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Second Medicaid HMO Taken to Task for Lax Oversight of Fraud Prevention

Boxer’s office chastises UnitedHealthCare, while insurance company says it’s made changes.

State Comptroller Matthew Boxer, left, reported that Medicare insurer UnitedHealthCare had not adequately monitored its mandatory fraud-prevention efforts.

For the second time in two years, State Comptroller Matthew Boxer has found that a company that manages Medicaid patient care for the state is failing in its responsibility to oversee fraud prevention efforts.

Boxer’s office released a report yesterday criticizing UnitedHealthCare for failing to hire or train the appropriate number of fraud investigators required by its contract with the state. Their efforts recovered only $1.6 million in improper payments, representing less than a tenth of a percent of the $1.7 billion state Medicaid premium payments to the company.

The audit covered the years 2009 and 2010 – the same time period for which Horizon Blue Cross Blue Shield was criticized in a similar report released in 2011.

“With billions of tax dollars flowing through New Jersey’s Medicaid program, our state relies on its Medicaid HMOs to fulfill their oversight responsibilities in an aggressive manner,” Boxer said in a statement. “This is another audit that shows an HMO failing to live up to requirements designed to combat fraud and lower state Medicaid costs.”

Boxer’s office has been auditing the state’s managed care contracts to ensure the insurers are upholding their responsibility to investigate waste and abuse of the state- and federally funded program, which pays for healthcare for low-income and disabled residents.

The comptroller’s office is responsible for auditing government finances; examining the efficiency of government programs; scrutinizing government contracts; and investigating misconduct, waste and abuse throughout the government, with a specific responsibility for Medicaid.

United serves 350,000 of the more than 1 million state residents enrolled in Medicaid, making it New Jersey’s second-largest carrier behind only Horizon’s 470,000 enrollees.

While the state contract with the company required that it have the equivalent of between four and six full-time investigators for the two-year period that was audited, the actual number ranged from fewer than two to three investigators.

In addition, the state contract required that the company’s vendors and subcontractors, such as pharmacies and dental providers, refer cases of waste or fraud to United. There wasn’t a single referral from the thousands of subcontractors during the two-year period covered by the audit.

The comptroller’s office recommended that the company make several changes, including establishing new procedures to ensure it’s fulfilling its contract requirements; reviewing reports to ensure they’re accurate; and strengthening its oversight of vendors and subcontractors.

Additional recommendations include: United should ensure that its workers satisfy the annual requirements of the state and that it should report any investigations in a timely manner.

A United spokeswoman said the company is taking steps to implement the recommendations.

“UnitedHealthcare Community Plan of New Jersey shares the commitment of the State in combatting fraud, waste and abuse,” Mary McElrath-Jones said in a statement. “UnitedHealthcare has been working closely with the Office of the State Comptroller on these matters from 2009 and 2010.”

The comptroller’s office will continue to monitor the company’s implementation of the recommendations, according to the statement announcing the report.

Horizon recovered only $188,000 in fraudulent payments during the same two-year period.

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