Purpose

To determine whether the Department of Health took sufficient steps to control the Medicaid costs of recipients diagnosed with end stage renal disease who were eligible for, but not enrolled in, Medicare. The audit covered the period January 1, 2010 through December 31, 2015.

Background

End stage renal disease (ESRD) is a medical condition in which a person has permanent kidney failure and requires dialysis or a kidney transplant to stay alive. For the six-year period ended December 31, 2015, Medicaid paid $909 million for medical services (including inpatient, clinic, physician/professional, referred ambulatory, transportation, durable medical equipment, and laboratory services) on behalf of 10,906 Medicaid recipients who were diagnosed with ESRD.

Medicaid recipients with ESRD are eligible for Medicare coverage if they receive regular dialysis treatments or a kidney transplant, and meet one of the following requirements: (1) have worked the required amount of time under Social Security, the Railroad Retirement Board, or as a government employee; (2) are already receiving or are eligible for Social Security or Railroad Retirement Board benefits; or (3) are the spouse or dependent child of a person who meets either of the aforementioned requirements.

When Medicaid recipients with ESRD are also enrolled in Medicare, Medicare becomes the primary insurer (payer) and Medicaid the secondary. As a secondary payer, rather than pay for the medical service itself, Medicaid can pay a recipient’s Medicare premiums, deductibles, and coinsurance amounts, which allows for a significant cost avoidance for the Medicaid program.

Key Findings

• For decades – since July 1973 – Medicaid recipients diagnosed with ESRD have been eligible for Medicare benefits. This allows state Medicaid programs to transfer some of the medical costs of these individuals to the federal Medicare program. We determined the Department of Health (Department) has not taken steps to effectively control the Medicaid costs of recipients diagnosed with ESRD. In particular, the Department does not identify Medicaid recipients with ESRD, notify ESRD recipients of their entitlement to Medicare, or take actions to help (or encourage) them to apply and enroll in Medicare. As a result, we identified 3,015 Medicaid recipients with ESRD who met the Medicare eligibility criteria, but who were not enrolled in Medicare at the time their medical services were provided. Had the Department informed the recipients about their entitlement to Medicare and taken proactive steps to help get them enrolled, the Medicaid program could have saved as much as $146 million over the six-year audit period. For example, we identified a child who was diagnosed with ESRD, was receiving continuous dialysis treatments, and qualified for Medicare based on his parent’s work credits. Had the child been enrolled in Medicare, the Medicaid program would have saved about $1.5 million over a four-year period.

• Based on our analysis of the $146 million, we estimated the Medicaid program could save as much as $69 million from 2016 through 2018 if the Department took immediate steps to identify Medicaid recipients with ESRD and helped guide them on how to apply for and enroll in Medicare. In response to our audit, the Department initiated a project to identify Medicaid recipients diagnosed with ESRD. According to Department officials, this process will produce an outreach letter that notifies ESRD recipients that they may be eligible for Medicare, explains the benefits of Medicare enrollment, and tells them how and where to apply for Medicare. Going forward, the Department can obtain recoveries from Medicare (up to 12 months of an individual’s medical costs) by tracking when ESRD recipients are retroactively enrolled in Medicare.

• In addition to the 3,015 recipients who met the Medicare eligibility criteria based on their or a qualifying family member’s work credits, we identified 4,381 ESRD Medicaid recipients who did not qualify for Medicare based on their time worked and for whom we could not identify a spouse or parent to establish Medicare eligibility. These 4,381 ESRD recipients included 4,240 adults and 141 children whose Medicaid case information did not note a spouse or parent. Medicaid payments for these recipients totaled about $553 million for services that Medicare would have covered. If even a small percentage of these patients were eligible for Medicare, there could be material savings for the Medicaid program.

• Sometimes a Medicaid recipient who is eligible for Medicare does not take steps to obtain Medicare coverage. To address this, the federal Social Security Administration (SSA) has a policy that allows Medicaid recipients who are age 65 and older and who are eligible for regular Medicare benefits to be enrolled in Medicare without a recipient’s consent. However, this policy does not address Medicaid recipients under age 65 who meet ESRD Medicare eligibility requirements who do not apply for Medicare. We requested that SSA issue a formal ruling as to whether Medicaid recipients diagnosed with ESRD could be similarly enrolled, without a recipient’s consent, as long as they met ESRD Medicare requirements.

Key Recommendations

• Implement a process to identify and notify Medicaid recipients with an ESRD diagnosis to apply for Medicare coverage and instruct them on how and where to apply for Medicare.

• Develop an outreach program that encourages ESRD-related providers and other stakeholders to inform ESRD recipients about Medicare benefits and Medicaid’s payment of Medicare outof- pocket costs, and to actively assist recipients apply for Medicare.

• Follow up with recipients who do not apply for Medicare by implementing a process that:
  • Ascertains the Medicare eligibility of recipients diagnosed with ESRD (by identifying recipients’ qualifying relations [spouse, parent] and obtaining recipients’ qualifying work credits [“quarters of coverage,” or QCs] from SSA); and
  • Notifies the recipients of their apparent Medicare eligibility.

• If SSA clarifies or amends rules to allow the enrollment of ESRD recipients who do not apply for Medicare, then for recipients with the necessary QCs, collect and submit documentation required for SSA to make an ESRD Medicare eligibility determination.

• Recover Medicaid claims paid for any retroactive Medicare enrollments of ESRD recipients.

Other Related Audits/Reports of Interest

Department of Health: Unnecessary Managed Care Payments for Medicaid Recipients With Medicare (2010-S-75)
Department of Health: Improper Payments Related to the Medicare Buy-In Program (2010-S-76)