Objective

To determine the extent of implementation of the six recommendations included in our initial audit report, Improper Fee-for-Service Payments for Services Covered by Managed Care (Report 2017-S-74).

About the Program

The Department of Health (Department) pays Medicaid providers using the fee-for-service (FFS) or managed care method. Under the FFS method, the Department, through its Medicaid claims processing and payment system, pays providers directly for services rendered to Medicaid recipients. Under the managed care method, the Department pays managed care plans a monthly premium for each Medicaid recipient enrolled in managed care, and the managed care plans pay providers for services rendered to their members. The State’s Medicaid program offers different types of managed care. Most recipients are enrolled in mainstream managed care plans (Plans), which provide comprehensive medical services ranging from hospital inpatient care to physician and dental services. Plans are responsible for providing most medical services to enrollees; however, some services are excluded from the Plans’ benefit packages and paid separately through FFS.

We issued our initial audit report on January 10, 2019.The audit objective was to determine whether Medicaid made improper FFS payments for certain services covered by Plans. The audit covered the period January 1, 2013 through April 30, 2018. The audit identified over $36 million in improper Medicaid FFS payments for services that should have been covered by the recipients’ Plans. We determined the majority of the improper payments occurred because the managed care enrollment information was not updated timely in the Medicaid eligibility files used to process Medicaid claims, particularly for newborns. We recommended that the Department review the improper payments we identified and make appropriate recoveries. We also recommended that the Department coordinate with Plans, Local Departments of Social Services, and hospitals to improve the timeliness of managed care enrollments to prevent improper Medicaid FFS payments.

Key Findings

Department officials made some progress in addressing the problems we identified in the initial audit report. However, since the audit, we identified nearly $7 million in new improper payments and further actions are still needed to take corrective steps and recover overpayments. We commend Rockland County Department of Social Services for taking steps to reduce improper payments in response to the audit. Rockland County was initially identified as a district with one of the highest number of improper newborn FFS claims; however, our updated analysis determined Rockland improved the timeliness of enrollment and was no longer among the districts with the highest number of improper claims. Of the initial report’s six audit recommendations, two were implemented, three were partially implemented and one was 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.