Purpose

To determine whether the Medicaid program made inappropriate capitation payments to Managed Long Term Care Partial Capitation plans for recipients who were no longer enrolled in these plans. The audit covered the period January 1, 2010 through January 31, 2015.

Background

Managed Long Term Care Partial Capitation plans (Plans) provide health and long-term care services to recipients who have a long-lasting health problem or disability. Generally, recipients enrolled in these Plans need home care, adult day health care, or other long-term care for more than 120 days; have both Medicaid and Medicare; and are age 21 or older. Medicaid pays Plans a monthly capitation payment for every Medicaid recipient enrolled in a Plan, and the Plan arranges for the provision of services its members require. For the period January 1, 2010 through January 31, 2015, Medicaid paid Plans $15 billion in capitation payments. The Department of Health (Department) can recover inappropriate capitation payments made to Plans. An inappropriate payment occurs when a capitation payment was made for a recipient who was later retroactively disenrolled from a Plan and the Plan was not “at risk” for the provision of services during the disenrollment period (i.e., the Plan did not pay for medical services for the recipient during the disenrollment period). Plans are required to void (repay) these inappropriate capitation payments when recipients are retroactively disenrolled.

Key Findings

• For the period January 1, 2010 through January 31, 2015, we determined Medicaid paid Plans 5,368 monthly capitation payments totaling about $21.4 million for recipients who were subsequently disenrolled and the Plans were not “at risk” (did not pay for medical services) during the disenrollment periods. By the end of our fieldwork, the Plans voided 1,522 of the 5,368 monthly capitation payments (totaling about $6.2 million). Additionally, the Office of the Medicaid Inspector General recovered another 800 payments (totaling more than $3.2 million) in response to our findings, leaving 3,046 capitation payments totaling about $12 million that still needed to be reviewed and recovered from the Plans.
• The Department does not have a system in place to identify capitation payments made for retroactively disenrolled recipients. As a result, the Department cannot properly monitor whether Plans are voiding the capitation payments. Also, the Department’s managed long‑term care contracts do not require Plans to void inappropriate capitation payments within a specified time frame. Therefore, improper capitation payments for retroactively disenrolled recipients can remain outstanding for several years.
• If the Department revises its policy on the payment of capitation payments during disenrollment periods when Plans were “at risk” (provided medical services), the Medicaid program could realize significant savings. Specifically, if Medicaid paid for the cost of such health care services rather than capitation payments, we estimated that for the period January 1, 2010 through January 31, 2015, the Medicaid program could have saved approximately $3.1 million.

Key Recommendations

• Review the remaining $12 million in capitation payments we identified and recover overpayments as appropriate.
• Enhance Department oversight to identify and recover capitation payments for retroactively disenrolled recipients for periods that Plans were not “at risk” for providing medical services.
• Amend Plan contracts to specify a timeframe in which Plans are required to void inappropriate capitation payments for retroactively disenrolled recipients.
• Assess the impact of revising payment policies to reimburse Plans for the cost of medical services (as opposed to capitation payments) provided to retroactively disenrolled recipients.

Other Related Audits/Reports of Interest

Department of Health: Appropriateness of Medicaid Eligibility Determined by the New York State of Health System (2014-S-4)
Department of Health: Optimizing Medicaid Drug Rebates (2015-S-1)