Objective

To determine whether Medicaid made improper payments on behalf of recipients with Department of Health-authorized overlapping Medicaid and Essential Plan coverage. The audit covered the period from January 2017 through November 2022.

About the Program

The Department of Health (Department) administers New York’s Medicaid program, which provides health care services to individuals who are economically disadvantaged. The Department also administers New York’s Essential Plan, which provides health insurance to lower-income individuals who, generally, don’t otherwise qualify for Medicaid. As income, household makeup, and other factors change, individuals may transition between Medicaid and the Essential Plan. Both programs provide comprehensive health insurance and cover many of the same types of services. When recipients transition from one program into the other, Medicaid and Essential Plan eligibility and enrollment rules can result in Department-authorized periods of overlapping insurance coverage.

Medicaid is the payer of last resort, which means recipients’ other third-party health insurance coverage, such as insurance under the Essential Plan, must be exhausted before Medicaid pays. During periods of authorized overlapping Medicaid and Essential Plan coverage, the Essential Plan should be the primary payer and Medicaid, as secondary payer, should pay any remaining liabilities, such as deductibles and coinsurance.

Key Findings

Medicaid improperly paid $93.7 million in claims during periods of overlapping Medicaid and Essential Plan coverage because the Department did not account for the Essential Plan as a liable third-party health insurance. Despite administering both programs and having enrollment information for both in its systems, the Department never applied payment controls and, consequently, Medicaid has been improperly paying the full amount for services as the primary payer since inception of the Essential Plan. Our review identified Medicaid overpayments of:

• Approximately $69 million for health care services fully covered by the Essential Plan;
• Up to $14.1 million for health care services covered by the Essential Plan under certain circumstances and/or up to certain quantity limits; and
• $10.6 million for managed care premiums when recipients did not qualify for Medicaid managed care because they also had Essential Plan coverage.

Key Recommendations

• Review the $93.7 million in improper payments and make recoveries as appropriate.
• Recognize the Essential Plan as liable third-party health insurance and ensure proper processing of Medicaid claim payments.