Audit finds state spent more than $1M in improper Medicaid payments

An audit of the Medicaid Provider Enrollment process released Thursday shows North Carolina’s Medicaid program issued $1.64 million in Medicaid payments to unlicensed providers. Eighteen providers with a suspended or terminated license were not removed from the Medicaid program at all.


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• 8 providers had suspended or terminated licenses for substance abuse (prescription drugs and/or alcohol).

• 6 providers had suspended or terminated licenses for unprofessional conduct.

• 2 providers had suspended or terminated licenses for sexual misconduct/inappropriate behavior with women.

• 1 provider had a terminated license for a felony conviction related to health care fraud.

• 1 provider had a suspended license due to concerns over a “mental condition that, if left untreated, may impair his ability to practice clinical medicine.”

The department also failed to ensure payments were only going to qualified providers in 2019. The performance audit, conducted by State Auditor Beth A. Wood, found providers with suspended, terminated and limited licenses and those without re-verified credentials continued to be paid for services. The agency also failed to require its contractors to verify provider ownership information during the Medicaid provider enrollment re-verification process.

Wood recommends the division immediately remove all providers from the Medicaid who have been suspended or terminated from the Medicaid program. The division should also remove any providers who have had limitations put on their licenses, lack appropriate credentials and they should verify the accuracy of all the provider ownership disclosures so background checks can be performed.

According to the report:

“The division did not identify and remove providers with suspended and terminated professional licenses from participating in the Medicaid program because the division did not monitor all disciplinary reports from the professional state licensing boards as required by its own policy.”

There were approximately 90,000 Medicaid providers in North Carolina in 2019. Per federal regulations, the providers must undergo screenings and be enrolled in order to receive Medicaid payments for provided goods and services.

The Government Accounting Office reported that a third of the nation’s $36.3 billion in improper Medicaid payments was due to non-compliance with provider screening and enrollment requirements in 2018.

Dr. Mandy Cohen, secretary of the Department of Health and Human Services, responded with a four-page letter that said the agency agrees with the findings. Under further review, the department determined that there are $13.4 million in overpayments which are subject to recoupment. In July 2023, the department will be rolling out a provider data management function which will include a credentialing verification component that will ensure a uniform and thorough vetting of providers.

She notes that licensing boards have issued extensive grace periods for licensure renewals during the public health crisis. Once the crisis ends, the division plans to manually verify credentials.