SIOUX FALLS, S.D. — The South Dakota Department of Social Services disputes a federal report that criticized the state’s efforts to combat Medicaid fraud, saying it has in fact been recognized by regulators for the low number of erroneous payments made to health care providers.

In a lengthy statement to the Argus Leader, the agency said that recognition from the Centers for Medicare and Medicaid Services earned South Dakota an exemption from a mandatory federal audit program that most states have to undergo, the newspaper reported ( ).

The inspector general’s office of the U.S. Department of Health and Human Services issued a report last week that found that the state’s Medicaid Fraud Control Unit, which is part of the attorney general’s office, was generally in compliance with federal requirements. But federal officials determined that the unit was getting few referrals of potential cases from the Social Services Department’s Program Integrity Unit, which they argue is understaffed.

“The limited number of staff within the PI Unit may have affected the PI Unit’s ability to provide referrals to the MFCU,” according to the report, which stated that as of March, the Social Services Department only had two fraud investigators.

But the state agency wrote that because of the low volume of provider fraud in South Dakota, “it’s not surprising that referrals to (Medicaid Fraud Control Unit) are low compared to other states.”

It said the Program Integrity Unit tries to address billing errors up front when claims are processed and the issues are brought to the attention of providers to get the fixed.

“If errors are not corrected, or there is a credible allegation of fraud, then a referral is made to (Medicaid Fraud Control Unit),” the agency wrote. The “report counts only official cases reported to (Medicaid Fraud Control Unit), it does not reflect all of the collaboration and information sharing that occurs.”

Information from: Argus Leader,