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Report: MN paid up to $271M in health costs for ineligible patients

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Minnesota's human services department once again paid benefits to people enrolled in public health care programs even though they were ineligible – potentially costing the state up to $271 million, according to a new report.

The report by the Office of Legislative Auditor uncovered several failures with the state's MNsure health exchange during last year's open enrollment period between January and March 2015.

Chief among the findings: The Department of Human Services (DHS) "did not adequately verify" whether people who enrolled in public health care programs (MinnesotaCare and Medical Assistance) through MNsure were actually eligible for those programs.

As the report notes, this issue is a "repeat finding," with the same issue raised in a report for 2014. It was also happening in pre-MNsure 2013, when it was suggested that the new MNsure computer system would "fix" the problem.

The report was released on a day Gov. Mark Dayton declared "MNsure Enrollment Day" to encourage people to sign up for public and private health plans through the state's insurance exchange.

What did the report find?

The auditor studied a sample of 157 people enrolled in public health programs, finding that 59 of them – 38 percent – did not meet the criteria for the program they were enrolled in.

Between them, these 59 people were overpaid about $93,000 in healthcare benefits.

If that's extrapolated further – meaning 38 percent of all enrollees in public health programs – it suggests the state is likely to have spent $115 million to $271 million more than it should have.

The audit found problems the state has with verifying whether those previously enrolled were still eligible. It also highlighted that county DHS workers who determine eligibility have not have enough training working with MNsure.

It also wrongly used an estimated $1.2 million in federal funds to pay for the health care costs of people aged over 65 enrolled in MinnesotaCare, when it should have used state funds only, the audit says.

Where did DHS, MNsure go wrong?

The auditor found several examples of how ineligible people continued to inappropriately get health care costs paid as a result of their public enrollment. These include:

Not charging premiums: Those enrolled in MinnesotaCare have to pay a monthly premium of up to $50 to stay in the program. Not everyone paid though due to problems with MNsure's billing system, resulting in the DHS taking in $10.5 million less in premiums than expected.

The DHS did not verify discrepancies in applications: If there's a problem with someone's social security number, citizenship/immigration status, or household income, they are given 95 days to provide the correct information. But the auditor found at least 60 percent of these cases remained unresolved as they went unverified by DHS workers.

In one case, a woman died a month after enrolling in Medical Assistance, but county workers couldn't identify her because MNsure had the wrong SSN. As a result, the DHS continued to pay premiums that cost an extra $432.

DHS workers failed to check income: The report notes that the DHS does not have access to Department of Employment and Economic Development wage and unemployment figures, so rely on MNsure and information from the application about their earnings to determine eligibility. However, this information may say they're eligible at the start of coverage, but doesn't reveal whether they remain eligible at the end of the 12-month coverage period.

Not everyone reported correct family size: Two out of the 157 people in the sample only reported themselves to MNsure. However based on 2014 tax information, each had a child living with them. This meant they were transferred to a different system and paid more. The report says the DHS should have programmed MNsure to validate household information with tax records.

People in the wrong program: Some people enrolled in MinnesotaCare had income levels that meant their children were eligible for Medical Assistance – which has a higher income limit for kids – but the DHS did not detect this.

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