An Office of Inspector General (OIG) audit discovered that Kansas made at least $18.2 million in unallowable payments to Medicaid managed care organizations (MCOs) on behalf of deceased beneficiaries. Previous OIG audits found that state Medicaid agencies had improperly made capitation payments on behalf of deceased beneficiaries.
Kansas pays MCOs to make services available to enrolled Medicaid beneficiaries in return for a monthly fixed payment for each enrolled beneficiary, known as a capitation payment. During the period of 2017 through 2019, the audit identified 12,277 capitation payments totaling over $18.2 million that Kansas made to MCOs and claimed for Federal reimbursement on behalf of beneficiaries whose dates of death, as recorded in one or more of the data sources that was consulted, preceded the services covered by the monthly capitation payments.
The specifics of the audit identified 1,283 capitation payments totaling $2.7 million were unallowable, of which $1.5 million was the Federal share. These payments were made on behalf of deceased beneficiaries who had a date of death in the Kansas eligibility system that did not always agree with the information in the Death Master File (DMF). Further, 100 capitation payments in the stratified random sample totaling $192,991, of which $108,657 was a Federal share, were made on behalf of beneficiaries who had a date of death recorded in the DMF but who did not have a date of death in the Kansas system. All were unallowable. On the basis of the sample results, it is estimated that Kansas made unallowable capitation payments totaling at least $14.6 million, with at least $8.2 million of that as the Federal share.
The OIG recommends the following to Kansas:
- Refund at least $10.9 million to the Federal Government.
- Recover unallowable capitation payments totaling almost $2.7 million that were made to MCOs on behalf of deceased beneficiaries who did have a date of death recorded in the Kansas system.
- Identify and recover unallowable capitation payments made to MCOs on behalf of deceased beneficiaries who did not have a date of death recorded in the Kansas system, which was estimated to be at least $14.6 million.
- Identify and recover unallowable capitation payments made on behalf of deceased beneficiaries before and after the OIG audit period and repay the Federal share of any amounts recovered.
The OIG made additional procedural recommendations for the strengthening of internal controls and policies and procedures regarding accurate and timely updates to the Kansas eligibility system and the accurate reporting of all Medicaid expenditures, to include prior-period adjustments.
Kansas officials did not directly address the recommendation but stated that the analysis resulted in legitimate findings of incorrect capitation payments. Kansas officials also described corrective actions that have been taken or planned, to include reviewing and reconciling data and performing automated and manual refunds, creating a task force to address the OIG recommendations, and implementing monitoring and senior leadership oversight activities.
The OIG’s full report can be accessed here.
Compliance Perspective
Issue
All facilities must ensure that Medicaid managed care organizations are kept current regarding beneficiary status and that reporting of status changes is done timely. Members of the healthcare team, including billing office and MDS coordinators, should be aware of when to report status changes and to ensure that the reporting is done timely and accurately.
Discussion Points
- Review policies and procedures related to Medicaid managed care organizations. Update as needed.
- Train appropriate staff on when and how to report changes in resident status to Medicaid managed care organizations. Document that these trainings occurred and file the signed document in each employee’s education file.
- Periodically audit to ensure that beneficiaries’ status changes are reported to Medicaid managed care organizations accurately and timely.
