Sneak Preview: N.C.’s Medicaid Application Process Criticized

September 25, 2014 | By Jerry Ashworth | Post a Comment

xsass_bookshot(The following was excerpted from an article in the Single Audit Information Service.) The North Carolina Department of Health and Human Services, Division of Medical Assistance seeks to implement best practices by March 2015 to better ensure that only qualified providers can enroll in the state’s Medicaid program, in response to a recent audit by the North Carolina Office of State Auditor.

DMA is responsible for establishing qualification requirements for Medicaid providers and for enrolling them. The division evaluates applicants to verify that they have adequate licenses and credentials to participate in the program.

The state audit determined that DMA did not provide reasonable assurance that only qualified providers were approved to enroll in the Medicaid program. Specifically, the division did not:

  • maintain adequate documentation for high-risk provider application approvals;
  • review its high-risk provider approval process; and
  • maintain sufficient written procedures for documenting the approval of high-risk providers.

OSA found that about 548 of 843 (65 percent) of high-risk provider applications that were approved in 2012 did not contain sufficient documentation to allow OSA to determine the reason for the approval. “High-risk provider application files listed various adverse actions ranging from recoupment actions and license suspensions to felony drug convictions,” OSA said. “All of these actions are potential reasons to deny a provider application. However, despite the severity or extent of the adverse actions, the division approved these provider applications without sufficiently documenting evidence to support the approval.”

For example, DMA approved a provider even though its license had been revoked by the North Carolina Board of Occupational Therapy due to fraudulent billing. It also approved another provider that did not disclose a misdemeanor shoplifting conviction while submitting an affirmation statement to DMA saying that it had never been charged with a misdemeanor or a felony.

OSA cited internal control best practices for proper documentation issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), noting that COSO’s “Internal Control — Integrated Framework” states: “Documentation provides evidence of the performance of activities that are part of the system of internal control, enables proper monitoring and supports reporting on internal control effectiveness, particularly when evaluated by other parties interacting with the entity, such as regulators, auditors or customers.”


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