Reports that a private firm that handles the state’s Medicaid reimbursements couldn’t figure out how to retract a million-dollar overpayment to a Kansas pharmacist is a vivid illustration of how easy it is to be careless with someone else’s money.

The overpayment was reported by a pharmacy in Independence that noticed its regular Medicaid reimbursement check from the state was far above its usual total. On closer examination, it was discovered that Electronic Data Systems (EDS), the private firm that manages the state’s Medicaid reimbursement program, had paid the pharmacy $999,999 for a $12 eyedrop prescription.

Wanting to do the right thing, the pharmacy contacted EDS about the mistake. In fact, pharmacy employees said they contacted EDS three times to try to remedy the error. The only answer they could get was that the firm had no procedure for canceling the check. They should put the check in the bank, they were told, and future Medicaid reimbursements would be subtracted from the amount until the state and the pharmacy were even.

“It was just unbelievable that they would not take the check back,” said Steve DeFever, owner of DeFever-Osburn Drug in Independence.

We agree.

It’s especially unbelievable that a state contractor could be so careless with state money at a time when Medicaid costs are rising at an alarming rate and putting tremendous pressure on the state budget. Asked for an explanation, the head of the state’s Division of Health Policy and Finance, which oversees EDS, offered a weak explanation about the initial reimbursement request being incorrect.

OK, mistakes happen, but any agency – public or private – that is handling the amount of public money that flows through Medicaid has to have processes that flag errors, especially errors as flagrant as the million-dollar pharmacy payment. Not only did EDS let the error through, it couldn’t even figure out how to deal with it when a payee did the right thing and reported the mistake. How many more mistaken checks as big or bigger than the one received in Independence are simply deposited and never reported?

A combination of state and federal tax money provides $1.4 billion in Medicaid services each year. This is not an insignificant amount of money. What’s more, national statistics indicate that about 10 percent of all Medicaid and Medicare reimbursements are fraudulent.

So, the recent report in Kansas indicates that not only is the state’s Medicaid reimbursement system so sloppy that it allows an overpayment of almost $1 million, it doesn’t even have a way to correct such an error when a payee is honest enough to report it.

Sen. Derek Schmidt, who represents Independence in the Kansas Senate, suggested that the state might need an inspector general to ensure that funds from the state Medicaid fund are being properly distributed. Establishing another level of state bureaucracy isn’t a pleasant prospect but neither is a contractor that potentially is misdirecting millions of dollars in state Medicaid funds. Whether the answer is an inspector general, a new Medicaid reimbursement contractor or some other remedial action, this is a situation that demands the full attention of state officials.