Auditor General Sees Dead People...Getting Paid

There were Medicaid payments of perhaps up to $2 million paid to dead people or for people who had died before they received the medical service in question.

That was one of the more glaring findings in a recently released state audit of the Michigan Department of Community Health. It states that as much as $4.4 billion over the past two years was not properly accounted for.

"It seems like a system that invites dishonest people to really take advantage of at the cost to the taxpayers," said State Rep. Tom McMillin, R-Rochester Hills. "This is why people are so skeptical of more taxes. Everyone knows this stuff exists — lax controls. The people who allowed this to happen have been getting raises and getting Cadillac benefits. They are going to cry they don't have enough resources. The money is there to stop $4 billion of fraud. A lot of it is just internal controls."

The audit found "significant deficiencies in internal control over financial reporting."

Much of the report pointed out that the Department of Community Health was not following federal law that requires reviews of financial records.

For example, federal law requires that there must be a review of local agencies receiving Women, Infants and Children money every two years. The audit found that this wasn't done in 21 of the 48 local agencies reviewed. Those 48 local agencies received $28.5 million during the audit period.

Numerous times, the auditor general report put in ALL CAPS its recommendations and concerns.

For example, the report states: "FOR THE THIRD CONSECUTIVE AUDIT, WE RECOMMEND THAT DCH ENSURE COMPLIANCE WITH FEDERAL LAWS AND REGULATIONS REGARDING SPECIAL TESTS AND PROVISIONS PERTAINING TO DSH [disproportionate share hospital] PAYMENT FOR STATE PSYCHIATRIC HOSPITALS."

And dead people applying for benefits was something that caught the eye of the auditors.

The audit stated: "DCH did not establish controls to prevent or detect and correct payments to providers who were deceased prior to the date the medical service was provided."

The audit shows that DCH paid $300,000 to 158 Medicaid providers who were deceased prior to the date that the medical service in question was allegedly provided. Also, DCH improperly paid providers $700,000 on behalf of 1,705 deceased Medicaid beneficiaries. DCH stated it had recovered $193,000 from the providers.

The audit says that the "likely questioned costs" were about $2 million.

Also, the audit raised questions about a DCH program set up to keep disabled and elderly people in their homes and delay long-term care. The audit found that DCH paid $800,000 of that money for people who were already in long-term care facilities.

In one example, DCH paid $8,888 over a 12-month period for one person to live in their home, while at the same time also paying for the individual's stay at a long-term care facility.

"The auditor general report outlines a department that is rife with overlooked fraud and abuse, and it is simply frightening that this is the type of service our state provides people in need," said state Rep. Joe Haveman, R-Holland, in a press release.  "As local governments are forced to choose between policemen versus fire fighters, as education funding is being cut, it is unconscionable for one department to waste as much as $4.4 billion in just two years and have no accounting for it."

"Don't ask for tax increases when you have inefficient government and you are wasting taxpayer money," said Rep. Dave Agema, R-Grandville. "Government keeps getting bigger when they are not efficient with the money they have."

The original version of this story was posted online on July 25, 2010.