Audit Questions Whether State Overpaid On Medicaid Claims

In the world of Medicaid billing, internal auditors accuse EDS of making millions of dollars in mistakes. As industry costs for processing dropped, the audit contends EDS billing did not adhere to its "low cost" guarantee.

While the state of Alabama paid more than $3 a minute for processing, North Carolina paid more than $20. Based on rough estimates, auditors believe EDS overcharged North Carolina more than $19 million.

"Nineteen million dollars is a very significant amount," said Rep. Verla Insko, D-Orange.

Unnoticed for months, the EDS audit is now drawing the scrutiny of lawmakers.

"It raises more questions in my mind about whether we're doing an adequate job of monitoring the private sector," Insko said.

"It's an area we need to look at. If we're entitled to ask EDS for some money back, we certainly want to do that," said Rep. Edd Nye, D-Bladen.

In the same report EDS fires back, calling the audit unfair. Executives argue the auditors misinterpret the terms and changes to the state contract. They claim comparisions to other state's individual price components are misleading because EDS bundles its services.

While disregarding the $19 million figure, the Texas company admits to far less in overbilling, stating $344,000 was already credited back to North Carolina. Still, EDS is not happy with the allegations. Executive Ricky Pope tells WRAL, "We do everything on the up and up. We totally disagree with the audit's findings."

EDS executives responded to the audit several months ago, but say DHHS never answered. DHHS will only say the question of overcharges remains unresolved. It is not the first Medicaid billing dispute for EDS. The company settled out of court with the state of Texas following a grand jury investigation in 2001.

EDS is already battling with the state over losing the Medicaid billing contract last year. The company sued after Affiliated Computer Services outbid EDS for a five-year deal.

In January, a judge ruled in favor of EDS, saying the bid process was flawed. Because of the contract dispute, EDS executives believe the timing of publicity about the audit is suspicious.