had kicked 55,000 people off the plan after determining they were ineligible.

Oregon’s electronic Medicaid enrollment system is a mess, but the state just entered into a $100 million no-bid contract for the next phase with its lead developer.

In a press release issued Tuesday, Brown praised Allen, the new director, and his staff for diving into the spending problems since arriving at the agency two months ago.

The governor’s office sent out the press release only a couple hours after the health authority released records about the overpayments to The Oregonian/OregonLive, which had filed a public records request. The governor declined an interview request.

Saxton stepped down as director of the health authority in August after an aborted smear campaign against a legal adversary came to light. Reached Tuesday, Saxton said she didn’t withhold anything about the overpayments to coordinated care organizations. “I have no information about what new facts are or what facts have been shared with the Governor’s office,” she said. “I don’t think I can help you. I’ve been gone for two months.”

The agency has known about the problem of overpayments for Medicare-eligible Oregonians and for Oregonians who had been retroactively disqualified from receiving Medicaid, perhaps for being dead, since at least 2016.

“Both of these issues were issues that were known to the prior leadership and then when I and the new leadership team arrived in September, they were brought to our attention,” Robison said.

Saxton clearly knew about them, public records obtained by The Oregonian/OregonLive over the last month show. In an email to Saxton earlier this year, the state’s former former Medicaid operations director, Varsha Chauhan, described her work to resolve issues that contributed to $1.5 million in “erroneous” payments to Oregon Medicaid coordinated care organizations.

The move comes after a “communication plan” detailing how the Oregon Health Authority intended to damage the reputation of a Portland health care provider became public.

In 2016, health agency leaders quietlymade “process changes” to correct the amount paid to the coordinated care organizations going forward. But by then, the state had already disbursed the $74 million. It repaid the initial $10 million to the feds and recouped that money from the care organizations, Robison said.

The state has not repaid federal Medicaid funds incorrectly reimbursed in 2014 and 2015, and it has not asked the coordinated care organizations to return the overpayments they received.

Officials at the Oregon Health Authority and U.S. Centers for Medicare and Medicaid had discussions in late 2016 “over whether repayment of those federal funds would be required for 2014 and 2015, given the nature of all the issues that were going on with the technology and manual processes,” Robison said. That question remains unresolved.

State health department leaders decided, regardless, that they would not require coordinated care organizations to pay back the extra money they got for serving Oregonians on both Medicare and Medicaid in 2014 and 2015. “My understanding is at the time, the leadership decided not to go back and recoup that because the services had been provided in good faith,” Robison said.

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