The second largest Medicaid health maintenance organization (HMO) in New Jersey, UnitedHealthcare Community Plan of New Jersey (United), received roughly $1.7 billion from the state in 2009 through 2010, while netting only $1.6 million in fraud, waste, and abuse recoveries during that two-year period, the New Jersey Comptroller reported July 31.

The Medicaid Fraud Division of the Office of the State Comptroller (OSC), which conducted the audit, found the HMO’s special investigations unit, a program integrity requirement under its contract with the state, was understaffed and did not receive adequate training for detecting fraud and abuse, according to the audit report.

“With billions of tax dollars flowing through New Jersey’s Medicaid program, our state relies on its Medicaid HMOs to fulfill their oversight responsibilities in an aggressive manner,” State Comptroller Matthew Boxer said in a statement. “This is another audit that shows an HMO failing to live up to requirements designed to combat fraud and lower state Medicaid costs.” In 2011, OSC audited the state’s largest Medicaid HMO, Horizon NJ Health, and made similar findings.

Under its contract with the state, United must have at least one fraud and abuse investigator per 60,000 enrollees. State auditors found, however, that United, with 350,000 Medicaid enrollees in New Jersey, fell short of minimum staffing levels for every quarter of the two-year audit period. For example, in the fourth quarter of 2010, United had about three full-time staff members working in its special investigations unit, but based on enrollment data, that number should have been closer to six, the report said.

The audit report also raised concerns about United’s oversight of its vendors and subcontractors, like pharmacies and dental providers, which are required to comply with the company’s policies, including referring cases of suspected fraud or abuse to the special investigations unit. Despite this requirement, none of United’s vendors or subcontractors referred a single instance of suspected fraud to the investigations unit over the two-year audit period, the report said.

Commenting on the audit findings, United Vice President of Investigations Richard Munson said the HMO has “initiated staffing changes to ensure compliance” with applicable requirements. He added, however, that United’s antifraud program, including its methodology for calculating staffing levels, was approved by the appropriate state regulator overseeing the Medicaid program.

Munson also said the deficiencies in its training program have “been resolved.” Munson added that United “maintains a comprehensive fraud, waste and abuse program that includes both prospective and retrospective activities aimed at only recovering on fraud, but preventing it from occurring in the first place.” OSC said it will continue to monitor United’s program integrity activities to ensure they meet the HMO’s contractual requirements with the state.

View the audit report at