Louisiana Department of Health may have misspent $13 million in provider fees, audit says

The Louisiana Department of Health may have spent $13 million improperly, according to a state auditor’s report that takes issue with how the health department pays behavioral health vendors. 

The department regularly contracts with mental health and substance abuse service providers who treat people on Medicaid. But the Legislative Auditor said state health officials often don’t track whether claims and billing codes submitted by those providers are correct, or if the state is paying what is properly owed.

That’s problematic because of “ongoing concerns with the integrity of SBH services and providers,” the legislative auditor’s 29-page report says. 

In a response to the report, LDH Chief of Staff Jacques Molaison largely agreed with the auditor’s findings, and said the department has hired a vendor to help it monitor contractor billing claims. That vendor has already started work, he said.

He disagreed with an auditor finding that the department fails to track detailed times of service for each claim submitted, and said state officials do, in fact, perform those reviews. 

The sums detailed in the audit report represent a tiny fraction of LDH’s total budget, which is bolstered by federal programs such as Medicaid and generally numbers in the tens of billions of dollars annually. Health department spending regularly comprises about half of Louisiana’s annual budget.

The amount of funding identified as requiring further investigation represents less than 1.5% of total specialized Medicaid behavioral health spending, said Aly Neel, an LDH spokesperson.

“However, LDH always strive to be good stewards of taxpayer dollars,” Neel said in a statement.

Enforcing controls on the Specialized Behavioral Health program, a subset of Louisiana’s Medicaid Behavioral Health Program, is important because noncompliance can signal improper payments or fraud, the audit explains.

LDH and a Medicaid fraud unit within Attorney General Jeff Landry’s office have identified Specialized Behavioral Health providers as pockets of potential risk and noncompliance in the past. From August 2019 through February 2023, 798 of 1,971 fraud referrals and case notices LDH received were for behavioral health providers or behavioral health services, the audit says.

The legislative auditor’s report follows lawsuits filed in recent years accusing LDH of failing to provide adequate care through Medicaid-funded programs, including behavioral health for children.

The report does note that LDH took some steps recommended by the Louisiana Legislative Auditor in recent years to ensure proper payment, such as specifying providers’ identities on all claims received and ensuring that service providers do not offer more than 12 hours of care per day.

The audit, which examined payments from 2015 to 2022, found those measures shrank potentially improper payments through the Behavioral Health and Specialized Behavioral Health program from nearly $11 million before the fixes to $631,195 thereafter.

At the same time, LDH failed to take other recommended steps, such as ensuring providers are paid at the right rates, flagging potentially improper payments – like in situations where patients log inpatient and outpatient services on the same day, among other scenarios – and several more measures. The audit found about $13 million in payments that may have been improper because of the failure to implement those measures.

“The LLA audit pointed out potential areas that may indicate fraudulent activity,” said Neel, the LDH spokesperson, “and we appreciate the assistance in identifying risky provider behaviors.”