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Lawmakers satisfied with KU's handling of $7.1 million Medicaid overpayment

Brad Ridley, commissioner of financial and information services at the Kansas Department for Aging and Disability Services, briefs lawmakers about a $7.1 million over-payment of Medicaid funds that was made to the University of Kansas, money that KU has since returned to the state.

— Members of a legislative oversight committee said Friday that they were generally satisfied with how the University of Kansas handled $7.1 million in overpayments it received from the state’s Medicaid program over a six-year period.

“I thought, number one, it’s good they self-reported,” said Rep. Dan Hawkins, R-Wichita, who chairs the Legislature’s joint KanCare oversight committee. “That’s been going on for a little while. We’ve known that that was happening and they figured it out. I’m glad they came forward and did it themselves instead of having to force it through legal action or something.”

Hawkins spoke in an interview after Brad Ridley, commissioner of financial and information services at the Kansas Department for Aging and Disability Services, briefed the committee about how the overpayments were discovered and about KU’s own decision to repay the money.

“Over the last few weeks, KU has returned that amount of money,” Ridley said, noting that the state is now working with the federal Centers for Medicare and Medicaid Services to return the money to the federal government.



Brad Ridley, commissioner of financial and information services at the Kansas Department for Aging and ...

For many years, Ridley said, the Medicaid program contracted with KU’s School of Social Welfare to provide training and quality assurance services for staff at various community mental health centers around the state. He said the agency has similar contracts with the KU Medical Center, Kansas State University and Wichita State University.

All of the money paid to KU under the contract came from federal funds, Ridley said.

The training was provided through the Center for Mental Health Research in the School of Social Welfare, a center which closed in 2016 after KU and the state failed to agree on terms of an annual renewal of the contract.

“The big negotiating point was the increased accountability that both (the Kansas Department of Health and Environment) and KDADS were requesting of these contracts, basically to better monitor what services were performed and how many hours, and what that cost was to perform those administrative services,” he said.

However, in a 2016 article by the Kansas Health Institute News Service, Rick Goscha, who was director of the research center at the time, was quoted as saying the state's final contract offer wasn't made until just a few hours before the previous contract expired.

He also said it called for a reduction in funding, but did not include a detailed description of the work to be performed because those terms were to be negotiated later.

According to a letter that KU Chancellor Douglas Girod sent to legislative leaders on Monday, after the two sides failed to agree on terms of a contract renewal, the university conducted an internal audit “to investigate the process by which time and effort were credited to these projects.”

Following the internal audit, KU then contracted with two outside financial firms to look further into the contracts and payments over an extended period of time, from 2011 through 2016.

After reviewing salary charges for 31 faculty, staff and administrators, who accounted for about 63 percent of all the charges billed to Medicaid through the contract, those firms determined that KU should return a little more than $7.1 million to the state.

Girod’s letter indicates the overcharges were not intentional. Rather, he said, the work that KU did for the program, he said, was considered an “in-kind” contribution to the Medicaid program that qualified for about a 50 percent federal match. But he said, “faculty and staff at the School did not have an accurate understanding of what was required in order to charge time and effort to the Medicaid contract, which would trigger a financial ‘match’ from (the federal Centers for Medicare and Medicaid Services).”

Girod’s letter indicated that the repayment was made in January from funds the university borrowed from the KU Endowment Association.

According to documents provided by KDADS, Girod first notified the agency in May 2017 that it had discovered there had been overpayments to the university.

In another letter dated Nov. 20 to KDADS Secretary Tim Keck, Girod outlined a “corrective action plan” the university was putting into effect through its Office of Integrity and Compliance to prevent overbilling in all of its outside contracts.

Ridley said the committee had been briefed about the internal audit taking place at KU in 2017. But Sen. Laura Kelly, D-Topeka, the ranking Democrat on the panel, said lawmakers did not learn about the full extent of the overpayments until recently.

“I think it would have been a wise idea to let us know that that was happening, rather than us finding out after the fact,” she said in an interview. “But I am satisfied with the investigation that they carried out and the resolution of the problem.”

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