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Illinois fails to recoup $76 million in Medicaid overpayment

SPRINGFIELD, Ill. (AP) — Gov. Bruce Rauner's administration hasn't recouped $76 million in overpayments to private Medicaid-program insurers dating back five years, two state audits found.

The reviews by Auditor General Frank Mautino, released last week, of the Department of Human Services and Department of Healthcare and Family Services also determined that they paid $71 million for Medicaid services without checking whether the clients were still eligible. And 74,649 requests for services have gone unanswered for more than the maximum 45 days, with the oldest dating to 2014.

A Healthcare and Family Services spokesman said the payments are being recouped.

The findings are critical because they involve Medicaid managed care organizations, or MCOs, the private insurance-run system for low-income and disabled residents. Under the General Assembly's direction, the administration last fall moved 800,000 more Medicaid clients to purportedly cost-saving managed care. Managed care now handles 80 percent of the state's 3.4 million Medicaid cases.

Rauner, a former private-equity investor who has repeatedly railed against waste and mismanagement and championed a private-business approach to government, downplayed the findings.

"Clerical errors, or mistakes, get made, and they get made in business, too, I hate to break it to you," Rauner said at a Springfield stop last week. "It's a few million dollars. When you find a problem, you correct it, and you constantly improve it."

Mautino determined that the state has paid 12 MCOs $22.5 billion since 2013. In one finding, Healthcare and Family Services left $65 million on the table from 2013 to 2015 by not collecting so-called medical-loss ratio refunds, or money owed the state because the MCO didn't meet the percentage of direct-care costs it promised.

Another finding determined that HFS had paid the MCOs $11 million for incentives the companies didn't earn.

And both departments were to blame, the audits said, for a backlog of 74,649 requests for social services that hadn't been evaluated in the required 45 days. The oldest dates to 2014.

A spokesman for Human Services did not respond to a request for comment.

John Hoffman, spokesman for HFS, said the state began seeking reimbursement of the medical-loss ratio payments before the audit began. He said new system programming and the time it took to ensure accurate calculations delayed seeking reimbursement.

"A full understanding of Medicaid, including its managed care operations, will show that the department has been efficiently monitoring its programs in the best interest of our members and the taxpayers," Hoffman said.

Eligibility determinations for 8,187 cases that had Medicaid services paid are about half complete, Hoffman said. And a new system begun this year automatically cuts off benefits if a client fails to respond to a notice seeking eligibility.

The backlog of people seeking services should drop precipitously now that a new eligibility system is in place and substantial training for caseworkers is completed, Hoffman said.

"Replacing an outdated system more than 40 years old to better serve our members and taxpayers can cause challenges, and we are working to reduce any inconveniences," Hoffman said.

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