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Audit: State paid $12 million in health costs — for dead people

Cook County has long been ridiculed for allowing dead people cast votes, but the state may have just garnered a new distinction.

It paid $12 million in health care for people who were already dead — including in one case, for a person who had died in 1989.

A new financial audit released by Auditor General Bill Holland’s office on Thursday found that the Illinois Department of Health and Family Services had 8,232 people still on Medicaid rolls qualifying for benefits, even though they were dead.

The state paid monthly premiums totaling almost $7 million for 561 people who had already been dead for an average of nearly two years before they were enrolled in a state managed care program.

“A person was dead for 663 days and then they were signed up for Managed Care,” an incredulous Holland told the Sun-Times. “They need to improve their system to ensure the death dates for current enrollees, and just to ensure that people who were deceased were not enrolled.”

The Auditor General’s office compared those enrolled in Medicaid as of June 2013 to Illinois Department of Public Health death records dating back to 1970.

Illinois Department of Health and Family Services spokeswoman Joanne von Alroth said since the audit brought the issue to light, the department has recouped more than half of the money. Von Alroth noted that managed care is a “passive enrollment” so those who were receiving Medicaid benefits were automatically rolled into the managed care program.

“Nobody deliberately put dead people on the managed care rolls,” von Alroth said.

She said the department recovered $7 million of the overpayments and predicted $11 million would be recouped by year’s end.

“We expect to have it all back. The organizations and providers who were overpaid acknowledged that it was a mistake,” von Alroth said. “This was disclosed to us more than a month ago, and we immediately addressed it. The auditor general made us aware of the findings. As soon as we were made aware of it, we took immediate action. We began recovering the payments right away.”

Holland noted in his report that he has not received documentation of recovered money, so he could not comment on that yet.

News that millions of dollars in Medicaid funds were misspent is an embarrassing revelation at a time when lawmakers in Springfield are struggling to balance a budget and threatening future tax or fee increases to pay the state’s bills.

Medicaid spending has been a flashpoint for Republicans and Democrats with GOP lawmakers pushing for the state to use a private firm to root out Medicaid waste and fraud. In 2012, the General Assembly passed a screening program as part of Medicaid reforms aimed to rein in spiraling costs of the $15 billion program.

The state awarded a contract to Maximus Inc., but the American Federation of State, County and Municipal Employees filed a grievance saying the work should be performed by state employees, not a private vendor. An arbitrator ruled in favor of AFSCME. Republicans have said the ruling should be appealed.

In April, an internal memo from two department heads that handle Medicaid payments: Julie Hamos, the director of Health and Family Services and Michelle Saddler, Secretary of the Department of Human Services, noted “new controls” were put into place to make sure that state benefits were not still flowing for people who were dead.

The state says about 24,000 Medicaid recipients die every year and that hundreds of thousands of deaths were recorded since 1970.

The audit also notes four cases were referred to the inspector general for investigation, including one in which an individual died in 1989 but had somehow tapped $29,860 in state aide for 816 services, including dental, lab and hospital bills. Though the person’s records reflected a 1989 death, the services began on December 5, 2005 and ran through last October — the last month under the audit’s review.

In the department’s written response to the audit, it noted “this Administration has made it a high priority to root out fraud, waste and abuse in the Illinois Medicaid Program.”

Illinois Department of Healthcare and Family Services (Department) audit