New report reveals deposits in Louisiana Medicaid Fraud Fund misallocated, poorly tracked

According to a report released by Louisiana Legislative Auditor Daryl Purpera money that was supposed to be deposited (and tracked) into the Medicaid Fraud Fund, was not done properly between 2012 and 2017.

The fund was designed to hold proceeds from state settlements or judgements from prosecuted Medicaid fraud cases. The money is supposed to be deposited in the fund and evenly split and used by the Louisiana Department of Health and the Attorney General’s office for future enforcement efforts.

In a news release accompanying the report Purpera said that both departments were sloppy in administering money intended for the fund:

“Both the Louisiana Department of Health (LDH) and the Office of the Attorney General (AG) lack adequate procedures to identify monies that should be deposited into the fund. As a result, auditors said, LDH did not deposit approximately $2.8 million and the AG did not deposit $712,713 into the fund … in accordance with state law. Specifically, LDH did not deposit $2,797,768 in fines and penalties assessed between fiscal years 2012 and 2017 into the fund until February 2018.”

According to the report, the LDH deposited more than $300,000 into the fund that should have gone to the Nursing Home Residents’ Trust Fund. What’s more, its staff weren’t sure when the deposits were made because of unclear documentation. And, surprise, surprise, money from the fund was spent on salaries that were not related to Medicaid fraud. Purpera said:

“Auditors found as well that LDH spent approximately $477,266 from the fund in fiscal year 2017 for salaries that did not appear to contribute to the prevention and detection of Medicaid fraud and abuse, as required by state law. In addition, LDH spent approximately $642,953 from the fund in fiscal year 2012 for software that could not be implemented because of system compatibility issues.”

The report reveals that in five years (2012-2017), the AG’s office deposited $16.6 million and the LDH, $323,000. Combined with a surplus that had existed before 2012, the withdrawals from the fund amounted to:

  • More than $7.5 million in “sweeps” used to cover state budget shortfalls,
  • More than $7.3 million to LDH,
  • Not quite $7.3 million to the Attorney General’s Office, Watchdog.org reports.

The report states: “Overall, we found that both LDH and the AG need to develop an effective process to identify and ensure that the appropriate monies are deposited into the Medicaid Fraud Fund. In addition, LDH needs to ensure that funds expended from the Medicaid Fraud Fund meet the requirements established in state law.”

The LDH included a response with the report, agreeing with its findings.

“It is important to note that these funds were deposited into other LDH accounts, and the agency has accounted for and reported these funds every year,” Reynolds wrote. “When this administration learned from the auditor that there were questions about the proper account in which to deposit these funds, [staff] implemented corrective steps immediately. In less than a month, the full amount of $2.79 million was transferred into the Fraud Fund.”

The AG’s Office also concurred. Chief Deputy Attorney General Wilbur Stiles III said, “The Department is currently working on the procurement of a case tracking system that will allow for more detailed record keeping of both state and federal funds.”

A fuller and slight different version of this article was first published on Watchdog.org.

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