Auditor General Wagner stands by report of higher error rates

A new federal report showing Pennsylvania to have a low Medicaid error rate was based entirely on information provided to the federal government by Gov. Ed Rendell’s administration, further fueling a spat between the governor and the state’s auditor general.

According to the report, Pennsylvania’s Medicaid error rate in 2009 was only 4.07 percent, significantly lower than the national average of 8.98 percent. The information in the federal report seemed to directly contradict a recent report from Auditor General Jack Wagner which found a much higher error rate for Medicaid cases in Pennsylvania, but lined up with error rates reported by the state Department of Public Welfare (DPW).

However, the branch of the U.S. Department of Health and Human Services responsible for the new report obtained their information directly from the state DPW and did not have independent auditors or investigators gather the data.

“We get it all from the state,” said Peter Ashkenaz, spokesperson for the Center for Medicare and Medicaid Services (CMS), which published the report. “They provide us with the information and we use that.”

Mr. Ashkenaz said CMS does not use independent auditors or analysts in compiling the report.

“The source for all the data is the state,” he said.

CMS releases the state Medicaid error rate reports once every three years. In 2006, it reported Pennsylvania had errors in 5 percent of cases, which dropped to 4.07 percent in 2009.

An independent review conducted by state Auditor General Jack Wagner last year found a significantly higher error rate in state Medicaid claims. According to Mr. Wagner, there were errors in 14.7 percent of claims.

Even reducing errors to 10 percent would save the state more than $436 million a year, said Mr. Wagner in a January report.

Monday, Gov. Ed Rendell touted the federal report as evidence that Mr. Wagner’s report was “out of line and out of whack.” He said expectations of massive savings in the Department of Public Welfare were unfounded.

Republican governor-elect Tom Corbett and GOP leaders in the state House and Senate have pointed to Mr. Wagner’s report as a way to cut government costs without having to reduce programs.

Pennsylvania is facing a $63 million deficit in the current fiscal year and a $4 billion deficit next year because of the disappearance of federal stimulus funds and higher public pension costs.

After the CMS report was announced Monday by Mr. Rendell, Mr. Wagner said he stood by his conclusions and challenged the legitimacy of the federal report.

Auditor General Jack Wagner

Auditor General Jack Wagner

“I firmly stand by our audited error rate of at least 10 percent, which, if corrected, would save Pennsylvania taxpayers at least $436 million a year,” Mr. Wagner said in a statement. “The federal report is based on information provided to the U.S. government by those claiming a lower rate. We have serious concerns about the methodology used in issuing this report.”

Mr. Wagner’s department examined a random sample of 13,000 Medicaid cases at the state’s county assistance offices in all 67 counties.

Michael Race, spokesperson for the state Department of Public Welfare, disputed Mr. Wagner’s concerns about the accuracy of the CMS report.

Mr. Race classified Mr. Wagner’s findings as “not statistically valid” because looking at county assistance offices does not offer a complete picture of Medicaid in Pennsylvania.

“The federal report is far more sophisticated than what Wagner has done,” said Mr. Race. “The fact of the matter is that the feds do this for a living. They are Medicaid experts and the auditor general is not.”

Mr. Wagner and Mr. Rendell are both Democrats, but have increasingly been at odds with each other over state policy.

Beginning last summer, Mr. Wagner has been holding weekly news conferences to draw attention to areas of the state budget which he deems wasteful or unnecessary. He also opposed Mr. Rendell’s attempt earlier this month to sell $1 billion in bonds to pay for capital projects across the state.