SALEM — A botched Oregon Health Authority program to fund services for the state’s neediest residents wasted $88 million, according to an audit released Wednesday by Secretary of State Dennis Richardson.

Another $15 million was lost in delays chasing down erroneous payments to health providers for 41,100 recipients.

The original relatively unheated tone of the audit unraveled in the hours after its release.

In the audit, given to reporters Tuesday night with a public release set for 1 p.m. Wednesday, Richardson referred to the money as “avoidable expenditures.”

“Our audit found that Oregon Health Authority (OHA) recovery efforts are appropriate and reasonable, but the agency should strengthen efforts to detect and prevent improper payments in Oregon’s $9.3 billion per year Medicaid program,” began the audit.

Richardson switched to a more aggressive tone in a “newsletter” released at 10:30 a.m. Wednesday, breaking his own 1 p.m. public release time.

The secretary of state lashed out at OHA with the title “Agency of Wasteful Spending.”

“OHA’s credibility had sunk to a new low with additional multi-million dollar disclosures of waste and incompetence,” Richardson said, while noting there was an unnamed “new administration” in charge.

The original 34-page audit, signed by Richardson and Oregon Audits Division Director Kip Memmott, was appended with the Oregon Health Authority’s official, mostly measured response to the audit, dated Tuesday. In it, OHA Director Pat Allen was largely conciliatory, agreeing to implement all eight recommendations for reforms suggested by Richardson, including the dates of projected implementation and the name and phone number of staff members responsible to carry out each of the changes.

Allen defended the agency and noted it deals with the “complexity and scale” of Medicaid, but indicated his goals for accountability aligned with the recommendations of the audit.

“We are committed to improving the transparency of Medicaid operations going forward,” Allen wrote.

The recommendations included setting clearer standards, promoting integrity, making clear punishments for improper actions, tightening oversight of Coordinated Care Organizations, ensuring providers know Medicaid rules, working with the state treasurer to track payments, creating more robust recovery programs, and ensuring an annual “reconciliation” of eligibility of Medicaid recipients.

But after the public release, press reports underscored Allen’s disagreement with basic “assumptions” of the audit when it came to what caused the problems in the first place and how avoidable the issues were in retrospect.

Gov. Kate Brown has said she did not know of the erroneous payments until she was told of them this summer. In August, she forced then-OHA Director Lynne Saxton to resign. Brown promised greater transparency in OHA and eventually called for a recouping of all overpayments.

A flood of reactions poured in from Republicans castigating OHA and its official boss, Brown, after the information was released. Brown is a Democrat, Richardson a Republican.

Among them was Rep. Knute Buehler, R-Bend, the Republican front-runner in the 2018 campaign for governor, linked to Richardson’s “newsletter” instead of the audit itself and claimed “the problem starts with the governor’s office.”

“Governor Brown has not taken any action on this serious issue of mismanagement — the overpayments have not been refunded, no independent investigation has been called and the public still doesn’t have answers,” Buehler said.

Buehler said he would introduce legislation in February to demand repayments of funds and an independent investigation be launched.

The Oregon Health Authority between 2014 and 2016 wrongly enrolled 41,100 people in the state’s version of expanded Medicaid under the federal Affordable Care Act. The state had planned to use the Cover Oregon electronic enrollment system, but the glitch-prone platform was pulled before it ever went into wide public use.

At the time, the federal government paid all of the health care costs of the rapidly expanding pool of people who were eligible for Medicaid under the Affordable Care Act.

As it struggled with its accounting system, the Oregon Health Authority spent an estimated $74 million in federal money. Staff later discovered it had been miscategorized. There was no evidence of fraud by recipients. The people were eligible for both Medicaid and Medicare and were enrolled in Medicaid. The federal government pays only about 64 percent of Medicaid costs, much less than Medicare. The state has recouped $10 million of the payments and is seeking return of the additional $64 million.

Among the findings in the Secretary of State’s audit was that OHA did not properly audit health providers, who in turn did not audit their roles in OHA-financed services.

“The lack of strong improper payment detection procedures poses a significant risk,” the audit said.

The report found that, prior to Allen’s appointment, former authority leadership effectively stonewalled attempts by Richardson’s office to get information on the scope of the enrollment problem.

— Reporter: 541-525-5280 gwarner@bendbulletin.com,

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