Missouri State Auditor's Office

State could save millions in Medicaid costs by better managing medical equipment and non-emergency medical transportation programs

This audit reviewed the cost-effectiveness and efficiency of two state programs helping Medicaid recipients with medical equipment (Durable Medical Equipment) and transporting recipients to medical appointments (Non-Emergency Medical Transportation). Both programs cost the state about $100 million from January 2003 through March 2004. The state works with nearly 1,300 providers to distribute medical equipment to recipients, and one contractor to transport recipients to appointments. The following highlights potential savings with better program monitoring.

Bidding equipment contracts could save $5.4 million

Federal officials showed in Florida and Texas a 17 to 22 percent reduction in equipment costs when these pilot project states competitively bid the equipment contracts. Auditors found Missouri could save $5.4 million annually with competitive bids. As of May 2005, state officials had not initiated such bidding. (See page 5)

Missouri pays more for medical equipment than other states

Auditors found Missouri paid more than 8 contiguous states on 41 percent of the 1,139 medical equipment devices reviewed. For example, Missouri paid $2,440 for one prosthetic device, while four other states paid only $1,830 for the same device, a 25 percent difference. (See page 6)

Medical equipment bought from non-Missouri providers

Despite a state law requiring purchase preference for Missouri products, auditors found $4.8 million paid to non-Missouri medical equipment providers. Auditors analyzed the out-of-state claims and found Missouri providers offered the same items. (See page 7)

New transportation contract may not have lowered costs

State officials were in the process of rebidding the Non-Emergency Medical Transportation contract when the Commissioner of Administration announced the state's plan to cancel the current contract. Under terms of the contract bid proposal, costs may not have decreased since high program costs from prior years were being used to develop the new contract rates. (See page 9)

Contractor paid millions from poorly monitored program

Auditors found the state paid the Medicaid transportation contractor $44.1 million over 15 months, with the company realizing at least $19 million in gross profit. The contractor also received a 87 percent gross profit margin on the mileage reimbursement program. The state contract allowed the contractor to select the method of transportation. (See page 10)

Contractor arranged for most recipients to use high cost taxis

The transportation contractor made more money when it arranged medical transportation through taxis or recipients drove themselves, instead of using the often cheaper option of public transportation. In one example, the contractor received $2.80 when a recipient used public transportation, but $34.90 if a recipient used a taxi. In another example, a recipient wanted to drive himself. The contractor reimbursed the recipient 15 cents a mile, or $3.60 for the trip, then the state paid the contractor $98.44 for administrative services. (See page 11)