Health Reform WK-EDGE Kentucky failed to verify income, citizenship when determining Medicaid eligibility
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Wednesday, May 24, 2017

Kentucky failed to verify income, citizenship when determining Medicaid eligibility

By Susan L. Smith, JD, MA

Kentucky made federal Medicaid payments totaling $105 million on behalf of 34,593 potentially ineligible beneficiaries because of human and system errors made during its Medicaid eligibility determinations. Specifically, Kentucky did not always electronically or manually verify income and citizenship as required by federal and state Medicaid eligibility rules. In addition, it did not perform or maintain documentation of identity-proofing for 40 beneficiaries in accordance with federal requirements, according to the HHS Office of Inspector General (OIG) (OIG Report, A-04-15-08044, May 15, 2017).

Medicaid expansion. The Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), gave states the option to expand Medicaid coverage to nondisabled low-income adults without dependent children beginning in 2014. The ACA also established a higher federal reimbursement rate, known as the Federal Medical Assistance Percentage (FMAP), for services provided to the newly eligible beneficiaries. In states that chose to expand their Medicaid program, individuals were eligible for the new adult group under Medicaid if they met certain criteria in addition to citizenship and state residency requirements. Section 2001 of the ACA authorized a newly eligible FMAP of 100 percent for the qualified expenditures incurred by newly eligible beneficiaries enrolled though the new adult category.

Application and enrollment. The ACA, requires states that choose to expand their Medicaid program to make changes to their application and enrollment processes, including a streamlined enrollment application process that would facilitate screening applicant eligibility for all health coverage options. Kentucky established a state based health insurance marketplace as provided under the ACA known as Kynect.

A Medicaid applicant begins the enrollment process by providing basic personal information through the state marketplace and attests that the answers to questions are true. The marketplace must verify the applicant’s identity through identity-proofing. As required by federal rules, Kentucky has a verification plan that states that it will rely on the Data Services Hub, an electronic data source, and other state sources to verify the accuracy of eligibility information provided by an applicant. In addition, CMS and states monitor the accuracy of Medicaid eligibility determinations using the Medicaid Eligibility Quality Control (MEQC) and Payment Error Measurement (PERM) programs.

OIG’s review. The OIG reviewed supporting the documentation for a stratified random sample of 120 newly eligible beneficiaries who received Medicaid services from October 2014 through March 2016 to evaluate whether Kentucky’s determinations of applicant’s eligibility met the federal and state requirements for Medicaid eligibility. Of the 120 beneficiaries reviewed, the state agency correctly determined eligibility for 111. Kentucky failed to determine income or citizenship for the remaining nine. OIG found that Kentucky enrolled five beneficiaries that may not have met income requirements because it did not request additional documentation to verify income after it attempted but failed to verify attested income with electronic sources due to a system error. For four of the 120 beneficiaries, the state could not provide documentation that it had received a citizenship verification response and indicated that it could not find supporting documentation due to human and system errors. Finally, the state did not always perform or did not maintain documentation it had performed identity-proofing during the application processor for 40 sampled beneficiaries as required by federal rules.

Recommendations. OIG recommended that the state agency redetermine, if necessary, the current Medicaid eligibility status of the sample beneficiaries for whom income or citizenship verifications did not meet federal and state requirements. OIG also recommended the state agency ensure that (1) the enrollment system used to determine eligibility verifies income and citizenship data using available electronic data sources and (2) the enrollment system used verifies applicants’ identity and maintains identity-proofing documentation.

ReportsLetters: OIGReports AccessNews EnrollmentNews HealthInsuranceExchangeNews MedicaidExpansionNews

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