January 12, 2007 For more information, contact: For Release: Jan. 12, 2007
802- 828-2281
Vermont Auditor: Medicaid Audit Cites $2.2 Million in Questioned Pharmacy Claims
MONTPELIER, VT - The Vermont State Auditor's Office released an audit report on Medicaid pharmacy payments which identifies $2.2 million in claims that may have been billed or paid in error.
The report is based on the results of eight data mining “algorithms” - complex computer analyses of millions of pharmacy claims paid by Vermont Medicaid between Jan. 1, 2004 and December 31, 2005. One algorithm, for example, sought to identify claims for drugs that were dispensed in tablet or capsule form but which were billed in quantities that far exceed normal or maximum dosage standards. The results indicated a total of $1,131,831 in possible improper payments. The report said other algorithms were useful in detecting likely billing or dispensing errors by pharmacies.
Prescription drug costs for Vermont Medicaid reached approximately $110 million in the fiscal year which ended June 30, 2006. Total Medicaid program expenditures for the same period, not counting administration, were approximately $975 million.
New State Auditor Tom Salmon said, “Medicaid is a very large program that requires improved controls to make sure that tax dollars are spent effectively and appropriately.”
The pharmacy report said the identification of the potentially improper payments is just the first step in the process to recover money for the State. The State now must undertake a process to validate what we found because some of the claims do in the end prove to be valid claims, and any affected pharmacies must have the opportunity to provide documentation that justifies a suspected improper claim.
The report notes that in other states where similar computer analysis is performed, the recovery rate tends to be in the 50 to 75 percent range. The State could recover about $1.2 million of the improper payments but must repay the federal government approximately 60 percent of the amounts recovered for its share, according to the report.
In the end, we estimate the State could recover up to approximately $485,000 and the federal government up to $725,000 while having the opportunity to institute new controls to prevent these types of improper payments going forward.”
The report praised recent actions by the Office of Vermont Health Access (OVHA) in Williston, which operates the Medicaid program, for creating a special “Program Integrity Unit” to improve the methods used by Medicaid to identify and investigate possible instances of fraud, waste, or abuse in the program. The OVHA is also planning to hire a data mining contractor to continue the process of identifying and recovering improperly paid claims.
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