Purpose

To determine if Medicaid made excessive payments for Medicare Part C cost-sharing liabilities. The audit covered the period January 2008 through November 2012.

Background

Many Medicaid recipients are also enrolled in Medicare. Such recipients are commonly referred to as "dual-eligibles." In 1997, Congress established Medicare Part C, also known as Medicare managed care or Medicare Advantage. Under Medicare Part C, private managed care companies administer Medicare benefits. These Medicare Advantage Plans typically have networks of participating providers whom they reimburse directly for services provided to enrollees. For dual-eligible persons, plan providers bill Medicaid directly for the enrollee's Part C cost-sharing liabilities (deductibles, coinsurance, and copayments). In New York, Medicaid pays the entire Part C cost-sharing amount claimed, regardless of the amount.

Key Findings

• During the audit period, Medicaid could have saved up to $69 million if it limited payments of Medicare Part C cost-sharing liabilities such that the total Medicare and Medicaid payment for a service did not exceed Medicaid's normal service fee. Other states already use this approach, and New York uses this approach to limit payments for certain other Medicare cost-sharing liabilities.
• For example, a Medicaid recipient with Medicare Part C coverage received outpatient surgery for a pacemaker, for which a Medicare Advantage Plan paid the provider $25,322. In comparison, Medicaid's fee for the procedure was $13,180 - far less than Medicare's payment. Nevertheless, Medicaid paid the provider $5,848 for coinsurance because there are no limits on Part C cost-sharing. If the Department limited payment of Part C coinsurance so that the Medicare and Medicaid payment in total did not exceed Medicaid's fee, Medicaid would not have paid the coinsurance.
• In addition, we determined Medicaid made $1.6 million in overpayments for Medicare Part C cost-sharing because recipients were not enrolled in Part C.

Key Recommendations

• Re-evaluate the reimbursement methodology for Medicare Part C cost-sharing, including a review of other states' policies.
• Review the $1.6 million in Medicaid payments for Medicare Part C cost-sharing liabilities for recipients who were not covered by Part C. Recover overpayments as appropriate.

Other Related Audits/Reports of Interest

Department of Health: Medicaid Payments to Selected Providers for Services to Recipients With Medicare Part C Coverage (2010-S-22)
Department of Health: Excessive Medicaid Payments for Services to Recipients Receiving Medicare Benefits (2009-S-64)