Objective

To determine whether Medicaid made improper payments on Medicare Part C claims for recipients covered by Medicare Advantage Plans. The audit covered the period from May 2018 through April 2023.

About the Program

Under Medicare Part C, private insurance companies administer Medicare benefits through different health care plans, known as Medicare Advantage Plans (Plans). Plans reimburse health care providers for services rendered to enrollees. Many Medicaid recipients are enrolled in these Plans (referred to as “dual-eligibles”). Generally, Medicaid is the secondary payer and covers cost-sharing balances that are not covered by the Plans, such as a deductibles, copayments, and coinsurance, as follows. Medicaid pays 100% of the deductibles. Medicaid pays 100% of the copayments and coinsurance on inpatient claims, and Medicaid pays 85% of the copayments and coinsurance on outpatient claims except for ambulance and psychology services, for which Medicaid pays 100%.

When Plans deny a claim or pay a different amount than what a provider billed (e.g., after netting out cost-sharing liabilities), Plans must communicate those actions to providers on the Explanation of Benefits (EOB) using Claim Adjustment Reason Codes (CARCs). Providers can submit claims for these unpaid amounts to Medicaid through eMedNY, the Department of Health’s (DOH) automated claims processing and payment system. When submitting claims, providers are required to include the Plan-reported CARCs. The eMedNY system uses the CARCs to determine whether a billed service is eligible for payment as well as the correct payment amount.

Key Findings

We analyzed Part C claims for hospital-based inpatient and outpatient services on behalf of dual-eligible recipients for the period May 2018 through April 2023 and identified $121.4 million in claims that fell into at least one of the following three high-risk categories for improper payment: claims with a high coinsurance amount compared to the reported Plan payment amount; claims with a high deductible amount compared to the allowed Medicare Part A or Part B deductible amount; or claims that indicated the Plan paid nothing for the service.

From a judgmental sample of 89 of these claims, totaling $1,325,452, from five hospitals, we determined Medicaid made improper payments for 49 claims (55%) totaling $881,233. (Note: 66 of the 89 claims [74%] were incorrectly billed, but 17 incorrect claims did not result in overpayments [e.g., inpatient claims billed as a deductible instead of a copayment were not overpaid because all inpatient cost-sharing is reimbursed at 100%].)

The improper Medicaid payments for Part C services occurred in part because hospitals misinterpreted State regulations and billing guidelines, did not properly submit CARCs on claims, or indicated Plans did not cover services when they actually did. We also found improvements are needed to eMedNY to prevent incorrect payments.

Key Recommendations

• Review the improperly billed claims we sampled and recover overpayments, as appropriate.
• Develop an ongoing process, using a risk-based approach, to identify and review hospitals that bill questionable Part C claims, including the hospitals identified in this report, and ensure corrective steps are taken.
• Enhance controls to help ensure Medicaid accurately pays Part C claims.