Objective

To determine whether the Department of Health (Department) overpaid the Medicare Part D prescription drug phased-down state contributions. The audit covered the period January 1, 2017 through December 1, 2018.

About the Program

The Department administers New York’s Medicaid program. Effective January 1, 2006, pursuant to the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, Medicare Part D provides prescription drug benefits for individuals who are dually eligible for Medicare and Medicaid (“dual-eligibles”). The Department is required to make a monthly payment (referred to as the phased-down state contribution, or “clawback” payment) to the federal government to cover part of the cost of prescription drugs for the State’s full-benefit dual-eligible population.

Key Findings

Auditors identified opportunities for cost reduction of Part D clawback payments totaling $2.9 million for the period January 1, 2017 through December 1, 2018. Specifically, the audit found the Department needs to assess the appropriateness of the following payments:

• $1.65 million in payments on behalf of 2,315 recipients who were receiving Medicaid in another state.
• $451,348 in payments on behalf of 1,250 recipients who either were only eligible for partial Medicaid benefits or did not have any Medicaid coverage.
• $269,478 in payments on behalf of 645 recipients who appear to have been incarcerated.
• $259,584 in payments on behalf of 929 deceased recipients.
• $257,761 in payments on behalf of 714 recipients who no longer had Part D coverage.

Key Recommendations

• Review the $2.9 million in clawback payments and take the necessary steps to ensure appropriate adjustments are made before the 36-month time frame for refunds expires.
• Develop a process to verify the reasonableness and accuracy of clawback charges.