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Audit: State Overpaying Medicaid Providers

Washington state has been overpaying for health care under the Medicaid program, according to state auditors.

The audit found the state spent about $17 million more than it should have on free health care for the poor in 2010. The amount is a tiny, tiny part of the billion-dollar Medicaid budget. But the auditor found the overpayments could feed a vicious cycle, increasing each year.

Medicaid pays a per-patient fee to a middleman managed-care company, which tries to keep down costs. But lead auditor Melissa Wade says those companies were still paying too much for certain procedures, such as reimbursing for CT scans separately instead of packaged with other services.

“Think of it like a Happy Meal. You buy a separate burger, French fry and a soda, it costs more. But when you buy the Happy Meal, you buy’em together, so it’s less. So when these doctors are unbundling these services, it’s more expensive to charge’em individually than as a package,” Wade said.

If those managed-care organizations overpay, the state pays then more the next year. Then the organizations overpay again, and the costs snowball. The audit says the Health Care Authority, which administers Medicaid, should be doing more oversight.

The state agency says it’s already made some fixes, and it takes issue with the dollar figure the auditors settled on. The review is based on a limited sample of health care transactions, so the full total of excess payments still is not known.

Gabriel Spitzer is a former KNKX reporter, producer and host who covered science and health and worked on the show Sound Effect.