Audit: Medicaid Kept Paying Premiums After Patients Died

By Carol Gentry

Published December 14, 2016 at 7:52 AM EST

Over a five-year period, Florida’s Medicaid program overpaid private HMOs an estimated $26 million in monthly premiums for enrollees who had already died, according to a federal audit released Tuesday.

The report, written in November, doesn’t say how many dead Medicaid enrollees had premiums paid on their behalf and not discovered until the audit. But it appears to be several thousand.

The auditors from the Office of Inspector General of the Department of Health and Human Services said the federal loss from the overpayments was more than $15 million. Florida’s Agency for Health Care Administration, which operates the Medicaid program, needs to pay that money back, HHS officials said.

AHCA is busy correcting problems identified in the audit, Communications Director Mallory McManus said Tuesday afternoon. “The Agency has already recouped almost $24 million of the $26 million in overpayments,” she said in an e-mail.

To AHCA’s credit, the agency successfully retrieved overpayments in death cases 98 percent of the time, the audit found. But a 2-percent error rate mounts up because the program is so costly; during the five years covered by the audit -- July 1, 2009 through Nov. 5, 2014 -- the state agency paid HMOs about $1.3 billion, the report says.

At the time, Florida Medicaid was changing from a traditional fee-based model to statewide managed care for nearly all Medicaid enrollees. So instead of reimbursing doctors and hospitals after services are delivered, AHCA now pays insurers a monthly allowance in advance to cover whatever is needed.

This payment method, which the industry calls “capitation,” puts AHCA in the position of having to recoup overpayments when it is notified that the patient has died. If it is notified.

The audit report, cumbersomely titled “Florida Managed Care Organizations Received Medicaid Capitation Payments After Beneficiary’s Death,” identified two main reasons for the failure to catch $26 million in overpayments. It said AHCA:

Delays too long in updating its computer files – the Florida Medicaid Management Information System -- when a beneficiary dies. Some delays are caused by discrepancies in information, while others occur because information never arrives.
Needs to improve collaboration with other state and federal agencies to improve accuracy and speed of death reports. And if cooperation lags, the inspector general’s team suggests developing alternative sources of information.

In response, AHCA said it had to rely on other agencies -- the Social Security Administration; the state Department of Children and Families, which handles Medicaid enrollment; and the Department of Health’s Vital Statistics – for accurate and timely information on deaths.

AHCA’s response, dated Sept. 9, says it is working with state agencies to improve communication speed and accuracy. But in the letter, signed by then-Secretary Liz Dudek, AHCA says it has been unable to gain access to the Social Security Administration’s “Death Master file” after 18 months of effort.

With Dudek’s retirement on Oct. 3, Deputy Secretary for Medicaid Justin Senior became Interim Secretary of the agency. Beth Kidder became Interim Medicaid Director on Oct. 10.

Despite the death-case overpayments, Medicaid HMOs are still playing catch-up on funding following discovery in April that the state had systematically underpaid them since 2014 because of a computer coding error. As Politico Florida reported, the mistakes amounted to $377.5 million.