Audit: MNsure, DHS errors cost state as much as $271 million

Updated 3:10 p.m. | Posted 12:35 p.m.

State officials got worse last year assessing Minnesotans' eligibility for public health plans, and the problems cost the state an estimated $115 million to $271 million from January through May, Minnesota's legislative auditor said Thursday.

Auditors took MNsure and the Minnesota Department of Human Services to task for not ensuring that all those who enrolled in the state's Medical Assistance or MinnesotaCare through MNsure met the federal and state eligibility requirements to get those subsidized health benefits, which was a repeat finding from a prior audit.

The department "did not adequately verify critical criteria for eligibility, such as social security numbers, citizenship, incomes, and household sizes, which resulted in ineligible persons receiving public health care benefits," according to the audit published Thursday.

A sample of 157 people who enrolled from January through March last year found 59 were not eligible for the program they were in, an error rate of 38 percent, more than double the error rate for the prior year, said Deputy Legislative Auditor Cecile Ferkul.

"We also found when we looked closer at those 59 people we concluded that 44 of those people weren't eligible for any public program," she added.

Errors in that small sample cost taxpayers a little more than $100,000 in the first five months of last year. Projected out across nearly 270,000 public program enrollees, the estimated costs run to the hundreds of millions of dollars, Ferkul said.

In some cases, the Human Services office paid out benefits to people with duplicate accounts and "did not ensure that data accurately and securely transferred from MNsure to the state's medical payment system," the audit noted.

Human Services Commissioner Emily Johnson Piper, who oversees the public health plans, raised concerns that the auditor's report overstated the extent of problems. Still, she called its findings serious and the need for improvement "critical."

The audit's release came the same morning Gov. Mark Dayton was in the MNsure offices with a proclamation promoting the Minnesota exchange.

Dayton said he had not read that auditor's report but noted the technical complexities of getting computer systems to properly screen cases.

He said while there are problems there have been big improvements, including more than $1.5 billion in taxpayer savings through new competitive bidding for the state's business.

"Auditors exist to find the problems and identify them," he said. "That's important because we want to know what the problems are so we can improve. But they're never put in a proper perspective with everything that's going right."

State Sen. Michelle Benson, R-Ham Lake, a frequent critic of MNsure, blamed Democrats and the Affordable Care Act for continued problems verifying eligibility.

Benson acknowledged the problems long predate the Affordable Care Act, but said a solution is needed now, not only to save money but to make the programs better for the people who need them.

"It is time for people in the administration to either ask for outside help so that we have good program integrity or put people with the right skills in place so that this stops happening," Benson said. "Changes need to be made faster than they're being made."

Ferkul said the report recommends making the software better at catching problems.

"We're recommending that they continue to work on changes to the design so that they can detect and assess whether or not errors occur in their processes," she said. "They also need to focus on some of the errors that we found where they could do some queries and analysis of the population to try to find the anomalies."

That includes checking to see whether children, who typically qualify for Medicaid, are ending up with MinnesotaCare coverage. The auditor's report did precisely that. After plucking the cases of 25 children on MinnesotaCare, they discovered more than half were supposed to be on Medicaid.