Kansas insurance commissioner says audit claiming $98M tax loss 'should be discounted'
The Office of the Inspector General’s audit of a Medicaid subsidy for assisted living facilities says the program is costing the state millions of dollars every year, but the state’s insurance commissioner says the audit “should be discounted nearly in its entirety.”
The audit had the goal of determining if there are issues with the legislative language that allows facilities to claim the benefits of being a Continuing Care Retirement Communities, if there are procedures to monitor registrations and if the Kansas Department of Insurance had ample measures to stop fraud, waste and the loss of federal matching funds.
The Office of the Medicaid Inspector General found a lack of clarity and enforcement in the program that it said led to more than $94 million in uncollected state taxes between July 1, 2020, and Aug. 31, 2023. The most significant cost is from retirement communities that the MIG alleged were improperly assessed as Continuing Care Retirement Communities.
CCRCs are any nursing homes that have different tiers of service available for the range of people who would live in a retirement community — from independent seniors to people who need skilled nursing or memory care. Continuing Care Providers are registered with the KDOI after undergoing a Quality Care Assessment.
Qualifying providers must meet at least one of these parameters:
Have fewer than 46 skilled nursing beds.
Provides for a high number of Medicaid recipients, with at least 25,000 days of nursing care for Medicaid recipients per year.
Is part of a continuing care retirement community.
States tax medical providers to increase rates paid to Medicaid providers, with an annual tax of $4,908 on each licensed bed in a skilled nursing care facility but offer the reduced rate of $818 per bed if it is deemed a Quality Care Assessment.
“Because the Quality Care Assessments are much lower for continuing care facilities, there’s obviously an incentive to be a continuing care facility,” said Steven Anderson, Kansas’s Medicaid inspector general. “However, lenient oversight allowed numerous nursing homes to qualify as continuing care facilities without sufficient evidence that they met the requirements for the reduced rate.”
Anderson alleges that 68% of facilities claiming to be part of a CCRC failed to meet statutory obligations when renewing their applications.
Insurance Department disagrees with MIG assessment
Insurance Commissioner Vicki Schmidt said the audit is based on a flawed understanding of senior care management, is overreaching in scope, misinterprets the law and reaches flawed conclusions based on unreliable extrapolations.
The most common reason the Medicaid inspector general gave for a facility not qualifying as a CCRC was the lack of, or more commonly, the late submission of a financial audit.
“It is inaccurate to assert that a CCP loses its registration automatically upon the slightest of technical violations,” Schmidt wrote.
Instead, the care facility would be entitled to a court hearing to contest the revocation of its registration. Schmidt said it can be challenging to complete a financial audit within the statutory timelines, which mandates it be completed within four months from the end of the fiscal year. Most facilities do end up submitting an audit, but not within the four-month timeframe.
“More often than not, the (Insurance) Department’s files reflect a CPA audit was provided with the renewal application, or within the extension granted by the Department to the applicant who sought additional time due to incongruity between annual renewal dates and the end of the provider’s fiscal year,” Schmidt said.
The audit also concludes that 24% of facilities are improperly given the reduced rate despite not meeting requirements for continuity of care. The MIG relied on financial statements, facility floor plans and provider websites to determine a facility has multiple types of care to determine whether a facility offered multiple levels of care. Schmidt said none of those methods are determinative of what a facility may offer.
Bill could implement audit's suggestion
The Legislature is already considering implementing one recommendation to the report, which would transfer authority of registration of CCRCs from the Department of Insurance to the Kansas Department of Aging and Disability Services. The DOI agreed with that change when House Bill 2784 was in committee.
“The Department is not involved with quality care assessments performed through KDADS, with the Centers for Medicare and Medicaid Services, bed tax determination, nor any other aspect of CCRCs,” said Eric Turek, director of government and public affairs at the Kansas DOI. “It is more fitting for the registration and renewal authority to reside with KDADS, an agency that has substantial enforcement authority over these types of facilities.”
The bill sailed through both chambers with unanimous consent in the Senate and only one no vote in the House. But both chambers made minor amendments to the bill, so it’s now being put in a conference committee bill with a handful of other health care laws.
The Medicaid inspector general could be doing more of these types of audits in the future. Last week, the Senate approved a bill that would expand the scope of its auditing ability from just Medicaid to food and cash assistance programs in the state.
Senate Bill 488 passed in the Senate with a 22-8 vote but wasn't heard in the House.
This article originally appeared on Topeka Capital-Journal: Kansas Medicaid inspector general and insurance commissioner spar
