Audit finds state improperly paid some Medicare subsidies

By David McGrath Schwartz

Thursday, Aug. 16, 2012 | 2 a.m.

Nevada failed to adequately vet seniors and the disabled who get a state subsidy to help pay their Medicare premiums, potentially costing state and federal taxpayers millions of dollars, according to a federal audit.

Nevada will have to pay back $180,000 to the federal government for not deleting individuals from the rolls even after they had been determined to be ineligible. The federal government will withhold another $900,000 to the state until there's further review of some cases.

Another $72.8 million is under scrutiny because the state did not have adequate documentation to provide to auditors, according to the report by the Office of Inspector General.

“The state agency did not verify the eligibility of individuals added ... or take corrective action on erroneous public welfare additions,” according to the audit, which was released last month.

Since the auditors’ initial investigation in March, the state has improved its monitoring of those it subsidizes and its communication with federal agencies, said Charles Duarte, the state administrator who oversees the Medicaid programs.

The state agency strongly disputed the $72.8 million questioned in the audit.

Duarte, in an interview Wednesday, described the figure as “very preliminary and probably inaccurate.”

The agency, in a response to an initial draft of the audit, petitioned to have that number taken out.

“An outside reader of the report may believe that there is potential for the entire $72.8 million ... to be disallowed,” according to the state’s response to federal auditors.

Duarte said that since the report, state officials recovered the documents auditors had labeled as missing. Those files had been deleted because they had already been electronically transferred to the federal agency.

The state hired a company to help look into the records and develop better procedures.

Nevada, through Medicaid, provides about 45,000 seniors and disabled clients with a monthly subsidy of just under $100 to help pay premiums for Medicare, the federally run health care program.

The audit looked at records in Nevada from late 2007 to the middle of 2009. In one finding, the audit discovered seven of 18 subsidies had been wrongly paid.

States are responsible for “verifying the validity of public welfare additions” and correcting errors to the welfare rolls, according to the Centers for Medicare and Medicaid, the federal agency that oversees those programs.

Of the $74 million spent on the subsidies in less than two years, $45 million was in federal money.