The Minnesota Department of Human Services (DHS) has launched a new process aimed at identifying potential Medicaid fraud, though, notably, it doesn’t review claims for most Medicaid enrollees in the state.
This year, the state is spending over $2 million on services from Optum, part of UnitedHealth Group, to scan claims for 14 programs that DHS considers “high risk” for fraud. This initiative started in December as part of a “strengthening of prepayment screening.”
According to recent reports from 5 EYEWITNESS NEWS, the state has only mandated Optum to examine claims related to about 20% or fewer of Medicaid recipients.
These findings stem from a press release issued by Gov. Tim Walz’s office back in October, detailing enhanced prepayment reviews. The press release mentioned that DHS had engaged Optum to evaluate Medicaid fee claims. There’s an important aspect termed “Service Charges” that wasn’t highlighted by 5 EYEWITNESS NEWS and isn’t clearly defined.
Essentially, the pay-as-you-go model means that DHS reimburses service providers directly for their charges. However, data from the Minnesota Council on Health Plans indicates that for over 80% of Minnesota Medicaid enrollees, services are billed and reimbursed through health insurance companies called managed care organizations (MCOs), not directly by DHS.
In simpler terms, claims for the vast majority of Medicaid recipients aren’t currently being screened by Optum and DHS for fraud potential.
During the press conference, 5 EYEWITNESS NEWS questioned the decision not to review all claims, asking why the prepayment review aimed at understanding fraud in the state appears to exclude a large amount of potentially fraudulent claims. Deputy Commissioner John Connolly responded that while the enhanced review currently focuses on the 14 high-risk services, they plan to expand the review to cover the entire program eventually.
Connolly acknowledged that while 20% of enrollees are paid through this process, MCOs comprise around 80 to 85% of enrollment. He did mention that spending would be more evenly split in the future.
When posed the question of why Optum wasn’t assigned to review all claims from the outset, Connolly admitted it was a valid inquiry, stating, “You have to start somewhere…This is a pivotal moment for us at DHS, and we plan to build on it.”
During the press conference, DHS Inspector General James Clark, who oversees fraud prevention, charged insurance companies with the responsibility of identifying and preventing fraud in claims submitted to MCOs. Ultimately, while DHS manages Medicaid funds in Minnesota, addressing fraud remains a crucial issue for the state.
DHS later provided additional details via email, noting that if long-term care is included, MCOs account for 45% of total Medicaid spending. If it’s limited to basic care, the number rises to 80%. MCOs are contractually required to maintain a Special Investigations Unit (SIU) focused on fraud and waste while DHS oversees these units and collaborates with them to tackle the broader issue of fraud across all Medicaid payers. DHS has the power to recover claims from MCOs if they determine that payments were inappropriate.
