OIG recommends New York refund managed Medicaid payments
Audit finds $7.8M in federal funds were claimed for enrollees who were incorrectly assigned to eligibility groups.
Photo: John Rensten/Getty Images
A new audit conducted by the Office of Inspector General (OIG) for the U.S. Department of Health and Human Services claims that, from October 2016 to September 2019, the New York State Department of Health improperly claimed federal funds for payments made to managed care organizations on behalf of enrollees whose status did not align with federal eligibility requirements.
According to the audit, about $7.8 million in federal funds were claimed for enrollees who were incorrectly assigned to eligibility groups, such as individuals enrolled in both Medicaid and Medicare or other ineligible categories.
This discrepancy, OIG said, stems from a lack of accurate data reconciliation, highlighting the persistent issue of improper Medicaid payments – a challenge that has plagued the system for years and continues to strain federal resources.
WHAT'S THE IMPACT
The audit revealed the data inaccuracies were primarily related to inconsistent record-keeping and weak oversight in eligibility verification, which resulted in payments for ineligible enrollees.
Prior OIG audits have flagged similar issues across various states. For instance, in a separate audit, improper Medicaid payments across multiple states were estimated to exceed $36 billion annually, representing a growing financial risk to both state and federal budgets, data showed.
OIG's report places much of the blame for these errors on inadequate oversight by state health departments. The New York audit, for example, found the state did not have effective systems in place to verify eligibility statuses consistently, which led to ongoing payment discrepancies.
These oversight gaps, coupled with the complexity of Medicaid eligibility requirements, create an environment in which errors can easily slip through the cracks, authors said.
Addressing these problems will require more than just repayments. While OIG has recommended that NYSDOH refund the federal government, the report underscores the need for structural improvements in how Medicaid eligibility is tracked and verified.
OIG is urging states to implement better data-matching technologies and regular audits to ensure that MCO payments are made only for eligible enrollees. Strengthened oversight is necessary not only to address current issues but to prevent future occurrences of improper payments, it said.
In response to the findings, NYSDOH has committed to reviewing OIG's recommendations and taking corrective actions. The state health department acknowledged that errors occurred but defended its overall payment system, emphasizing that most payments were accurate and that steps have already been taken to minimize future mistakes.
At the federal level, the Centers for Medicare and Medicaid Services has taken steps to enhance program integrity, including introducing more stringent rules around eligibility verification and the reconciliation of managed care payments. But the audit showed implementation at the state level remains a significant hurdle.
Without strong state-federal collaboration, improper payments will continue to drain resources from an already overburdened healthcare system, OIG said.
THE LARGER TREND
In March the U.S. Government Accountability Office reported an estimated $236 billion in improper payments during fiscal year 2023, and of that amount, more than $100 billion came from Medicare and Medicaid.
The $236 billion in improper payments were reported by 14 agencies across 71 programs. More than $175 billion (74%) of errors were overpayments – for example, payments to deceased individuals or those no longer eligible for government programs. $11.5 billion were underpayments; $44.6 billion were unknown payments (meaning it's unclear whether the payment was an error); and $4.6 billion were cases where a recipient was entitled to a payment, but the payment failed to follow proper statutes or regulations.
There was some good news, though: Payment errors have declined since last fiscal year by about $11 billion. Eight program areas saw substantial declines in improper payments this past year. For example, payment errors under Medicaid dropped by $30 billion from the previous year.
Overall, while improper payments were down from last year, they remain higher than before the COVID-19 pandemic.
Jeff Lagasse is editor of Healthcare Finance News.
Email: jlagasse@himss.org
Healthcare Finance News is a HIMSS Media publication.
