State auditors found some questionable administrative costs — including $26,500 for a holiday party and “employee recognition expenses” — at a state-funded nonprofit that promotes renewable energy and energy efficiency.

Capital Bureau

SALEM — Following news that the state may have improperly paid or allocated about $186.4 million in Medicaid funds, a state audit has found that the Oregon Health Authority lacks sufficient processes to detect and prevent improper payments.

It also recommends possible fixes, saying that, among other findings, OHA should adopt certain best practices, improve data matching and integrity, and boost oversight of Medicaid providers.

The long-anticipated review was released Wednesday morning by the Oregon Secretary of State’s Office, after months of negative news about the state health agency’s handling of eligibility and payment issues in the Medicaid program.

Medicaid is a health care program for the poor and other qualifying groups, jointly funded by the state and federal government. Although the federal government shoulders much of the costs, it’s up to the states to administer the program, which is used by 1 million Oregonians.

The audit also found that the agency doesn’t have “well-defined, consistent and agency-wide processes” to detect improper payments, especially in the state’s system of coordinated care.

Additionally, auditors found that gaps in detecting and preventing improper payments may also make it more challenging for the payments to get recovered.

Most recipients of Medicaid in Oregon are enrolled in what’s called a coordinated care organization, or CCO. A CCO is essentially a regional network of care providers who see Medicaid patients. The state pays the CCO on a per-patient basis every month.

In late October, news emerged of $74 million in possible overpayments to the CCOs between 2014 and 2016. OHA has already recouped $10.1 million of that. The errors are likely due to mis-classification of certain patients who were also eligible for Medicare, and it’s not clear how much of the money the state must repay the federal government.

In a statement Wednesday, Secretary of State Dennis Richardson, a Republican, said that the $74 million possible overpayment was unrelated to issues identified in Wednesday’s audit. Further, that issue was not reported to auditors, but made public when The Oregonian requested relevant public records.

The week before Thanksgiving, the agency identified a litany of additional problems, ranging from mis-allocation of funds to possible overpayment, that could total about $112.4 million more.

OHA has been under the microscope since May, as it worked through a backlog of about 115,000 patients whose qualifications for Medicaid were unclear.

The agency found that over half — about 67,600 — still qualified and they were kept on the program. While 24,100 were found ineligible, the rest didn’t respond to the state’s inquiries, and were cut, although the agency expects that some of that group will be retroactively re-enrolled.

Auditors contended Wednesday that the health agency’s delay in fixing that problem caused the agency to spend $88 million that could have been avoided.

OHA says that the costs were not avoidable, though, in part because it is not possible for the agency to tell whether someone who received Medicaid and was found ineligible on a certain date would have been ineligible on some prior date.

The federal government also requires the agency to keep people on Medicaid until they have gone through a process that officially determines that they no longer qualify for the program.

While auditors acknowledged that requirement, they also said that “regardless, expenses resulted because these clients remained on the caseload past the point when OHA reported they should have gone through an annual eligibility determination.”

Auditors also noted that the agency initially withheld information.

“Our audit work was limited by prior agency management,” auditors wrote. “At times, we were prevented direct access to staff, had our interviews with staff monitored, had our information requests delayed, and were occasionally provided with complete and/or inaccurate information.”

They noted that responsiveness improved after a new director, Patrick Allen, took the helm Sept. 1. Gov. Kate Brown, a Democrat, named Allen to the post in the wake of a publicity scandal under the previous director, Lynne Saxton. Several other top leadership positions at the agency were also vacated.

“…Today’s audit report provides the best information the audit team could obtain from OHA’s previous uncooperative leadership and administration,” Richardson said. “The amount of wasteful and incompetent spending at OHA has been staggering and has gone on for at least the past four years.”

In response, the Oregon Health Authority Chief Financial Officer Laura Robison issued a public statement saying “we can do better.” The agency acknowledged there was room for improvement while challenging the accuracy of some characterizations and assertions in the final audit document.

“We are making changes to improve the accuracy and transparency of our programs,” Robison said.