Maryland officials for the last seven years have used inmates to process Social Security numbers and other personal information from low-income residents receiving medical benefits, a state audit revealed.
And prisoners with a history of fraud or theft were not restricted from recording the sensitive data until July.
The Medical Care Programs Administration of the Department of Health and Mental Hygiene, which spent about $6.8 billion on 881,000 Marylanders last fiscal year, relied largely on prisoners to handle Medicaid claims. While most requests are submitted electronically, roughly 900,000 paper claims totaling $265 million, for example, were handled during a recent 11-month period, according to the Maryland Office of Legislative Audits.
“We couldn’t cite a law that said it couldn’t be done,” said Legislative Auditor Bruce Myers, of the arrangement with the contractor, Maryland Correctional Enterprises. “But we thought it was highly unusual. It just seems like too much risk for just a little bit of monetary gain.”
The discovery was part of a series of findings that raised concerns about fraud and abuse in a department that doles out billions of dollars each year.
Auditors also found that between September 2005 and June 2009, the Department of Health and Mental Hygiene failed to ensure those receiving Medicaid were eligible for the benefit, did not verify the reasonableness of drug payments made to pharmacies, or institute proper cost controls to limit wasteful spending.
“There have been problems with this for years,” Myers said. “We haven’t seen much improvement. There’s just so much money here. If you reduce the error rates just 1 percent, you could save a lot of money.”
In response to the audit, Health and Mental Hygiene Secretary John Colmers said the department would re-evaluate using inmates, but added the state received $750 million in federal stimulus money last fiscal year for promptly entering claims.
However, background checks were not performed on outside contractors handling some of the information, the audit found.
“We’ve been doing this for seven years and haven’t had any problems,” said John Folkemer, deputy secretary for health care financing. “That is because people are brought into the room and can’t bring anything in or out. Unless somebody is memorizing numbers, it is unlikely there would be a problem there.”
Before 2003, the department handled the processing itself but contracted the service to save money, Folkemer said.
The department in July implemented new rules “requiring that only inmates with criminal histories not involving embezzlement, extortion, fraud, theft, burglary or other crimes against persons involving money” handle the claims.
Some say the program still lacks safeguards.
“Even with that, I don’t think inmates should be used for this purpose,” said state Del. Charles Barkley, D-Germantown. “It’s not a good idea. You probably have some inmates who are savvy with numbers. Those folks do a lot of good services, but this is not one of the things they should be involved in.”
The audit comes on the heels of a damning report released in October that said administrative errors by the state’s Department of Juvenile Services cost Maryland $3 million in federal Medicaid funds.
State Sen. Jennie Forehand, D-Rockville, a member of the Joint Audit Committee, said she was unaware of the setup with inmates but thought it could be useful for rehabilitation.
“I think if they have people in prison who have experience or who have been trained well they need to be kept busy and productive,” she said. “That’s certainly one way to save money — assuming they are properly supervised.”