Purpose

To determine whether the Department of Health (Department) made Medicaid mainstream managed care premium payments on behalf of individuals who had comprehensive third-party health insurance coverage. The audit covered the period January 1, 2012 to September 1, 2017.

Background

The Medicaid program is a federal, state, and locally funded program that provides a wide range of health care services to those who are economically disadvantaged and/or have special health care needs. The Department administers the State’s Medicaid program. For the State fiscal year ended March 31, 2017, New York’s Medicaid program had approximately 7.4 million enrollees and Medicaid claims totaled about $58 billion. Under managed care, Medicaid pays managed care organizations (MCOs) a monthly premium for each enrolled Medicaid recipient, and the MCOs arrange for the provision of services their members require. As of August 2017, 4.4 million people were enrolled in mainstream managed care plans – about 2.5 million were enrolled through New York State of Health (NYSOH), New York’s online health insurance marketplace, and the remainder were enrolled through other means, including the Local Departments of Social Services (LDSS).

Many Medicaid recipients have additional sources of health care coverage. In accordance with the New York State Social Services Law, the Department’s policy is to exclude Medicaid recipients from mainstream managed care when they have concurrent comprehensive third-party health insurance (TPHI). Furthermore, according to the Medicaid Managed Care Model Contract, when the Medicaid managed care provider and the comprehensive TPHI provider are the same, the State can disenroll the recipients from managed care retroactively and recover premiums paid to the MCO for those recipients during the period of overlapping coverage.

Key Findings

• During the audit period, the Department paid about $1.28 billion in Medicaid managed care premium payments on behalf of enrollees who also had concurrent comprehensive TPHI:
  • $26.9 million (about 73,000 premiums) can be recovered because the recipients’ MCO is the same legal entity as the recipients’ third-party insurer.
  • $70.6 million (about 191,000 premiums) were paid to MCOs that were related through some form of ownership (such as parent, subsidiary, or affiliate) to the third-party insurer. The Department must review these relationships to confirm the premiums are recoverable.
  • $1.17 billion (about 3.2 million premiums), representing about 91 percent of the $1.28 billion, are not recoverable because the MCO and third-party insurer are not related.
• Although some instances of concurrent Medicaid managed care and comprehensive TPHI coverage are unavoidable, we identified scenarios where inappropriate managed care premium payments could be minimized with improved oversight and management by the Department:
  • The Department often becomes aware of enrollees’ comprehensive TPHI coverage after the coverage has taken effect. Our audit determined Medicaid paid over $691 million (about 54 percent of the $1.28 billion) in managed care premiums while enrollees’ comprehensive TPHI was in effect, but not known by the Department. To prevent such premium payments – and, in the case of unrelated-provider coverages, unrecoverable premium payments – it is imperative that comprehensive TPHI be identified timely.
  • Medicaid paid over $591 million (about 46 percent of the $1.28 billion) in inappropriate managed care premiums despite the enrollees’ comprehensive TPHI having been identified by the Department and recorded in eMedNY, the Department’s Medicaid claim processing and payment system. Since June 2016, the Department has improved payment controls that use TPHI information to prevent such improper premium payments; however, these efforts only target NYSOH-enrolled recipients. The Department has not implemented similar controls with regard to non-NYSOH-enrolled recipients, such as recipients enrolled through the LDSS.

Key Recommendations

• Improve monitoring efforts to assist in the prevention, detection, and recovery of inappropriate managed care premiums.
• Implement controls to remove non-NYSOH-enrolled recipients with comprehensive TPHI from managed care.
• Review the managed care premiums we identified and recover as appropriate.
• Amend the Model Contract language to allow the Department to recover premiums from all MCOs regardless of the relationship with recipients’ third-party insurer.

Other Related Audits/Reports of Interest

Department of Health: Unnecessary Managed Care Payments for Medicaid Recipients With Medicare (2010-S-75)
Department of Health: Inappropriate Premium Payments for Recipients No Longer Enrolled in Mainstream Managed Care and Family Health Plus (2015-S-47)