Sen. Pat Pettey, a Kansas City Democrat shown speaking on the Senate floor in April, received results of a legislative audit of the state's inspector general's work to uncover fraud in state payments for health care services. In four years, the inspector general's work resulted in prosecution of two people and court judgments of about $7,500. (Sherman Smith/Kansas Reflector)
TOPEKA — The Kansas inspector general assigned to the attorney general’s office prosecuted two cases of alleged health program fraud, resulting in judgments against perpetrators of $7,500 over the past four years.
A report by the Kansas Legislature’s auditing division said the inspector general from 2021 to 2024 fielded more than 5,500 complaints and opened 280 investigations. Almost three of every five cases remained open, auditors said. One-fourth were closed without action after allegations were disproven, there was insufficient evidence to proceed or the money lost was too inconsequential to justify further work.
“Most of the complaints come from the Department for Children and Families and allege benefit eligibility fraud,” said senior auditor Matt Fahrenbruch.
The audit requested by Sen. Pat Pettey, D-Kansas City, was completed in July. The Legislature’s audit of the inspector general’s office focused on financial recovery and prosecutorial results. Auditors examined the 280 investigations, consulted court records and interviewed the inspector general’s staff. The inspector general’s personnel grew from four people in 2021 to 10 employees in 2024.
The report indicated the inspector general referred seven cases to law enforcement for prosecution during the four-year period. Fahrenbruch said two of the seven cases resulted in judgments against defendants.
In one case, an individual misrepresented household income to gain Medicaid benefits worth at least $25,000. The person was charged with multiple felonies and agreed to pay $2,500 in restitution in 2023. Auditors said the person stopped payments in 2024 after reimbursing the state $920. The other case involved a woman who forged information to claim a pregnancy to gain Medicaid services. As part of a plea agreement, she was ordered to pay $5,000 in restitution.
“Since ’21 we’ve gone from four (staff) to now in ’24 10 additional staff with this kind of recoup of funds?” Pettey said.
In one of the five cases categorized as awaiting prosecution, auditors said a person with power of attorney diverted a $186,500 inheritance from a relative who was an institutionalized Medicaid beneficiary. Local law enforcement conducted a preliminary investigation and recovered most of the money from the suspect. The inspector general took over the case and returned the funds to the victim.
Inspector General Steven Anderson, who now works under Attorney General Kris Kobach, said the public should recognize the Legislature didn’t appropriate funding to hire two full-time special agents until 2023.
“You can’t do investigations if you don’t have investigators. It’s that simple,” Anderson said.
He also said the Legislature should view cases in which an allegation was disproven as a successful conclusion to an inquiry by the inspector general.
“For anybody who’s been wrongly accused to be exonerated is a real plus,” Anderson said. “So, those don’t add dollars. They don’t show up as recoveries. They don’t show up as savings, but for the people subject to those investigations, it’s a win.”
The latest audit did make reference to a 2021 report revealing the Kansas Department of Health and Environment mistakenly overpaid companies delivering Medicaid services to disabled, elderly and low-income Kansans from 2015 to 2020. It was discovered managed care organizations hired by the state were paid $1.3 million for care associated with 25 individuals who were deceased.
KDHE recovered $1.1 million from three managed-care companies by withholding subsequent state Medicaid payments. A fourth company no longer employed by Kansas repaid $171,000.
Anderson said the Legislature’s audit noted but didn’t attempt to confirm the inspector general’s estimate that oversight from his office led to $3.2 million in “future savings,” based on identifying and removing people who benefitted from the health assistance programs but were ineligible.
“We didn’t evaluate the validity of the numbers as part of this limited-scope audit,” said Fahrenbruch, the senior auditor with the Legislature.
The audit said “the concept of waste didn’t meet the definition of recoupment for the state” so questions about the accuracy of the inspector general’s estimates weren’t evaluated.
In addition, Anderson said the audit mentioned but didn’t confirm the purported $8 million in savings that could have occurred if the state’s billing for emergency alert services and equipment had been handled as recommended by the inspector general.
Auditors also didn’t explore the inspector general’s estimate that $320 million in “wasted funds” had been identified by his office from 2021 to 2024, Anderson said.
For example, in 2022 the inspector general concluded the state’s Home and Community Based Services program paid $193 million for 2,850 beneficiaries who hadn’t used those services in more than a year, despite rules requiring monthly use to remain eligible. In its response, the Department for Aging and Disability Services agreed to take steps to improve oversight of that funding.
The Kansas inspector general’s office bounced around state government after being initiated in 2007 by the Legislature. It landing with the attorney general in 2017. From 2014 to 2018, the job of inspector general was left vacant.
Then-Attorney General Derek Schmidt appointed an IG in 2018 and was responsible for selecting Anderson in 2021.
The 2025 Legislature expanded the mission of the inspector general’s office to search for potential fraud, waste, abuse and other illegal acts in the state’s Supplemental Nutrition Assistance Program, or SNAP, and Temporary Assistance for Needy Families, or TANF.
Lawmakers allocated $305,000 to expand the inspector general’s staff with an additional two auditors and one investigator in the current fiscal year to address the broadened mandate.
Anderson said it was his assumption the inspector general also would be available to explore fraud in the state’s free- and reduced-cost school lunch program.
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