BATON ROUGE, La. (AP) — Louisiana mistakenly paid nearly $1.9 million for privatized Medicaid benefits for 1,727 people after they had died, according to an audit released Monday.

Legislative Auditor Daryl Purpera's office discovered the errors when it compared payments the state Department of Health and Hospitals made for privatized Medicaid services in the 2012-13 budget year, to lists of the deceased obtained through DHH's vital records office.

The auditors found the department incorrectly paid $1.6 million to the five managed care organizations that oversee medical services for Medicaid patients through a program called Bayou Health. DHH paid $258,000 to Magellan Health Services, the company managing addictive treatment and mental health services through the Medicaid program called the Louisiana Behavioral Health Partnership.

"Approximately 53 percent of these payments were for participants who died before the programs began," the audit says.

DHH Secretary Kathy Kliebert said the department will seek repayment from the companies that were paid improperly and has changed its method for crosschecking Medicaid enrollment, to ensure that people are removed from the Medicaid rolls when they die.

"We are going to recoup 100 percent of this money," she said.

Both Bayou Health and the Behavioral Health Partnership started in 2012, as Gov. Bobby Jindal's administration pushed to privatize many state-run health care services.

In both programs, Louisiana's health department pays the companies monthly fees for overseeing the care of each Medicaid patient, similar to an insurance premium or an administrative fee, depending on the type of health care involved. DHH decides participant eligibility and enrollment, not the private companies, according to the audit.

"Based on the results of our analysis, DHH does not have a sufficient process in place for identifying deceased Medicaid participants in a timely manner," the audit says.

In a written response to Purpera's office, Medicaid Director Ruth Kennedy agreed with the report's findings, but noted that the $1.9 million overpayment "represents a tenth of one percent" of the total premiums paid per Medicaid patient per month during the audit period.

Kliebert blamed the payments on the state's reliance on the Social Security Administration's "sloppy, faulty federal database" to determine Medicaid eligibility. She said DHH now will check its Medicaid rolls against its own vital records office.

"By using our records, we feel much more comfortable that going forward we're not going to have this issue," Kliebert said.

She said the health department will recoup all improperly paid fees to the private companies by February, by deducting it from future payments. She said the companies weren't at fault, because enrollment is determined by DHH and management fees are based on that.

"They weren't ripping us off. They weren't fraudulently billing us," Kliebert said.

About 1.4 million people are enrolled in Louisiana's Medicaid insurance program for the poor, elderly and disabled, which is financed with a combination of state and federal funds. About 900,000 of them receive medical care through the Bayou Health program.

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DHH paid $1.9M for Medicaid for dead people

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