Purpose

To determine if Medicaid overpaid Medicare crossover claims for physician and other outpatient services and to identify the claims processing control weaknesses that allowed the overpayments to occur. The audit covers the period December 3, 2009 through March 31, 2012.

Background

Many Medicaid recipients are also eligible for Medicare, the federal health insurance program available to people 65 or more years-old, as well as people under 65 with certain disabilities. Individuals enrolled in both programs are commonly referred to as "dual eligible." In general, for dual eligible individuals, Medicare is the primary claims payer - and Medicaid, as a secondary payer, pays the individual's Medicare deductibles and coinsurance for the medical services rendered. On December 3, 2009, the Department of Health (Department) implemented the Medicare/ Medicaid claim crossover system. Under the system, providers submit medical claims for dual eligible individuals to Medicare. After Medicare processes the claims, they are electronically transferred to the Medicaid claims processing system (eMedNY) for payment of deductibles and coinsurance. Prior to the automated crossover system, the Department relied on providers to self-report accurate information to eMedNY regarding how much Medicare paid and how much Medicaid owed; this often led to incorrect Medicaid payments of Medicare deductibles and coinsurance.

Key Findings

• Medicaid made actual and potential overpayments (totaling about $26.4 million) on 865,987 crossover claims that were processed during our audit period.
• The actual overpayments totaled about $10 million (from 414,081 crossover claims). The overpayments occurred because eMedNY incorrectly interpreted certain crossover claim adjustment codes; and did not properly apply Medicaid reimbursement limits.
• The potential overpayments totaled $16.4 million (from 451,906 crossover claims) where providers submitted their claims directly to Medicaid and bypassed the controls afforded by the crossover system.

Key Recommendations

• Correct the flawed eMedNY computer controls that caused the Medicaid overpayments we identified during the audit.
• Recover the Medicaid overpayments totaling $10 million caused by flawed eMedNY computer programs that incorrectly processed Medicare crossover claims.
• Review the $16.4 million in potential Medicaid overpayments and recover where appropriate.

Other Related Audits/Reports of Interest

Department of Health: Overpayments for Services Also Covered by Medicare Part B (2010-S-50)
Department of Health: Overpayments of Claims for Selected Professional Services (2010-S-73)