Minnesota's Medicaid program made up to $29 million in improper payments for duplicate accounts

The state agency that oversees Minnesota's Medicaid program disclosed that it incorrectly paid up to $28.9 million over three years to managed care organizations and health care providers for tens of thousands of enrollees with duplicate personal accounts.

The state Department of Human Services (DHS) said the overpayments stemmed from gaps in its electronic system for tracking eligibility and enrollment, which led to the creation of multiple personal identification numbers for more than 47,000 Minnesotans.

The errors may have disrupted health care services for some Medicaid enrollees, who could have had claims delayed or denied because of problems with the computer system, according to a report sent to the state Legislature this week.

The DHS has struggled to keep up with a long list of costly financial missteps that have shaken public confidence in the state's largest agency and its oversight of the state's Medicaid program, the public insurance program that serves 1.1 million Minnesotans. Since early last summer, DHS officials have acknowledged that repeated breakdowns in internal controls caused the agency to make more than $100 million in overpayments for substance-use treatment services. Top administrators at the DHS have pledged aggressive action to strengthen internal controls within the agency; yet, as the errors pile up, lawmakers have said they may be more reluctant to fund new programs for the state's most vulnerable populations.

Sen. Michelle Benson, R-Ham Lake, chairwoman of the Health and Human Services Finance and Policy Committee, said she and other lawmakers began hearing complaints about multiple accounts from managed care organizations about two years ago, and this report validates their concerns.

"There is a risk of fraud whenever you have this kind of lackadaisical approach to tracking," she said. "It's also a lot of money at a time when we're looking for money for school safety, disaster relief and paying back tribes for [Medicaid] overpayments."

The disruption caused by the large number of multiple accounts has rippled through the state's Medicaid system. It sows confusion among state and county workers, creates billing problems for managed care organizations, and increases labor costs trying to sort out the wrong information. In some cases, the multiple accounts can disrupt the delivery of health care: Claims for health care services can be rejected if providers cannot verify their eligibility due to duplicate or incorrect personal identification numbers, officials said.

The errors are centered in the state's system for tracking eligibility for the public insurance programs. Every person who applies for public assistance gets assigned a unique personal identification number in the DHS eligibility system. A person should only have one active number assigned to them at any time, though multiple numbers are sometimes created inadvertently because of clerical errors or significant changes to applicant information.

The estimated financial impact of the duplicate billing problem is between $12.6 million and $28.9 million over the three years, 2016-2019, covered by the analysis, according to the report by the DHS and Minnesota IT Services (MNIT). Though the numbers are sizable, the potential duplicate payments represented less than one-tenth of 1% of total Medicaid payments over the three-year period, officials stressed.

"Every dollar is important," said Julie Marquardt, a deputy assistant commissioner at the DHS. "We are not minimizing the impact, but certainly that would be a very small number."

While not new, the problem of duplicate accounts worsened with the introduction in 2013 of a new electronic system, known as Minnesota Eligibility Technology System, or METS, to determine who is eligible for the state's Medicaid program. The new software system led to a proliferation of personal identification numbers, in part because it allowed people to enter personal data directly into the system. In the past, county workers typically would work one-on-one with people to help them enroll, which minimized potential mistakes and flagged errors.

All told, about 47,390 Minnesotans enrolled in Medicaid and MinnesotaCare, or about 3% of all enrollees, had multiple personal identification numbers in 2019, up from 41,575 the previous year, the report said. Of these, about 3,315 people have both multiple identification numbers and coverage periods that overlap, and thus are at the highest risk of being subject to duplicate payments, the agencies said.

The DHS is working on a multiyear project to proactively detect and remove duplicate personal identification numbers on a continual basis. Currently, duplicate records are not normally spotted until they cause overpayments or problems for clients and providers, the report said.

Marquardt said the DHS would repay the federal government as it recovers any overpayments related to the duplicate identifications. "We are getting a handle on the issue and identifying the different fixes," she said.

In public testimony since taking over the DHS last fall, Commissioner Jodi Harpstead has repeatedly acknowledged the payment errors at the $18.5 billion agency while pledging to tighten internal controls. In addition to the overpayments, an internal audit at DHS last month found several violations of laws designed to prevent fraud, waste and abuse within the agency's behavioral health division.

Chris Serres • 612-673-4308 Twitter: @chrisserres