LITTLE ROCK, Arkansas — As Arkansas moves forward with a plan to offer subsidized health insurance to thousands of low-income residents, it is preparing to reorganize its Medicaid program to create a new office that would investigate fraud and waste complaints.
Under a measure Gov. Mike Beebe signed into law last week, 33 staffers from the Department of Human Services will begin working this summer under an independent office that will investigate payments to ineligible recipients, improper billing by providers and other areas that Republican lawmakers say are costing the state's Medicaid program.
They'll answer to the newly created Inspector General, who will be appointed by Beebe and confirmed by the state Senate. The proposal is among several aimed at curbing costs in the Medicaid program that lawmakers approved in conjunction with a plan to expand health insurance to 250,000 people using federal Medicaid dollars. The "private option" insurance plan, which still must get federal approval, is being touted as an alternative to expanding Medicaid's enrollment under the federal health care law.
At least nine other states have inspectors general to review their states' Medicaid programs, and others are considering similar programs as they mull whether to expand Medicaid under the health law, said Megan Comlossy, a policy associate in the health program for the National Conference of State Legislatures.
"I think states that are looking at Medicaid expansion under the Affordable Care Act are interested in ensuring that if they are expanding, the money is going to legitimate services rather than fraud and abuse," Comlossy said.
Under the Arkansas plan, staffers already working in the Department of Human Services to monitor waste and fraud will be reorganized under the Office of Inspector General. In addition to the IG, the measure also calls for the hiring of a legal counsel for the department.
Sen. David Sanders, who sponsored the legislation setting up the office, said it was modeled after similar programs set up in Texas and New York.
"It is not buried within the bureaucracy of the Medicaid program. It's independent," Sanders, R-Little Rock, said. "That experience from other states tells us and demonstrates to us that is a much better way for ensuring that the Medicaid program is run well and it is looked at by an independent entity that is focused on rooting out waste, fraud, abuse and neglect."
The IG's office would be able to recover or freeze Medicaid funds from providers if they've committed fraud, and will be required to refer suspected fraud or criminal activity to the attorney general's office's Medicaid Fraud Control Unit. The office will also be required to file an annual report detailing its investigation and money recovered.
"We frankly think it'll strengthen (the Medicaid program) because the inspector general will be focused full time on program integrity," state DHS Director John Selig said. "That's something that for the director of Medicaid currently is one of many duties he's got."
As lawmakers debated whether to expand Medicaid during this year's session, Sanders and other Republicans said the program also needed to keep costs down in the $5 billion program that serves more than 776,000 people in the state. An audit released in February said that the state has paid more than $1.3 million in Medicaid dollars to ineligible recipients since 2009.
Groups representing hospitals and physicians from around the state said they're waiting to see how the IG's office is set up before judging the program, but said that Sanders made changes to the legislation that alleviated their initial concerns about the administrative burden the new office could pose.
"I think some of it will be fleshed out in rules and regulations and how the office is actually set up," said Bo Ryall, president and CEO of the Arkansas Hospital Association. "I think it remains to be seen if it's not adding a new layer of audit bureaucracy."
David Wroten, executive vice president of the Arkansas Medical Society, said those concerns will ultimately hinge on who Beebe selects to run the new office. The society represents 4,300 physicians and medical students in the state.
"That's the thing about inspector general programs. They're pretty heavily dependent on who that person is and how responsive they are to the state," Wroten said. "If you end up with an inspector that seems to be on a witch hunt, really bringing in people who haven't done anything wrong, then we would have a problem with it."
The new law, which takes effect July 1, requires that the inspector general have at least 10 years of experience in prosecution for fraud, fraud investigation, auditing or comparable experience in health care. Beebe said he expected to soon begin looking at potential candidates for the IG position.
"You want someone who's intelligent but who has all the objectivity and integrity in the world so they have credibility, somebody without any preconceived notions of ideology one way or the other," Beebe said.
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