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Auditor says state loses millions of dollars in Medicaid fraud

By Kristen Consillio

LAST UPDATED: 5:33 p.m. HST, Jan 17, 2014

The state has failed to put enough resources into curbing fraud, waste and abuse in its Medicaid health insurance program covering 290,000 residents, resulting in tens of millions of dollars in losses annually, a state auditor's report released today shows.

"As a result, Hawaii's detection and enforcement activities lag far behind national averages," the report said, citing a 2011 Centers for Medicare and Medicaid Services finding that improper payments from the Hawaii's Medicaid and Children's Health Insurance programs totaled $66.9 million.

The Department of Human Services expanded the Medicaid program more than a year ago to align with President Barack Obama's Affordable Care Act.

The expansion eliminated the asset limit for most enrollees as of Jan. 1 and raised income levels for eligibility, which has resulted in an increase of about 18,000 low-income residents into the program since Oct. 1.

"With state contributions to the Medicaid program nearly doubling over the past five years, legislators are understandably concerned about the relevance and usefulness of the information it currently receives from the division," the auditor said in the report.

DHS Director Patricia McManaman said in a written response to the auditor that the department is taking steps to eliminate fraud, specifically through a new $95 million eligibility system called Kolea, which will eventually connect with federal data hubs and the state Department of Labor and Industrial Relations to verify income and reduce errors.

"DHS believes that no fraud, waste and abuse is acceptable," she said in her response.

Read the report at

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