Health Law Daily California made $1B in Medicaid payments for potentially ineligible beneficiaries
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Thursday, February 22, 2018

California made $1B in Medicaid payments for potentially ineligible beneficiaries

By Matt Pavich, J.D.

The HHS Office of the Inspector General (OIG) found that California has made Medicaid payments on behalf of ineligible and potentially ineligible beneficiaries in excess of an estimated one billion dollars. California agreed with most of the findings, but disagreed with the report’s specific recommendation regarding beneficiaries who may not have met the residency requirements (OIG Report, A-09-16-02023, February 20, 2018).

California eligibility determination process. California administers the Medicaid program, known as Medi-Cal, and is responsible for making eligibility determinations. To do so, it uses the California Healthcare Eligibility Enrollment and Retention System (CalHEERS) and the Statewide Automated Welfare Systems (SAWS.) CalHEERS verifies information provided by applicants and determines eligibility based on MAGI, a measure of income. SAWS also verifies information, but uses other criteria, such as age, to determine eligibility. CalHEERS determines whether individuals who apply through the Covered California website are eligible and sends applicant information to SAWS for case management or review of individuals whose eligibility cannot be determined. For individuals who apply in person or on the county website, the state uses SAWS to determine eligibility.

A beneficiary may be found eligible under different groups, such as under the new adult group one month and a different coverage group the next. Once an applicant is found to be eligible, CalHEERS or SAWS sends their information to the state agency’s system, MEDS, for storage. That information includes aid codes which identify the coverage group and scope of benefits; codes are usually assigned to each month for which a beneficiary is eligible.

Scope of review. The OIG review covered 1,886,854 newly eligible beneficiaries for whom California made Medicaid payments for services from October 1, 2014 to March 31, 2015. OIG then reviewed a random sample of 150 newly eligible beneficiaries, ninety of whom were associated only with the new adult group and sixty of whom were associated with both the new adult group and other coverage groups. It found that California made payments on behalf of 27 ineligible and 14 potentially ineligible beneficiaries. Based on the review, OIG estimated that the State agency made Medicaid payments of $738,180,945 on behalf of 366,078 ineligible beneficiaries and $416,520,734 on behalf of 79,055 potentially ineligible beneficiaries.

Ineligible beneficiaries. The report notes that in order to be eligible for the new adult group, an applicant must have a household income at or below 138 percent of the Federal Poverty Level (FPL), be between 19-64 years old, not be eligible for any mandatory coverage group, not be pregnant, and not be entitled to, or be enrolled for, Medicare benefits. The state agency, however, made payments on behalf of 24 beneficiaries who did not meet those requirements. Twelve had incomes above 138 of the FPL, one of whom had a change in income, and neither CalHEERS, nor SAWS, is able to discontinue Medicaid payments once a previous MAGI determination has been made. Seven beneficiaries were eligible for another mandatory coverage group, including one who was under 26 and who had been in foster care. Two beneficiaries were pregnant, but the caseworker failed to input that relevant data. Two were either entitled to, or were already enrolled in Medicare and CalHEERS failed to use SSA data to verify the eligibility for at least one of the applicants. The final beneficiary failed to provide evidence of citizenship and did not submit a Medicaid application, yet was still declared eligible.

In addition, the report found that the state agency incorrectly made payments on behalf of two beneficiaries who did not meet the requirements for coverage as a child and made payments for one whose eligibility had ended. Other beneficiaries did not meet the requirements for various groups, such as the parent group.

Potentially ineligible beneficiaries. The review found that of the 14 potentially ineligible beneficiaries, the state agency made payments on behalf of seven without verifying all eligibility requirements. It also made payments for full-scope services on behalf of six who had not been in the U.S. for five years and were, thus, only eligible for emergency and pregnancy-related care. The state also made payments on behalf of one who may not have met the residency requirement. In addition, the review found that the agency made payments for two individuals who may not have even sought Medicaid.

Recommendation and response. OIG recommended that the state agency redetermine the eligibility of the 38 sampled beneficiaries who failed to meet the requirements. It also recommended, among other things, that CalHEERS and SAWS be able to deny or discontinue payments for ineligible beneficiaries, use SSA data for verification, ensure proper verification of all eligibility requirements, and develop and implement written policies to ensure that applicants who did not intend to apply for Medicaid are not found to be eligible.

The state agency agreed with all recommendations except the recommendation related to residency requirements. The agency it had properly relied upon the sampled beneficiary’s self-attestation of homelessness and that it had made its determination based on federal and state requirements.

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