Saturday, May 26, 2001

Hawaii State Seal

overpays $7 million,
audit finds

The state audit says errors
in processing claims led to
the overpayment

By Pat Omandam

Errors in claims processing by the state Med-QUEST Division could have resulted in overpayments totaling more than $7 million in 2000, according to a report from the state auditor's office.

In a financial audit released yesterday of the Med-QUEST Division of the state Department of Human Services, the audit found weaknesses in the processing of Medicaid fee-for-service claim payments processed by the division's fiscal agent, Hawaii Medical Service Association.

In fiscal year 2000, Medicaid payments for service accounted for $392 million, or 60 percent, of the division's total expenditures.

The audit discovered a high error rate -- about 30 percent of the number of cases tested -- as well as a randomness of errors and a limited monitoring by the division. The report said these findings "raise serious concerns regarding the propriety of the reported Medicaid program expenditures and the reliability of the work of HMSA."

Some errors related to the submission of claims for unauthorized goods and services. Others included claims coded and priced incorrectly, incorrect approval codes and incorrect payments due to examiner error.

The Medicaid program provides medical assistance to those age 65 or older who meet income and asset requirements. The QUEST program provides medical services to needy families and dependent children.

State Auditor Marion Higa recommended the division establish a well-documented and concise claims review system, adequately train employees and ensure that HMSA be notified immediately of any discrepancies.

It also recommended HMSA be held accountable for any errors in its claims processing, as required in the division's contract with HMSA.

State Human Services Director Susan M. Chandler, in her May 14 response to the audit, said the division is working to correct shortcomings in the processing of claims.

For the long term, she said, the division will begin a Medicaid fee schedule that will promote greater efficiency and accuracy. Also, the fee-for-service claims processing will be incorporated into one consolidated information system.

Meanwhile, the audit also said the division failed to consistently review and reverify eligibility of QUEST members.

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