Child, Family Services misses millions in fed funds

The Division of Child and Family Services failed to collect millions of dollars from the federal government and private insurers over the past few years because of poor billing practices and failure to keep up with changes in federal law.

Legislative auditors say not all is lost, however, because the division can request reimbursement for much of the federal money retroactively for two years. DCFS, auditors estimate, could ask Medicaid for $4.7 million in unbilled costs for services provided in the past two years.

"Division personnel indicated they did not realize that Medicaid was offering the opportunity to receive reimbursement based on full costs when changes were proposed to the rate setting process in 2002," the audit report states.

Supervising auditor Mike Noel told the audit subcommittee Southern Nevada Child and Adolescent Services could also bill Medicaid for $1.9 million more each year for services provided at its Desert Willow Treatment Center. The division could also increase private insurance reimbursements 25 percent by billing at cost, instead of the old rate schedule.

According to Noel, the division has been billing for services at rates far below their actual cost - in some cases at less than one-third of actual cost - despite a state law requiring fees be set "that approximate the cost of providing the services."

The Northern Nevada Child Adolescent Services rates were based on 1999 costs, but Noel said he couldn't find any documents showing how the Southern Nevada rates were set.

He said Medicaid management officials say the programs are entitled to reimbursement based on actual costs.

In many cases, the audit report says DCFS personnel were simply not aware of increases in the Medicaid payment rates.

While the federal government will make up some of the loss, legislators were told the state has little chance of recouping money from private insurers.

Auditors also found other problems, including outpatient services that were not always billed, incorrect bills sent out, and case management and other such services not billed.

Representing the agency, Diane Comeaux told lawmakers some of the problems were already being looked into before the audit. She said DCFS has hired an internal auditor and will ask lawmakers for a one-year extension to coordinate improvements in internal controls, operations and using the new computer billing system the legislature approved in 2003. She said staff training in billing procedures and other issues is also planned, and the division is preparing a five-year plan to make sure the problems don't recur.

Contact Geoff Dornan at gdornan@nevadaappeal.com or 687-8750.