A limited audit of women prisoners at Topeka Correctional Facility and the Johnson and Wyandotte county jails revealed improper state payments of $185,000 to private insurance companies for Medicaid benefits aimed at people ineligible for services due to their incarceration, officials said Monday.

Findings by the state's Medicaid inspector general indicated the problem was tied to Kansas Department of Health and Environment's inability to receive sufficient, timely data from the state Department of Corrections on TCJ prisoners in the fiscal year ending in June. The inspector general, who works for the attorney general, examined jail records for the two populous counties and revealed improper Medicaid payments to managed care companies for women transferred to TCJ who ought to have had lost coverage in county jail.

"The current KDOC-Medicaid data matching process does result in errors. It's not foolproof," said Sarah Fertig, inspector general for the Medicaid program in Kansas.

Fertig said KDHE's hiring of Appriss data exchange company should provide "near real-time" notification whenever a person in Medicaid entered a jail, prison or detention facility. The information is necessary for the state clearinghouse to promptly remove incarcerated beneficiaries from Medicaid and to block unnecessary payments to the three MCOs operating the $3 billion program, she said.

"KDHE has not clawed back those payments from the MCOs that were meant to cover those individuals," Fertig said. "It's pretty black and white. If you are living in a prison or a jail, you are categorically ineligible."

In addition, the audit said, KDHE's current policy of requiring at least 10 days' written notice before terminating inmate eligibility for Medicaid was inconsistent with federal and state regulations.

Sen. Gene Suellentrop, a Wichita Republican and chairman of the Legislature's oversight committee for Medicaid, said audit findings outlined for House and Senate members could lead to formal recommendations to the 2020 Legislature that convenes in January. The committee scheduled a meeting Tuesday to discuss potential reforms.

Christiane Swartz, deputy Medicaid director at KDHE, said in response to the report that agency policy would be updated to eliminate the 10-day notice requirement. KDHE will require staff to consult prison release dates before granting retroactive eligibility for Medicaid to persons recently released from custody to make certain benefits weren't extended to periods that included incarceration, she said.

KDHE agreed to make use of information from Appriss in conjunction with corrections department data to build a more complete picture of a beneficiary's time in custody.

However, Swartz said KDHE would place "under consideration" the idea of invoking the state's contractual right to recoup inadvertent payments to MCOs for persons determined ineligible due to their incarceration status.

The limited audit by the inspector general, which didn't look at men inmates in prisons or jails, revealed three-fourths of 230 cases in which a Medicaid-eligible woman was admitted to TCF during the year resulted in proper steps being taken to sever an individual from the public health program. In the 54 other cases, eligibility was discontinued late or not at all. About half resulted from a paperwork backlog in July, August and September 2018 that stalled processing of TCF admissions until October of last year.

The report said $26,500 of the improper payments to MCOs were related to when women inmates were in county jail prior to transfer to TCF and the remaining $159,000 linked to inmates at the Topeka prison.

"The most extreme case involved a beneficiary who was booked into jail in 2018 and transferred to TCF seven months later," Fertig said. "We found no indication that the clearinghouse was ever aware of her incarceration. That resulted in 11 months of Medicaid eligibility and $3,100 in capitation payments while the beneficiary was incarcerated."