Purpose

To determine the extent of implementation of the six recommendations made in our audit report, Medicaid Payments Made Pursuant to Medicare Part C (Report 2012-S-133).

Background

Medicaid provides health care services to those who are economically disadvantaged and/or have special health care needs. Many of the State’s Medicaid recipients are also enrolled in Medicare. Under Medicare Part C, also known as Medicare managed care or Medicare Advantage, private managed care companies administer Medicare benefits. Medicare pays a fixed amount for each Medicare Part C beneficiary every month to companies offering Medicare Advantage plans, and plans reimburse health care providers directly for services provided to enrollees. For individuals enrolled in both Medicaid and Medicare Part C, plan providers bill Medicaid directly for the enrollee’s Part C cost-sharing liabilities (deductibles, coinsurance, and copayments).

We issued our initial audit report on May 9, 2014. The audit objective was to determine if Medicaid made excessive payments for Medicare Part C cost-sharing liabilities. The audit covered the period January 1, 2008 through November 30, 2012. Our initial audit found the State’s Medicaid program did not have limitations on the amounts it paid for Part C cost-sharing liabilities. Instead, Medicaid paid the entire cost-sharing liability billed by a provider, regardless of the amount requested. Our initial audit determined Medicaid could have saved up to $69 million if it limited payments of Medicare Part C cost-sharing liabilities.

The audit also identified several scenarios under which Medicare Part C cost-sharing liabilities were improperly paid, including: $70,594 in excessive payments for Medicare Part C cost-sharing liabilities; $1.6 million in overpayments for Medicare Part C cost-sharing liabilities paid on behalf of recipients who were not enrolled in Medicare Part C; and $94,306 for Medicare Part C cost-sharing claims paid during the same months that Medicaid made Medicaid Advantage Plan premium payments of $552,327 for the same recipients (people who enroll in a Medicare Advantage Plan can enroll in the same organization’s Medicaid Advantage Plan, in which case the Medicaid Advantage Plan premium payment typically covers the recipient’s Medicare Part C cost-sharing liabilities).

We recommended that the Department: re-evaluate the reimbursement methodology for Medicare Part C cost-sharing; review and recover the improper payments; and correct the Medicaid payment system that allowed concurrent payments of Medicare cost-sharing liabilities and Medicaid Advantage premiums on behalf of the same recipient.

Key Finding

Department officials made progress in addressing the problems we identified in the initial audit report. This included developing controls to limit the amounts paid for Medicare Part C cost-sharing liabilities and controls to prevent concurrent payments of Medicaid Advantage premiums and Medicare cost-sharing liabilities on behalf of the same recipient. However, further actions were still needed. For instance, none of the overpayments identified during the initial audit had been recovered. Of the initial report’s six audit recommendations, one was implemented, two were partially implemented, and three were not implemented.

Key Recommendation

Officials are given 30 days after the issuance of the follow-up report to provide information on any actions that are planned to address the unresolved issues discussed in this report.

Other Related Audit/Report of Interest

Department of Health: Medicaid Payments Made Pursuant to Medicare Part C (2012-S-133)