The state and federal government are at odds over what federal investigators say was millions of dollars in improper billing by Kansas officials for Medicaid payments.

A February audit by the Department of Health and Human Services’ Office of Inspector General recommended that Kansas repay $5.1 million of improper payments from 2002 – and that the state determine how much of another $126.8 million in payments might also be subject to repayment.

Julie Brookhart, a spokeswoman for Centers for Medicare & Medicaid Services in Kansas City, Mo., said last week her agency is waiting for the state to act.

“The Centers for Medicare & Medicaid Services has made the request to Kansas to provide a methodology for determining the amount that is due,” Brookhart said in an e-mail to the Journal-World. “We do not have this methodology, and until we get it we cannot respond any further.”

But the Kansas Division of Health Policy and Finance is reluctant to repay the $5.1 million.

“We don’t think that’s warranted,” said Gavin Young, a spokesman at the state Division of Health Policy and Finance. He said Medicaid officials have not pressed the state for either the $5.1 million or the billing reviews.

“It’s just sitting there,” he said, referring to the OIG audit.

The standoff comes as Kansas, in a separate but related case, says it will repay $14.1 million in incorrect payments.

The February audit looked into how Kansas billed Medicaid to pay for school-based health services for children with special needs. Investigators said that a sample of 300 Medicaid claims from three school districts – Wichita, Kansas City and the Central Kansas Cooperative – in 2002 turned up 217 claims that shouldn’t have been paid:

¢ 76 claims lacked a required doctor’s order for occupation and speech-language therapy services.

¢ 139 claims lacked evidence that services had ever been rendered.

¢ Two claims lacked a required doctor’s order for physical therapy.

Based on that percentage, the report said, the state should repay $5.1 million of $8.4 million in statewide Medicaid payments from that year. And because the same payment rules were in place the other years, Glen Bailey, an OIG spokesman, said his department wasn’t saying that all $126 million needed to be repaid by Kansas. That’s up to the proposed review to determine.

“We haven’t audited those periods,” he said. “But … they might want to take a look at that.”

Scott Brunner, director of medical policy for the Kansas Department of Administration, provided the state’s official response in a December letter to OIG – saying that Medicaid rules did not require a doctor’s approval for the 76 occupation and speech-language payments.

And the state does not believe it should have to review all similar payments from 1998 to 2003, he said.

Kansas “does not believe that the billings of the three school districts are truly reflective of the billing practices of all school districts,” he wrote.

Another claim

Meanwhile, Kansas has given back nearly $14 million in ill-gotten Medicaid payments that were discovered in another OIG audit this year.

“It’s been repaid,” Young said of the $14 million.

Federal auditors ordered the payback earlier this year after realizing state officials had tapped Medicaid for a year’s worth of school-based services rather than the allowed nine months.

The overbilling occurred each year between 1998 and 2003.

State officials did not contest the findings, Young said.

“We didn’t pay for services that weren’t provided – these were services that were received for 12 months,” he said. “But the regulations say we can only pay for nine months’ worth.”

How the payback or the shift to a nine-month billing will affect children receiving services – physical, occupational, physical and speech therapies, mostly – remains to be seen.

“We’ve not heard a thing about this,” said Dale Dennis, deputy secretary at the State Department of Education.

In Lawrence, assistant special education director Kevin Harrell said Medicaid covers only a fraction of the school district’s costs.

“We receive some Medicaid reimbursement, but, really, it’s a drop in the bucket,” Harrell said.

He doubted the payback would affect students.

“We’re required to provide the services we provide regardless of whether they’re funded by Medicaid,” he said. “It might have an impact of the budget, but I don’t see it affecting services.”

Most of the children receiving services covered by Medicaid are poor and have serious disabilities.

Consultant input

The OIG audit noted that state officials hatched the billing formula after conferring with Maximus, a Virginia-based consulting firm known for helping states navigate federal bureaucracies.

Maximus will not be penalized for its role in the overbilling, Young said, noting that state officials had the final say in adopting the formula.

“An error was made,” he said. “We have accepted responsibility for the issues cited in the inspector general’s report.”

The audit, based on a review of three school districts’ Medicaid billings, found that language in the state-written manual resulted in several errors.

Young said the state agreed to correct the errors but said the refund was unwarranted.

“The dispute is over how the services were billed, not over whether they were provided or should have been provided – they were provided,” Young said. “No one is saying they shouldn’t have been provided.”