Oregon Medicaid program erroneously paid up to $4.1M due to system errors, audit says

The overpayments are a small fraction of what the state spends on its Medicaid program, but they could put federal funding at risk, state auditors warned.

Oregon's Medicaid program overpaid up to $4.1 million to local healthcare organizations across the state after state officials failed to account for hundreds of duplicate identification codes for enrollees, putting federal funding for the program at risk, according to a new audit.

The 20-page audit from the Oregon Secretary of State's Office found nearly 650 duplicate system identification codes for enrollees in the state's benefit eligibility system out of more than 2 million IDs the agency reviewed, estimating millions of overpaid dollars that were given to coordinated care organizations in the state as a result. State auditors believe that the duplicate codes cost the state anywhere from $232,000 to $4.1 million that Oregon should not have paid to the insurers.

The state's Medicaid program, known as the Oregon Health Plan, allows low-income individuals to visit such organizations across the state as a form of locally-provided coverage. In turn, these organizations receive payments from the Oregon Health Authority depending on the number of people they care for. About 1 in 3 Oregonians uses the Oregon Health Plan, which began making increased payments to coordinated care organizations this year to stabilize its contracts and account for federal changes.

But the errors in the system come at a particularly vulnerable time for the state's Medicaid program, which is expected to implement resource-intensive work requirements and increased eligibility reviews in accordance with the GOP's 2025 federal tax and spending law over the next few years. Democrats and eligibility workers have said the cuts and changes to the program from the law will make it harder for people who qualify to receive care and benefits.

"The Oregon Health Plan is a critical program that supports the wellbeing of Oregonians, which is why it must be administered efficiently, effectively, and in compliance with federal rules," Secretary of State Tobias Read said in a statement. "OHA already identified many of the duplicate payments and recouped or adjusted them before our review was complete, but overpayments are still overpayments, and any lost federal funding for the Oregon Health Plan would make it more difficult to care for the Oregonians who need help the most."

The up to $4.1 million in erroneous payments came as the state paid $37 billion to coordinated care organizations over the time period of 2020 to 2024. But officials with the health authority say that's a small fraction of the work the agency has successfully done.

Vivian Levy, interim Medicaid director at the Oregon Health Authority, framed that figure in a response letter within Oregon's Medicaid program and its entire spending, making up anywhere between 0.0004% to 0.0064% of the $64 billion in Medicaid program costs statewide between 2020 and 2024.

"The agency is concerned with the title of the audit report due to the fact that we work diligently through robust, established processes to recover and return monies, as appropriate, under the federal program guidelines," Levy wrote. "While limited duplicate capitation payments may occur, OHA is committed to correcting any duplication errors and recouping the capitation payments."

Auditors also recommended that the Oregon Health Authority work to improve worker training for eligibility staff, review other identification codes auditors did not test for overpayments, give the extra money back to the federal government and design a "quality control process" to prevent the issue from happening again. The health authority accepted all of those recommendations and told auditors it will implement them over the next two years.

"OHA is dedicated to being a responsible steward of taxpayer dollars," Levy wrote. "OHA's Managed Care Reconciliation Team maintains strong systems and processes that contribute to such a low percentage of estimated duplicate ID payments and is committed to making further operational improvements to prevent duplicate ID payments in the future."

This isn't the first time this year state auditors have flagged issues with the state's healthcare benefits. A March audit found that an Oregon Health Plan program for adults who make too much money to qualify for Medicaid could have improperly given out up to $15 million in payments related to benefits for recipients.

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This article was originally published by Oregon Capital Chronicle and used with permission. Oregon Capital Chronicle is part of States Newsroom and can be reached at [email protected].

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