Archive for Tuesday, October 4, 2005

Million-dollar Medicaid mistake turns into partisan battle

October 4, 2005


— A $1 million Medicaid payment to a southeast Kansas pharmacist for a bottle of eardrops erupted Monday into a political fight.

Senate Democratic Leader Anthony Hensley of Topeka called for an investigation into the pharmacist, while Senate Republican Leader Derek Schmidt of Independence said the pharmacist should be thanked for alerting state officials.

Steve DeFever, the pharmacist, said he agreed with Schmidt.

"I don't mind or care if they investigate," said DeFever, owner of DeFever Osborn Drug in Independence. "I wasn't trying to cheat. I'm the one who put my hand up."

Meanwhile, EDS, the company that handles the state's Medicaid payments, said it was implementing new procedures to keep similar errors from happening again.

Payment mix-up

In April, DeFever's drugstore received reimbursement of $1 million from Medicaid, the state-federal program that provides health care for the poor.

But the reimbursement was for prescription eardrops that cost $1.95 per unit. Officials first reported that the medicine was eyedrops, but later corrected themselves.

When the pharmacy tried to report the payment error to EDS, the store was told to bank the check, and future Medicaid reimbursements would be drawn off the funds until the check was depleted.

Last week, Schmidt criticized state officials for this situation, saying that the pharmacy tried to give money back and couldn't.

EDS then started investigating the allegation.

On Monday, it reported its findings to the Special Committee on Medicaid Reform, which is chaired by Schmidt.

Here is what EDS says happened:

The mix-up started on DeFever's end on April 5 when the pharmacy incorrectly filled in a reimbursement form, which is transacted online. The pharmacy left empty the field for the quantity of medicine on the form.

The empty field defaulted to 999,999 units of eardrops, which resulted in the $1 million payment, the allowable payment from Medicaid for that kind of drug. This could have been a simple computer software problem, EDS said.

The EDS system sent an automatic denial to the pharmacy, but the pharmacy overrode the denial to complete the transaction.

On April 27, however, the pharmacy voided the claim and resubmitted a corrected one.

When the pharmacy received its check and recognized the error, it contacted the EDS call center and was told to cash the check, and that overpayments would be recovered by offsetting future claims.

But routine EDS audits flagged the outstanding balance owed, and EDS issued two letters, in June and July, to return the funds to the state. The pharmacy did not answer the letters.

Hensley calls for probe

"I am very concerned about the actions of the provider," Hensley said, saying the pharmacy had abused the system.

Hensley forwarded questions about the transaction to the head of the Medicaid Fraud and Abuse Division of the attorney general's office.

But Schmidt said DeFever was a "good-faith actor" who helped uncover a problem with EDS' system.

Hensley asked Schmidt why he hadn't notified authorities earlier, when he first learned of the problem. Schmidt said the proper officials knew of the problem.

DeFever said he didn't know whether he agreed with EDS' conclusion that he or his staff had made the error.

"It's possible. But it seems like there should be a system where I would have to call them for huge quantities," such as what had appeared on the form, he said.

He said his staff ignored subsequent letters from EDS to return the funds because they had already been directed in earlier conversations to put the money in the bank.

For their part, officials from EDS, which has an annual contract with Kansas for approximately $20 million, said it was tightening its procedures.

EDS' Carol Pangborn, who is responsible for the Kansas program, said call center employees would flag reimbursements for unusually large amounts of drugs.


lunacydetector 12 years, 3 months ago

where is H. Ross Perot? he still owns EDS doesn't he?

....and that dip who wants the pharmacist investigated...RIDICULOUS

neopolss 12 years, 3 months ago

I would think we could waste tax money better by simply burning it.

noname 12 years, 3 months ago

I am interested to know what the state's policies are. I assume that as a contractor for the state, EDS does not make the policies, just implements them.

I also find it interesting that the pharmacy overrode the denial sent by EDS and then the pharmacy never responded to 2 letters sent to recover the funds.

I don't think the pharmacists should be charged with fraud, but not all the fault is with EDS.

dirkleisure 12 years, 3 months ago

EDS denied the claim, and the pharmacist overrode the denial, then claims ignorance.

Also, the 999,999.99 entered isn't due to EDS software, but due to the software chosen by the pharmacist.

While EDS certainly deserves blame for what happened after the check was sent, the blame for the check being sent at all lies squarely with the pharmacist.

Janet Lowther 12 years, 3 months ago

It's hard to believe any programmer would be so stupid as to default a required value to the maximum. What on earth was he (or she) using for a brain? For that matter what were the software QA people doing when they let THAT gaffe get past 'em. . .

All programs need to test their input data for plausibility. 999,999 units of eardrops is not plausible. Indeed, I have programs which track the statistics for the data being entered and flag anything two standard deviations (or more) above average for review by humans.

BTW, Ross Perot sold EDS to GM years ago, back before he ran for president.

bankboy119 12 years, 3 months ago


Because the field was left blank it is the pharmacist's fault? If the field was left blank that should default to 0 not to 999999999999999999999999999. If there's nothing there doesn't that equal zero? Government programs that run off of taxpayers money are a complete waste because of crap like this. The money isnt' theirs so they don't care what happens to it.

lunacydetector 12 years, 3 months ago

did EDS get this job through a bid process or was it a no bid contract?

dirkleisure 12 years, 3 months ago

Read the comment, bankboy.

The software that defaulted to all 9's is neither EDS software nor government software. The software is third party, chosen by the pharmacist, and used to file all of his insurance claims (ie Medicaid AND private insurers).

It isn't a government program, and it isn't running off of taxpayer money. In fact, when the 999,999.99 claim was submitted it was rejected.

The pharmacist, again using the thrid party program, then overrode the rejection and collected the money.

dirkleisure 12 years, 3 months ago

And the pharmacist shouldn't have any responsiblity whatsoever.

Other than cashing a fat check from the government.

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