OIG Says TennCare Owes Feds $400M, Maybe More

The Volunteer State is also being asked to provide the paperwork or refund another $370 million for improperly documented behavioral health services.

Federal auditors this week recommended that Tennessee's Medicaid program refund to the federal government $397 million in uncompensated care overpayments, and refund or provide documentation justifying another $370 million paid for behavioral health services.

TennCare Director Stephen Smith said he "strongly objects" to the findings put forward by the Department of Health and Human Services' Office of the Inspector General, calling the report "inappropriate and unreasonable."  

OIG auditors examined Tennessee's $2 billion certified public expenditures for uncompensated care at public hospitals for TennCare enrollees from 2009-14. For state fiscal years 2010-13, the report found that Tennessee each year claimed the same amount -- $373.8 million – which auditors said shows that the state didn't calculate specific estimates of the CPEs for each of those years, as required.

The audit said that Tennessee did not comply with federal requirements for claiming CPEs for public hospital unreimbursed costs.

"Of the $2 billion in CPEs that Tennessee claimed during our audit period, $909.4 million was allowable and supported," OIG said. "However, the remaining $1.1 billion ($767.5 million federal share) exceeded the amount allowed. This amount included $482.1 million ($337.5 million federal share) of excess CPEs that Tennessee claimed but did not return after calculating actual CPEs."

OIG said Tennessee calculated another $609.4 million ($430 million federal share) above the allowable amount, which included $522.3 million ($370.1 million federal) of unsupported net costs of caring for uninsured behavioral health patients, $53.6 million ($37.9 million federal) of unallowable net costs of caring for TennCare behavioral health patients ages 21-64, and $33.5 million ($22 million federal) of overstated costs because of faulty math.

OIG recommended that Tennessee: Refund $397.4 million in overpayments for CPEs that exceeded the allowable amount; provide documentation or a refund for $370 million in improperly documented money for behavioral healthcare; and establish procedures to ensure compliance with federal requirements.

Tennessee 'Strongly Obects'

In a response included with the audit, TennCare Director Smith said the state "strongly objects" to OIG's methodology that relies on "an audit process that dates back 12 years (and) is fundamentally flawed and places the state in the impossible position of having to refute findings without key documents or historical knowledge of key agreements – both formal and informal - from individuals responsible for decisions and actions from both the state agency and the federal government."

In addition, Smith said TennCare has "provided completely acceptable and auditable documentation" that adheres to federal guidelines for the $370 million in claims for behavioral health services.

"If OIG applied this clear federal guidance and the language of the demonstration as intended by CMS, the total findings would immediately be reduced by more than half," Smith said.