Hatchett Faults Handling of
Medicaid Accounts Receivable



See the audit report for Full Details

Edward B. Hatchett, Jr.
Auditor of Public Accounts
144 Capitol Annex
Frankfort, KY 40601

Contact:
Matthew G. Cantor
Intergovernmental Liaison
Phone 502-573-0050
FAX 502-573-0067
APA.PressReleases@auditor.ky.gov
(Frankfort - November 19, 2002) A performance audit of Kentucky's management of its Medicaid accounts receivable says the Commonwealth is ill served by sluggish reform efforts, especially during a funding crisis. The audit, performed by State Auditor Ed Hatchett on the handling of accounts receivable consisting of provider overpayments, found that at the start of the third quarter, Medicaid accounts receivable over two years old stood at $17 million. By the end of the quarter, total accounts receivable had grown to $44 million, and Kentucky had refunded more than $25 million in federal payments figured on $35 million in outstanding overpayments more than 60 days old.

The audit notes that Kentucky also fails to charge interest on overdue accounts receivable, in effect extending interest-free loans to providers for indefinite periods.

Aged Accounts Receivable Escalate to $17 million Despite New Procedures

The audit says that Kentucky lacks effective comprehensive procedures for

  • collecting accounts receivable directly from providers,
  • recouping accounts receivable from providers by offsetting subsequent Medicaid billings,
  • recouping accounts receivable from providers by offsetting Medicare payments,
  • identifying uncollectible balances, resulting in loss of the federal share and
  • writing off uncollectible balances.

"Despite good intentions, Medicaid's efforts to manage provider overpayment accounts receivable is yielding frustrating results," said Hatchett. Our report offers many recommendations for improving management and timely collection of these accounts."

 

Edward B. Hatchett Jr.
Auditor of Public Accounts
144 Capitol Annex
Frankfort, KY 40601
WEB: www.auditor.ky.gov/