Under terms of a Medicaid reform plan approved by the Legislature in 2016, the state is required to provide “electronic distribution of an explanation of medical assistance benefits to recipients for health care services received under the program.”

Among other things, it’s a way to improve financial accountability.

“The thought here was that if we got Medicaid recipients used to actually reviewing their EOB’s (explanation of benefits) they might flag if providers are billing for services that they did not receive, so it could help with fraud, waste and abuse, as well as just getting them used to how many services they are accessing, the cost and so on,” Heather Carpenter of the state health department told legislators in an April hearing.

In 2018, the state signed a $3.6 million contract with MedExpert, a California-based medical information company that was already providing services to the state. The information program became fully operational in February.

The state shut it down six months later, alleging it wasn’t cost effective.

This appears to be a case in which the state will save money in the short term and spend more in the long term on waste, fraud and abuse.

In a Medicaid update released in November, the state said the mandated electronic benefit reporting service has been suspended, but the state says it intends to resume it next fall. The state does not have the capability to do this on its own, so how it will be resurrected and at what cost is not clear.

One of the most alarming red flags in the state report is this sentence about waste, fraud and abuse: “The division continues to evaluate each report of improper payment and at this time less than 50 percent of issues reported appear to have merit.”

That seems like an exceptionally high percentage of meritable tips.

MedExpert disputes the state’s claims about cost effectiveness and says the statistics about improper payments are wrong.

The state asserts that only 3,500 patients reviewed claims under the program. a low rate of participation. The company says that is the number of people who provided a response. There were more than 4,050 patients who reviewed 125,000 claims from 5,697 providers. There were 1,786 providers with reports of claims errors.

MedExpert has asked, in a letter to the attorney general, for corrections to the state report, which it says misrepresents its work in Alaska and may damage its business Outside.

In six months, the program found “3,500 cases with anomalies warranting further investigation and 1,773 cases with known errors,” Anchorage attorney Jahna Lindemuth, who is representing MedExpert, wrote to the attorney general’s office. Lindemuth is a former attorney general.

The face value of the Medicaid claims identified as erroneous exceeds $1 million, she said.

“By extrapolating to the value of the claims after investigation, one can assume the state could establish fraud or waste in the amount of $10 to $20 million dollars for this six-month period—fraud and waste the state would have been better positioned to investigate had it not terminated the MedExpert contract before even a year had gone by,” she said.

One case reported in April has a value of more than $2 million, she said.

“For reasons unknown to us, the department never properly escalated this case, nor any of the other cases reported by MedExpert” to investigators or the Medicaid Fraud Control Unit, Lindemuth wrote Dec. 3.

She also said that state asked the company to destroy all of the data, which it is legally prohibited from doing.

“The state pulled the plug on this successful program and it is absolutely incorrect to now report to the Legislature that it was unsuccessful,” she wrote.

The company also had a state contract for the Alaska Medicaid Coordinated Care Initiative, an agreement ended by the state in August. The state Medicaid report said a low number of Medicaid patients used the service.

This is a program aimed at getting people who make excessive use of health care services on Medicaid to cut back. MedExpert said the department’s own analysis in 2018 was that over four years the state return on investment was 16:1, with a total reduction of $135 million by fiscal year 2018.

“For FY 2019 the claim value for AMCCI’s reduction saved the Alaska Medicaid program more than $5.4 million, approximately 30 percent of which, or $1.6 million, was state general fund (GF) dollars. When considering overall contract cost and other factors/initiatives that impacted ED (emergency department) use, cost savings or return on investment for the AMCCI was limited,” the state Medicaid update said.

Lindemuth said the $5.4 million figure is another misrepresentation. It is “unvalidated and far understated.”