D.C. Issues Medicaid Mea Culpa

City Might Owe Millions to Government, Official Says

The District might owe the federal government tens of millions in Medicaid dollars because of improperly filed claims from the D.C. public school system and the Child and Family Services Agency, Mayor Adrian M. Fenty (D) said yesterday.

The mayor discussed the issue during a breakfast meeting with the D.C. Council, at which the head of the city's new Department of Health Care Finance presented a slide show about the improper billing: Some claims were filed for work that wasn't done; some claims weren't filed for completed work; and still other claims were submitted for proper work but the documentation wasn't correctly completed.

"We are bringing this to the federal government, we are confessing our sins to say that we [messed] up," said Julie Hudman, director of the D.C. Department of Health Care Finance. "Once we have talked to the federal government to show that we are cleaning up our past messes, we hope to reach a negotiated settlement like other states have done."

Hudman said that instead of firing workers and pointing fingers, she and her staff plan to educate agency officials on how to properly document services paid for by the federal government.

The District receives $1.85 billion in federal dollars to offer a range of services to children with special needs. The services vary, including rehabilitation and counseling in DCPS, as well as transportation.

"We try to work with the states to make sure that they are paying for services that are being delivered to beneficiaries, and it is their responsibility to make sure that they are doing just that," said Loraine Ryan, spokeswoman for Region III of the U.S. Department of Health and Human Services' Centers for Medicare and Medicaid Services. Ryan works in the Philadelphia office, which collects Medicaid funds for the District, Maryland and Virginia.

D.C. Council member David Catania (I-At Large), chairman of the council's Committee on Health, applauded D.C. officials for what he described as proactive steps to manage the federal dollars provided for health-care services to some of the city's most vulnerable residents.

"What is happening in the District is not unique," Catania said.

"This is happening across the country, where people are using Medicaid dollars like an ATM. We have probably been aggressive in collecting money, but we have not been keeping adequate documentation to support the reimbursements."

While Hudman refused to say how much money the city might owe, one D.C. government source, who spoke on the condition of anonymity because he was not authorized to discuss the matter, said the debt could reach well above $100 million.

The District's chief financial officer, Natwar M. Gandhi, highlighted the improper billing troubles in the city's Comprehensive Annual Financial Report in the past two years, saying that they represented a "material weakness" that could compromise the District's financial standing on Wall Street if they were not corrected.

In Fenty's 100-day plan released last year, one of the goals was to improve management of the payments and receipts to "increase federal Medicaid reimbursements by $10 million."

Council Chairman Vincent C. Gray (D) said he's pleased with the growing level of accountability.

"It was my bill that created the Department of Health Care Finance," Gray said. "This new office created the opportunity for us to have a different approach to what is the largest budget in the District of Columbia, nearly $2 billion. One of the things we hoped for was increased accountability, and that is what we are seeing with the audit of these two agencies."

Staff writer David Nakamura contributed to this report.