A state computer system that was supposed to streamline enrollment for Medicaid and MinnesotaCare has instead increased workloads for counties and cost the state $76 million in federal funding due to data errors.

The state needs to do a better job preventing errors caused by the system and should better monitor who has access to sensitive data such as income information, according to an audit released Wednesday by the Office of the Legislative Auditor.

The system, known as the Minnesota Eligibility Technology System, or METS, was launched in late 2013 and so far has cost $432 million. It is administered by the Minnesota Department of Human Services (DHS) and the state's technology agency, MNIT.

It is used by county and tribal workers who are on the front lines of enrolling people for the Medicaid program that covers 1.1 million Minnesotans. But sometimes enrollees get kicked off the program.

"County caseworkers handle phone calls from enrollees who have had their cases incorrectly closed," the audit said. "In some cases, enrollees were denied treatment at a doctor or were unable to fill a prescription at a pharmacy."

METS collects information from applicants, and it is supposed to verify key eligibility criteria such as income and citizenship against state and federal databases.

But according to the report, shortcomings embedded within the system short-circuit the verification process, resulting in a manual review by a county or tribal employee.

County caseworkers were required to manually review 37% of 624,000 cases over a 15-month period, according to the audit. "METS has not achieved the efficiencies that an automated eligibility determination system should provide," the report said.

DHS Deputy Commissioner Chuck Johnson said the agency will use the findings to improve the system, but he added that the number of manual case reviews does not reflect weaknesses in the system.

"What we think is most important is making an accurate eligibility determination," he said. Cases need to be reviewed manually because of inconsistencies between what an applicant reports and information in databases.

"The question is, is 37 percent too much or too little? I don't know," said Johnson. He said the auditors should have looked at the accuracy rates of eligibility determinations made automatically and manually.

The state will be unable to collect $76 million in federal funding for the MinnesotaCare program because of conflicts between METS and another DHS system, making it difficult to accurately estimate the federal government's share of the program's costs.

DHS disclosed the financial hit last year and included it in last November's financial forecast. Johnson said improvements are being made that could reduce the $76 million obligation.

With the dramatic rise in unemployment caused by the COVID-19 outbreak, counties report that they are seeing caseloads increase as more people try to sign up for Medicaid health insurance.

"Our applications are going up dramatically," said Deborah Huskins of the Hennepin County Human Services and Public Health Department. "The number of cases and the amount of work is going to go up," especially because more applications will need hands-on attention.

"It is still a system that is quite burdensome to work with," Huskins added. "If we could get to more efficiencies, it means we would not need as many staff to do the work."

Some tasks are so complex, such as enrolling newborns into the system, that a special team of three workers was developed just to handle those cases.

Other times the work becomes so muddled that the system is unusable.

"It is faster and more complete to close the case and open a new case and start over again," she said.

DHS has worked with the counties to improve the system, but there are still many hurdles.

"We've had a pretty good relationship, but I think everybody is dissatisfied with the amount of improvement we have been able to obtain," Huskins said.

The problems with METS are also well known in the Legislature, where memories are fresh of the failures of MNLARS, the troubled vehicle licensing and registration system.

"We've been talking about this for several years," said Sen. Carla Nelson, R-Rochester. "What is even more concerning is that the problem has existed for so long but there has not been a solution."

Nelson spent time with a local county caseworker and saw the METS deficiencies firsthand.

"The system is not functioning well at all," she said. "Counties have had to hire additional staff just to manually walk through what is not working in METS, costing counties about $8 million a year."

Johnson said DHS and MNIT are continuing to make incremental improvements, with an eye toward addressing some of the bottlenecks counties are experiencing.

An assessment of the software that powers the system is also underway, including whether a new vendor should be hired.

In February, DHS acknowledged that METS computer problems have led to overpayments to managed care organizations that manage care for nearly 950,000 people on Medicaid or MinnesotaCare.

About 48,000 enrollees had two separate profiles in the system, meaning that the HMOs were paid twice to care for the same person.

It was estimated that $12.6 million to $28.9 million was overpaid over three years. Some money will need to be paid back to the federal government, which provides matching funds to the state.

DHS has also faced criticism for another computer system that is used by county workers to assess the elderly or people with disabilities to see if they qualify for special Medicaid funding to help keep them out of institutions.

The system, known as MnChoices, has cost $600 million. The agency is seeking help from outside vendors to improve the system, a DHS official told the Legislature in January.

Twitter: @GlennHowatt