Reviewing Outcomes of the Office of the Inspector General’s Investigations (Limited-Scope)

Introduction

Senator Pat Pettey requested this limited-scope audit, which was authorized by the Legislative Post Audit Committee at its March 3, 2025 meeting.

Objectives, Scope, & Methodology

Our audit objective was to answer the following question:

1. How much state general funds has the state recovered due to the direct work of the Office of the Inspector General and how many of the office’s investigations have resulted in a prosecution?

To answer this question, we reviewed all 9 audits and reviews the Office of the Inspector General (OIG) published between January 1, 2021 and December 31, 2024 to identify instances of potential monetary recoupment. This excluded monies we categorized as wasted or unrecoverable or estimates of potential future savings. Based on that review, we interviewed OIG officials and requested additional documentation to confirm any funds being recovered based on those reports. Lastly, we reviewed supplemental documentation received from the Kansas Department of Health and Environment.

For OIG investigations, we reviewed the list of investigations OIG opened within the same timeframe. We performed limited data reliability on that listing and interviewed officials to understand the work and the case categorizations in that listing. We then requested supplemental documents for investigations that had been referred for prosecution or had reached the prosecution stage. We also requested documentation for investigations involving recoupment of funds and viewed several court records.

The Office of Inspector General has been known as the Office of the Medicaid Inspector General. Based on its statutory name and broadening authority starting in July 2025, we are referring to the auditee as Office of Inspector General in our report.

More specific details about the scope of our work and the methods we used are included throughout the report as appropriate.

Important Disclosures

We conducted this performance audit in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. Overall, we believe the evidence obtained provides a reasonable basis for our findings and conclusions based on those audit objectives.

Our audit reports and podcasts are available on our website www.kslpa.gov.

The Office of the Inspector General’s work between calendar years 2021 and 2024 has resulted in 2 prosecutions and the recovery of $1.3 million in federal and state funds to date.

Background

Kansas provides several medical assistance programs to eligible residents.

• Kansas offers 3 major medical assistance programs to eligible residents:
  • Medicaid: Medicaid is a jointly funded government program that offers health coverage to eligible low-income groups such as pregnant women, children, adult caretakers, former foster youth, individuals with disabilities, and seniors.
  • Children’s Health Insurance Plan: This program provides insurance for uninsured children who don’t qualify for Medicaid.
  • MediKan: A state-funded program that offers temporary health coverage to individuals applying for Social Security disability benefits.

• The Kansas Department of Health and Environment (KDHE) has primary oversight for these 3 programs. This includes contract management for several Managed Care Organizations (MCOs) that provide services to beneficiaries, as well as eligibility determinations, claims management, and federal standards compliance. MCOs are paid a set dollar amount per-beneficiary and per-month (also known as capitation payment). MCOs receive capitation payments regardless of whether they provided services to a beneficiary.

• The Kansas Department for Aging and Disability Services and Kansas Department of Insurance also play a role in specialized Medicaid programs such as 8 Home and Community Based Services waiver programs.

The Office of the Inspector General evaluates the state’s medical assistance programs for accountability and integrity.

• In 2017, state law (K.S.A. 75-7427) established the Office of the Inspector General (OIG) as an independent division within the Kansas Attorney General’s Office. Before that, KDHE housed the OIG, but it hadn’t staffed the office since November 2014. OIG resumed its operations in 2019 after the nomination and Senate confirmation of a new Inspector General. Following that Inspector General’s departure in July 2020, the Legislature confirmed the current Inspector General in April 2021

• The law outlines OIG’s mission to increase accountability, integrity, and oversight of Kansas medical assistance programs through audits, reviews, and investigations.

Between 2021 and 2024, OIG performed audits, reviews, and investigations on Kansas’s health assistance programs.

• Between calendar years 2021 and 2024, OIG completed 9 audits or reviews covering a variety of health assistance programs.
  • Between 2021 and 2024, OIG published 5 audits, 3 performance review reports and 1 interim audit covering various programs, including Continuing Care Retirement Communities, the Transitional Medical Program, and the Home and Community Based Services Waiver.
  • Performance reviews are more limited and informal assessments. Those reports generally identify trends, risks, or areas for improvement. In contrast, audits are formal and detailed examinations that provide a higher level of assurance regarding accuracy, compliance, and potential fraud. Both types of reports may include recommendations to KDHE or other agencies. Audits typically include official responses from the agencies reviewed. OIG is responsible for following certain principles and standards for performance reviews and audits.

• Between 2021 and 2024, OIG screened over 5,500 complaints and opened 280 investigations.
  • State law authorizes OIG to investigate potential fraud, waste, abuse, and other illegal activity related to health assistance programs. Investigations typically begin with complaints, mostly from the Kansas Department for Children and Families, often alleging benefits eligibility fraud. Other complaints come through OIG’s hotline or from other agencies, law enforcement, and individuals. OIG staff screen each complaint for jurisdiction and merit.
  • OIG reviews all complaints of eligibility fraud. According to officials only the most blatant complaints result in opening an investigation due to limited staffing. All remaining complaints involving eligibility are forwarded to KDHE for review and potential action. KDHE staff investigate to confirm such ineligibility. If KDHE finds signs of fraud, they refer the case back to the OIG for further investigation.
  • OIG may also open investigations based on their audit or review findings. KDHE doesn’t have to wait for the OIG to complete an investigation before removing ineligible beneficiaries, but it will coordinate with OIG before acting.
  • OIG can issue subpoenas to obtain witness testimony and relevant records related to their investigations. If fraud is likely to have occurred, OIG officials will prepare an affidavit of probable cause and refer the case for prosecution. The prosecutor decides whether or not to pursue formal charges.

• OIG has increased its investigations between 2021 and 2024. Figure 1 below shows work activity and staffing during that time.

• As the figure shows, three-quarters of the investigations opened between 2021 and 2024 have been opened since 2023. It’s important to note that all of OIG’s dedicated investigations staff have been hired since mid-2023.

The 2025 Legislature expanded OIG’s authority from health assistance programs to other welfare programs. 

• In 2025, the Legislature passed House Bill 2217 which provided OIG additional authority to evaluate and investigate potential fraud, waste, abuse or other illegal acts in state-administered cash and food assistance programs. The fiscal note estimated nearly $1 million in additional funding for 9 additional staff.

• The Legislature appropriated about $305,000 for 3 additional staff (2 auditors and 1 special agent) in fiscal year 2026.

• In this audit we focus on OIG’s audits, reviews, and investigations between 2021 and 2024, before the passage of House Bill 2217. First, we focus on prosecutions and then on recouped funds.

Prosecutions based on OIG Investigations

OIG reported opening 280 investigations between 2021 and 2024.

• We received summary data on all OIG investigations that began between 2021 and 2024. We reviewed the data and talked with OIG officials to clarify various terminology and to confirm our understanding of the information. For 3 cases, we reviewed additional evidentiary documentation from OIG. We also reviewed related district court records.

• From 2021 through 2024, OIG reported opening 280 investigations. These were cases where the office had sufficient information (either from external complaints or internal information) to move to an investigations phase.  Figure 2 shows the status for those investigations at the time of our review in May 2025.

• As the figure shows, 165 (59%) investigations were open and had no results yet at the time of our review.

• Additionally, 69 (25%) investigations were closed without action because the allegations were disproven, lacked sufficient evidence, or involved losses too small to warrant further investigation. Officials told us that the disproven investigations (36) are successful in that they vindicate the alleged perpetrator of a crime.

• OIG referred 24 (9%) cases to other law enforcement or regulatory agencies. Officials explained their Office focuses on eligibility and provider fraud. They refer cases that fall outside this scope, such as those involving abuse, neglect, or exploitation, to other entities.

• Finally, for 22 (8%) investigations, OIG’s data indicated authorities had taken some sort of action. Some of those investigations are still open, while most of them are closed, as described below:
  • 13 investigations were identified as having resulted in future savings. OIG officials explained these savings amounts were their estimates of future savings based on identifying and removing beneficiaries that were benefitting from the health assistance program but shouldn’t have been.
  • 2 investigations were labeled as having resulted in administrative action. OIG officials explained these were cases where the KDHE corrected the beneficiary’s file or changed policy to correct an issue.  
  • 7 investigations had enough evidence of potential eligibility fraud that OIG officials referred them for prosecution.  No action had been taken by the prosecutor on 5 at the time of our work (3 of the 7 also had reported future savings because KDHE had already removed the individuals from the Medicaid rolls).

• In this limited-scope audit, we didn’t do any work to evaluate or validate the OIG’s efforts that led to these case categorizations. The 7 cases referred for prosecution are discussed more in the next section.

Records show 2 of the 280 investigations have resulted in prosecution, but additional cases may be prosecuted in the future.

• Of the 280 investigations opened between 2021 and 2024, 7 have been referred for prosecution based on OIG officials’ credible evidence of wrongdoing. OIG officials told us that when they refer a case for prosecution, it’s up to the prosecutor whether to accept or decline the case.
  • 1 investigation in which the beneficiary provided inaccurate household income to become eligible for Medicaid has been prosecuted and is considered closed. We’ll discuss the details of this case further below.
  • 1 investigation involving the beneficiary having forged information to claim a pregnancy to become eligible for Medicaid is currently being prosecuted. We’ll discuss the details of this case further below.
  • OIG has reported that the remaining 5 investigations were referred for prosecution, but the prosecutor has not filed charges yet. As of our fieldwork in May 2025, OIG officials confirmed there were no updates.
    • In 1 of the 5 cases, a person with Power of Attorney diverted a nearly $186,500 inheritance from their relative, an institutionalized Medicaid beneficiary. Local law enforcement conducted a preliminary investigation and recovered most of the money from the suspect. The OIG took over the case and returned the funds to the victim. OIG’s additional investigative work resulted in staff referring the case for prosecution. OIG recorded this case as a “recovery” and referred it for prosecution due to the evidence of fraud involved. 

• At the time of our fieldwork, 165 investigations remained open with no results.  Therefore, additional cases may be referred for prosecution in the future. A subset of those may be prosecuted.

Recoupment of Funds from OIG Audits, Reviews, and Investigations

Our work focused on how much the state was able to recover based on the work conducted by the OIG.

• To do this work, we first reviewed all 9 audits and reviews OIG published from 2021 through 2024. These reports are listed in Appendix A. The reports identified several different monetary amounts as findings. We focused on those findings OIG identified as involving monies that were recoverable or having been recouped by the state.

• Recovered or recouped funds are based on monies the state was eligible to claw-back based on erroneously providing services to ineligible individuals. We interviewed OIG officials to discuss our method of categorizing monetary findings in these reports. We also discussed several findings in more detail to better understand the conclusions.

• We categorized other types of monetary findings in the OIG reports into two main categories. Future savings are savings going forward based on eligibility changes, such as removing someone from the beneficiary list. Waste refers to funds not recoverable or findings for which audited entities declined to take action.

Records show 1 of 9 OIG audits or reviews reported the state recouping $1.3 million in federal and state funds, which KDHE confirmed as accurate.

• We identified only 1 report that included funds recouped by the state. In September 2021, OIG published a report reviewing Medicaid capitation payments made on the behalf of deceased beneficiaries. OIG found the state made about $1.3 million in capitation payments between February 2015 and September 2020 to 4 Managed Care Organizations (MCOs) for 25 beneficiaries who were identified as deceased.

• The report stated that KDHE made the necessary changes to the beneficiaries’ files to avoid continued erroneous capitation payments. It also stated KDHE recovered $1.1 million in the identified overpayments by applying “offsets” to later capitation payments to 3 MCOs for other beneficiaries. Offsets were used so these MCOs didn’t have to make a separate payment.

• The report further indicated the recovery of about $171,000 by direct payment from the 4th MCO. That’s because the state had stopped contracting with that MCO and the offset method wasn’t possible. OIG officials didn’t have additional documentation for us to confirm the recovery of these funds.

• We contacted KDHE officials who were able to provide documentation showing the full $1.3 million was paid back. As described in the OIG report, KDHE confirmed this occurred through capitation payment offsets for 3 MCOs, and a direct check from the 4^th MCO.

• It should be noted that the $1.3 million in recouped funds included a mix of federal and state monies, since Medicaid is funded with roughly 60% federal and 40% state dollars.  

The 2 investigations that have been prosecuted have resulted in the state recouping less than $1,000 to date.

• In 2022, an OIG investigation led to criminal fraud charges against a Medicaid beneficiary and an order to pay $2,500 in restitution plus court fees. At the time of our fieldwork, the individual had paid $920, which is less than half of the amount owed. Additional details from the case:
  • In 2021, the Kansas Department for Children and Families reported allegations to OIG that an individual wasn’t reporting their full household income to Medicaid. OIG had sufficient evidence to refer the investigation to prosecution. Subsequently, authorities charged the individual with multiple felonies, including making a false statement or representation to gain access to Medicaid benefits. According to court records, the defendant received services valued at $25,000 to $100,000. In 2023, the individual agreed to a diversion agreement that required them to pay $2,500 in restitution and $642 in court fees over 18 months.
  • Court records we reviewed in early June 2025 showed the individual made 5 payments totaling $920 before stopping payments in May 2024. The individual has since violated their probation terms, and officials have scheduled a hearing in August 2025 to revoke the diversion agreement. OIG officials explained that this may increase the amount of restitution the individual is required to pay.

• In 2024, an OIG investigation led to criminal fraud charges against a Medicaid beneficiary for making false information and forgery. The individual agreed to a plea deal and may have to pay restitution to the state. Additional details from the case:
  • In 2022, the Kansas Department for Children and Families reported allegations to OIG that an individual had submitted a forged doctor’s letter and a fake photo of a positive pregnancy test to qualify for Medicaid benefits. OIG had sufficient evidence to refer the investigation to prosecution. Subsequently, authorities charged the individual with multiple felonies, including providing false information and committing forgery to gain access to Medicaid benefits.
  • Court records we reviewed in early June 2025 showed that on April 30^th, 2025, the individual agreed to a plea agreement that, if approved, would require them to pay $5,042 in restitution and additional court fees. OIG officials told us that this represents the value of the Medicaid benefits the defendant received. The court will approve or deny the agreement at a sentencing hearing scheduled for June 30, 2025.

• It is important to note that OIG does not determine the amount of restitution a court case stemming from an OIG investigation will ultimately yield. Based on the cases detailed above, the amount the courts order a defendant to pay in the form of restitution or fines can be disproportionately small compared to the monetary value of the services they received.

Other Findings

OIG estimated their work between 2021 and 2024 could result in about $3.2 million in future savings, but we didn’t confirm those estimates in this audit.

• Our review of OIG audits and reviews, as well as the investigations data identified 3 reports and 16 investigations with identified future savings of about $3.2 million.

• OIG officials explained that categorization is used when their work identifies ineligible beneficiaries that were or should be removed from a medical assistance program. By removing the beneficiary from the program, the state avoids making future capitation payments for ineligible individuals. OIG officials explained they typically estimate future savings by multiplying the beneficiary’s monthly capitation payment at the time of removal by 12 months.

• OIG’s savings estimates assume beneficiaries would have left the program after one year, even without an investigation. Some beneficiaries may have been removed earlier due to other factors, such as death or detection through other methods. But it’s also possible that without OIG’s work, some individuals could have stayed on Medicaid for much longer.

• It’s important to note that eligibility determinations and the removal of beneficiaries is ultimately up to KDHE. OIG provides report recommendations and information from its audits and reviews to KDHE. However, the recommendations are not binding, and KDHE may have additional information or policies that could keep the identified beneficiaries in the health assistance program.

• As a result, although OIG can estimate future savings based on its work, it has no influence over the removal of beneficiaries from health assistance programs and subsequently, how much the state saves.

• It’s reasonable to assume these audits, reviews, and investigations helped save the state some capitation payments going forward. But in this limited-scope audit we didn’t review whether the applicable individuals were actually removed by KDHE. We also didn’t evaluate the accuracy of OIG’s savings estimates. Our scope was to evaluate funds the state has actually recovered, not potential savings.

OIG’s work between 2021 and 2024 also identified about $320 million in wasted funds, but we didn’t confirm those estimates in this audit.

• As of May 2025, our review of OIG audits and reviews, as well as the investigations data identified 6 reports and 1 investigation with identified waste of about $320 million.

• In our analysis, we defined waste as funds that OIG determined were spent on ineligible beneficiaries or lost by other means. Those funds were either deemed unrecoverable by the audited agency or were not recommended for recovery by OIG. This included cases where OIG or the audited agency determined recovery was not feasible, or where the agency chose not to pursue recovery for other reasons. For example:
  • In its 2022 audit on Home and Community Based Services, OIG found that the state paid over $193 million for 2,854 beneficiaries who hadn’t used required services in over a year, despite rules requiring monthly use for eligibility. OIG recommended recoupment of capitation payments for ineligible beneficiaries as well as a broad eligibility review. In its response, the Department for Aging and Disability Services (KDADS) agreed to take steps to improve oversight but expressed concerns about potential recovery actions.
  • In its 2023 audit on the Transitional Medical program, OIG found the state wasted an estimated $16.3 million on capitation payments for over 1,000 ineligible individuals from 2019 to 2021. Although OIG recommended recoupment, KDHE said payments older than 2 years couldn’t be recovered and that the dedication of agency resources wouldn’t be warranted. KDHE also said COVID (and related federal rules) hampered their eligibility reviews during this time.
  • In its 2024 audit on Continuing Care Retirement Communities, OIG claimed the state lost about $87.1 million in potential tax revenue from 2021 to 2023. That estimate was based on the Department of Insurance providing certificates to continuing care providers who hadn’t completed required audits. Without those audits, OIG claimed providers would have lost their continuing care provider designation and would have had to pay higher taxes. Although the department admitted some mistakes, they said most providers were just late and had received extensions. OIG did not recommend recoupment.
  • The same audit also estimated a loss of $5.8 million based on KDADS failing to verify that skilled nursing facilities had the necessary continuum of care component to qualify for a Continuing Care Retirement Community classification. The audit didn’t recommend recoupment, but recommended revising the statutory definitions, among other things.
  • In 2024, OIG investigated a case in which an individual received about $6,400 in caretaker benefits despite being ineligible. The investigation found that KDHE was aware of the ineligibility but still allowed the payments. OIG classified the payments as waste, noting that the agency should have prevented it.

• Because the concept of waste didn’t meet the definition of recoupment for the state, we didn’t pursue it further to evaluate the accuracy of OIG’s estimates. Our scope was to evaluate funds the state has recovered, not wasted.

Recommendations

We did not make any recommendations for this audit. 

Agency Response

On June 11, 2025, we provided the draft audit report to the Office of the Inspector General (OIG). We made minor changes to the draft based on officials’ informal feedback. Because we didn’t make any recommendations as part of this audit, an official response was optional. OIG chose to provide a written response. In its response, officials generally agreed with our findings and conclusions.

OIG Response

The OIG’s official response can be viewed here.

Appendix A – Cited References

This appendix lists the major publications we relied on for this report.

1. Report No. 22-01: Reporting Medicaid Eligibility Fraud Report (July, 2021). OIG
2. Report No. 22-02: MediKan Audit Report (July, 2021). OIG
3. Report No. 22-03: Capitation Payments for Deceased Beneficiaries Audit Report (September, 2021). OIG
4. Report No. 22-04: Home and Community Based Services (HCBS) Program Audit Report (April, 2022). OIG.
5. Report No. 23-01: Eligibility Audit Report (June, 2023). OIG
6. School Reimbursements Interim Report (October, 2023). OIG
7. Report No. 24-01: Multi-ID Beneficiary Audit Report (November, 2023). OIG
8. Report No. 24-02: Transitional Medical Program & Health Insurance Premium Payment System (HIPPS) Audit Report (December, 2023). OIG
9. Report No. 24-03: Continuing Care Residential Communities (CCRC) Audit Report. (April, 2024). OIG