Dept. of Community Health Refutes Report Showing Dead People Getting Paid

Editor's note: The following is a response from the Michigan Department of Community Health regarding a recently released audit from the Michigan Office of the Auditor General and the  MichCapCon.com article "Auditor General Uncovers Numerous Troubles with Dept.of Community Health"

Recently, the Office of the Auditor General (OAG) released a Single Audit report claiming the Michigan Department of Community Health (MDCH) and the Michigan Medicaid program potentially have $4.4 billion in questionable expenditures.  Weeks later, critics accused MDCH of fraud, waste, abuse, negligence, out-of-control government spending, physical assault and mismanagement of taxpayers' money.  Some suggested that Michigan's budget woes could be resolved with $4.4 billion in questionable spending.

Let's be very clear.  The Single Audit has no findings of fraud.  There is no malfeasance.  There aren't billions or even millions of dollars being wasted and therefore the solution to the current budget deficit.  Services MDCH provides are in no way connected to fraud, waste or abuse.  The MDCH provides legitimate services for eligible people.

In fiscal year 2002, the Medicaid program served 1.2 million beneficiaries at a cost to the state general fund of $2.2 billion.  In fiscal year 2010, the program will serve more than 1.8 million beneficiaries at a state cost of $ 1.7 billion.  Simply put, in this fiscal year, the program will serve 50 percent more individuals at a state cost that is 23 percent lower than in fiscal year 2002.  Roughly two-thirds of Michigan's Medicaid beneficiaries receive their health care services through an HMO system where nearly all are ranked in the top 50 in the U.S.  The truth is that the state's Medicaid HMO program is recognized by the federal government as a national leader.

One could hardly imagine this record given the OAG's report.  On July 28, the MDCH officials met with the House Appropriations Subcommittee to set the record straight.  The MDCH disagrees with many of the key findings in the report.  The report conveys information in a way that is misleading.  It claims that MDCH has $4.4 billion of questionable expenditures.  This number is based on assumptions and conclusions drawn from a small sample of records reviewed during the audit.

For example, the auditors examined a sample of 41 Medicaid cases to determine if each person's file had the proper paperwork for eligibility.  Of the 41 cases, the OAG concluded that seven did not have the appropriate paperwork.  They deemed payments for selected services relating to these cases as inappropriate.  The auditors determined these services cost $8,000 and then projected that MDCH may have inappropriately spent $2.7 billion.  The OAG acknowledges that "it is possible that DCH could obtain additional documentation that would reduce the amount of known and likely questioned costs." 

The OAG identified some significant issues and MDCH is committed to fixing them.  These problems are primarily related to documentation, recordkeeping, and the implementation of new automated systems.  They are not fraud, waste, abuse, or mismanagement.

Over the last few years, MDCH has been undergoing a major automated systems overhaul.  As a result, MDCH temporarily suspended identifying deceased beneficiaries and providers.  During the audit period, $1 million of payments were made for services for deceased beneficiaries and to deceased providers.  The new system is in place and MDCH has begun to recover those dollars.

The MDCH provides legitimate services for Michigan's most vulnerable citizens and we will continue to vigorously carry out that mission.

Janet Olszewski,
Director Michigan Department
of Community Health

This letter was posted online on Aug. 4, 2010.