D.C. agency struggles to master Medicaid reimbursement

By Henri E. Cauvin
Washington Post Staff Writer
Monday, January 11, 2010; B01

The D.C. Department of Health Care Finance started work a little more than a year ago with a mandate to end years of dysfunction in the District's massive Medicaid program. Sloppy accounting had cost the city tens of millions of dollars from the federal government, and the Fenty administration said it was determined to fix the problems.

Last week brought stark evidence of just how difficult that is.

A year after halting Medicaid claims so it could straighten out its billing, the D.C. Child and Family Services Agency told city officials that it faces a shortfall of about $10 million because it hasn't fixed all of the problems and isn't ready to resume claiming money from Medicaid.

The blow to CFSA's budget comes as the District, like many area governments, confronts the effects of a struggling economy. Falling tax revenue has forced cuts in social services even as demand for aid has increased. Without the anticipated reimbursements from Medicaid, CFSA might have to cut several million dollars in spending, a small but significant share of the agency's $270 million budget.

As the city's child welfare agency, CFSA investigates abuse and neglect and oversees about 2,000 children in foster care. Its failings in child protection have been widely noted over the past decade. CFSA's mismanagement of the Medicaid process has been a persistent problem as well, and auditors have found staggering errors and rejected millions of dollars in claims.

CFSA, fearful that without big changes those mistakes might persist, stopped claiming money from Medicaid in January 2009 and set out to remake the agency's reimbursement process with the help of experts from the new health-care finance department.

Established as a cabinet-level agency to replace the health department's medical assistance administration, the Department of Health Care Finance is one of the most powerful arms of the D.C. government. Its budget is about $2 billion, and through Medicaid and other programs, it plays a key role in ensuring health care for tens of thousands of D.C. residents, including more than half of the city's children. By many accounts, the agency has brought expertise and focus to the Medicaid program. But the news from CFSA last week underscored the depth of the challenges.

The promised changes at CFSA were supposed to be in place by Jan. 1, and the budget envisioned $10 million in funds from Medicaid over the rest of this fiscal year, which ends Sept. 30. When Jan. 1 arrived, however, CFSA was not ready, and it appears that it will be several months before the agency is likely to resume seeking reimbursements from Medicaid.

Director Roque Gerald delivered the news to CFSA's staff Friday in an e-mail sent after the agency and the mayor's office had received news inquiries about the shortfall. In the message, Gerald said that the agency had been "diligent" in its efforts to resume Medicaid billing and that recently released guidelines from the federal government had forced CFSA to "retool our approach."

D.C. Council members David A. Catania (I-At Large), who chairs the health committee, and Tommy Wells (D-Ward 6), who chairs the human services committee, said the budget problems are bigger than new federal guidelines.

"What we have are management issues, and these are management issues that date back decades," Catania said in an interview.

Last week, Catania and Wells summoned Gerald and other officials for a meeting on CFSA's problems. The council members said they made it clear that the agency should not count on the council to cover the shortfall. "That's an issue for the director," Catania said.

Wells, whose committee oversees CFSA, said that with so much pressure on the city's budget, CFSA can't be leaving money on the table: "In this climate of declining revenue, they have an obligation to the whole city to claim as much revenue, including Medicaid, as they legally can."

No one argues that the task facing CFSA was easy or quick, Wells said, but after a year, the agency can't keep offering excuses. "I appreciate that they want to be cautious . . . but they should have fixed it by now," he said.

States and the District are responsible for administering Medicaid and contributing a share of the benefits, but the federal government is the source of most of the funding for the program, which provides health insurance to many low-income families.

In the District, almost all of the children in the foster care system are eligible for some services from Medicaid. Not only does Medicaid cover health needs such as antibiotics, surgery and psychotherapy, but it also covers some of the costs of coordinating care for a foster child -- essentially reimbursing CFSA for some of its work. When the District fails to claim its share of federal money, it has to put up local funds or cut services.

Catania, whose committee oversees the new health-care finance agency, said that the city's Medicaid management is no longer the mess it was a few years ago and that's it's up to the agencies to do their part. The D.C. Department of Mental Health, which a few years ago was claiming only about half of its eligible funds, has gone a long way toward mastering the Medicaid maze and is now claiming about 90 percent of eligible funds, Catania said.

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