The Kansas Department of Aging and Disability Services (KDADS) is back in the news; this time, it’s for making improper payments.
An interim report from the Kansas Attorney General’s Office of the Inspector General found over $200 million in improper payments from the State of Kansas to the Managed Care Organizations, or “MCOs,” that oversee the state’s Home and Community-Based Services (HCBS) waiver programs.
According to the most recent report, an earlier interim report issued on Jan. 12, 2026, found that required functional assessments were not being completed in a timely manner for the Brain Injury (BI), Frail and Elderly (FE), and physically disabled (PD) waiver participants. As a result, the audit found that more than $238.3 million was improperly dispensed to MCOs during the audit period.
“Ineligible HCBS beneficiaries should have been timely processed and transitioned to the KanCare Medically Needy Program,” the report reads. “Assuming all beneficiaries would financially qualify for the Medically Needy Program, it would cost the State an estimated $147,662,271.00. That could have saved the State $90,705,743.16. This savings could be larger if beneficiaries do not meet financial qualifications for other Medicaid programs.”
According to the report, the state contracted the Aging Disability Resource Center (ADRC) to conduct functional assessments for three waivers. High rates of overdue assessments were found during the audit, contributing to the following estimated erroneous State capitation payments:
- Brain Injury (BI) Waiver: 486 of 1,643 (30%) – $17,628,981.42
- Frail and Elderly (FE) Waiver: 2,879 of 12,108 (24%) – $96,388,111.42
- PD Waiver: 2,749 of 7,881 (35%) – $124,350,921.32
The audit also found a combined error rate of 29% for waiver recipients with missing or overdue assessments.
The full review of quarterly fallout reports for all 21,632 HCBS beneficiaries under the three waivers resulted in the following outcomes:
- Completed Reassessments: 15,518 (72%)
- Overdue Assessments: 5,939 (27%)
- Missing Initial Assessments: 175 (1%)
KDADS response ignores plain language of the audit
The Kansas Department of Aging and Disabilities Services, or KDADS, “disagreed” with the findings.
“KDADS does not agree with conclusions that extrapolate relatively small samples into hundreds or thousands of individuals and then characterize those extrapolations as established statewide errors,” the agency replied. “Sample-based estimates may be useful for identifying areas for additional review, but they are not equivalent to a case-by-case determination that each extrapolated individual was ineligible, improperly placed on a waitlist, improperly paid, or caused a specific financial loss to the State. KDADS does not agree that the approximately $238.4 million identified in the prior redetermination audit represents established improper Medicaid payments, nor that the approximately $90.7 million identified as potential savings represents an established financial loss or savings opportunity for the State.”
However, the audit did not extrapolate from samples, as KDADS claimed.
“The review did not use extrapolation as it was a 100% review of Kansas Aging Management Information System (KAMIS) fallout reports that were submitted to the OIG from KDADS,” the IG replied. “The review determined 6,114 beneficiaries went without receiving a functional assessment for over 730 days (during the COVID-19 Pandemic under Appendix K, or over the normally regulated 365-day required reassessment windows. The $238.4 million was capitation payments that were made on 6,114 ineligible beneficiaries.”
The $90.7 million was reported as potential savings if 6,114 of the ineligible beneficiaries were moved to the Medicaid Medically Needy Program.
“It should also be noted that ineligible capitation expended by the State could potentially be clawed back by the federal government, which would include 60.67% of the Federal Medical Assistance Percentage Kansas receives from the federal government,” the OIG wrote. “Under … Federal Regulations …. if a beneficiary eligibility file is incomplete (e.g., missing an annual level-of-care re-evaluation, missing medical signatures, or lacking functional assessments), the state cannot legally justify the expenditure or placement on a waiver. The federal government considers payments made on behalf of individuals with incomplete eligibility files to be improper payments.”
But what of the severely backlogged waitlist for Individuals with Intellectual or Developmental Disabilities? As The Sentinel previously reported, some residents have been on the IDD waitlist for 10 years or more. The legislature has capped the ID/D waiver waitlist at 4,000. Currently, more than 5,000 individuals are on the waitlist — and KDADS transferred $24 million meant to reduce the I/DD waitlist to the Frail and Elderly waitlist.
“We noted that 92% (72) of sampled Intellectual/Developmentally Disabled (ID/D) beneficiary cases contained insufficient information to validate HCBS eligibility and waitlist placement,” the report reads. “They did not have a signed initial assessment, Notification of HCBS Economic and Employment Support (ES) ES-3160, ES-3161 closure form, or both. Kansas regulation explicitly states that each review and amendment of this plan shall be approved in the same fashion, and be approved in writing by the consumer or the consumer’s guardian, as appropriate.”
The report also noted that payments to individuals with incomplete eligibility packets were improper.
“The federal government considers payments made on behalf of individuals with incomplete eligibility files to be improper payments,” OIG wrote. “If a beneficiary eligibility file is incomplete (e.g., missing an annual level-of-care re-evaluation, missing medical signatures, or lacking functional assessments), the state cannot legally justify the expenditure or placement on a waitlist.”
Incomplete initial assessments
Additionally, initial assessments could not be located for 61% of sampled I/DD beneficiaries when referencing assessments and records obtained from the Community Developmental Disability Organizations.
Physical Disability waiver beneficiaries had a similarly troubling lack of documentation.
“We noted that 87% of beneficiaries did not have an initial assessment on file or had one that was not signed per requirements,” the report reads. “This error rate means a majority of the beneficiaries on the PD waitlist have insufficient information contained within their file to support waiver placement.”
KDADS suggested OIG misinterpreted waitlist time as inaccurate reporting.
“The length of time an individual remains on the waitlist, however, should not be interpreted as evidence that the individual does not meet the applicable requirements for waitlist placement,” KDADS replied. “Waitlist placement and waiver enrollment are separate stages of the process, and eligibility is further confirmed when a waiver slot becomes available.”
OIG, however, said that’s not what they reported.
“Average length of time was not interpreted as a waitlist inaccuracy,” OIG wrote.
KDADS also complained that a lack of documentation didn’t mean someone shouldn’t be on the waitlist.
“KDADS does not agree, however, that the absence of an ES-3160, ES-3161, or signed functional assessment in the particular records reviewed necessarily establishes that an individual was improperly placed on or removed from the waitlist,” the agency said. “Staff review identified that some records may be maintained through KAMIS utility uploads, assessor records, shared drives, KEES journal documentation, or other designated locations.”
As The Sentinel previously noted, one of the serious problems with the ID/D waiver system is that records are not all kept in one place — which KDADS admits.
Sarah Hart Weir Rogers, Executive Director of the Kansas Council on Developmental Disabilities, said the forms to even get on the waitlist have to be filled out by hand, and then the data entered into a spreadsheet. Rogers said — as part of a five-point plan to eliminate the waitlist the spreadsheet should be replaced with two-way waitlist technology consolidating the various records into one searchable database.
Moreover, according to OIG, KDADS not only isn’t following state regulations — which are more stringent than the federal rules — but isn’t even following its own rules.
“KDADS is disregarding its own contractual provider manuals that govern State HCBS functional assessment verification,” the IG wrote. “Under the Kansas Medical Assistance Program Provider Manual, signatures must be original handwritten, including digital signatures, and dated by the beneficiary and/or their representative. Level of Care assessing entities must upload documents for all HCBS waivers. The manual explicitly states the KDADS Quality Assurance (QA) Manager will issue findings for non-compliant information if the assessment is incomplete, inaccurate, or does not contain a valid date or signature. It should be noted that quarterly QA data is shared with CMS.”
