With Federal Medicaid Audit Planned, Senators Call for Hearings

Updated: 12/10/2012 7:52 AM KSTP.com By: Mark Albert

There is new scrutiny into the billions of dollars Minnesota pays to provide health care to the poor and those with disabilities.

The Office of Inspector General at the U.S. Department of Health and Human Services has notified the state Department of Human Services that it will audit the rates Minnesota paid H.M.O's to provide public health care as part of the Medicaid program.

Specifically, the Office of Audit Services plans to "determine whether information used for capitation rate setting for Minnesota's Health Care Programs was reasonable, allocable, and allowable" in 2008 and 2009 calendar years, according to a letter sent by the office's regional inspector general for audit services in Chicago. Click here to read the letter.

The state pays H.M.O.'s per person per month to deliver care to the state's Medicaid recipients. In October, a record 738,319 low-income and disabled people qualified for care, according to figures provided by D.H.S.

In fiscal year 2012, the state's portion of coverage was expected to cost more than $4 billion.

The federal government matches that amount, which is why federal investigators have jurisdiction to probe Minnesota's rate-setting to determine whether the rates were set too high or too low and whether taxpayers spent too much or too little.

"The taxpayers care if their money's going down the drain," said Sen. Sean Nienow (R-Cambridge), a lawmaker whose proposal to audit the managed care programs in future years was signed into law earlier this year. "That's why it's so important to get in here and take a look at what's going on."

Nienow, along with Sen. John Marty (DFL-Roseville), welcomed news of the Inspector General audit. They are now calling for Legislative hearings when the next session begins in January to re-examine how Minnesota pays for managed care.

"We want to make sure that either we're not skimming money off, going into line someone's pockets, or that we're not overpaying or underpaying," Nienow said.

"I think there's some serious problems going on and the fact that we uncover the problems is a good thing," Sen. Marty said in an interview Sunday.

"I'd like us to have hearings on how we do it more efficiently," said Marty. "These contracts have been so out of control that it's time to change it."

See below to watch previous stories from our ongoing investigations of this issue.