The Health Law Sidebar
August 3, 2020

US HHS OIG Identifies Millions in New York Medicaid Payments to Managed Care Organizations for Deceased Medicaid Beneficiaries

The United States Department of Health and Human Services (HHS) Office of Inspector General (OIG) announced on July 27, 2020, that a recent audit they conducted found that New York made unallowable Medicaid capitation payments to managed care organizations (“MCOs”) for deceased beneficiaries.

Capitation payments, which are fixed monthly payments that the State pays to MCOs in return for those organizations making services available to Medicaid beneficiaries, have been the subject of previous audits conducted by the OIG. Those audits revealed that other states had made improper capitation payments to MCOs on behalf of beneficiaries that were deceased. The previous audits led the OIG to conduct an audit of New York to identify whether improper capitation payments to MCOs for deceased beneficiaries existed there as well.

The OIG audit of New York revealed various reasons as to why New York made unallowable payments to MCOs for deceased beneficiaries, including New York’s lack of capabilities that would have identified errors in the system that automatically terminates Medicaid payments to MCOs for beneficiaries after they have died.

After reviewing a sample of capitation payments, the OIG estimates that New York made at least $23.3 million in payments to MCOs on behalf of beneficiaries that had died during the OIG’s audit period, which was July 1, 2014 to December 31, 2018.

To mitigate these unallowable payments, the OIG recommended that New York refund the Federal Share of the payments to the Federal Government and recover the unallowable payments that were made to the MCOs on behalf of the deceased beneficiaries. While New York did not indicate that they agreed with the OIG’s findings and recommendations, New York has said that they refunded the Federal Government more than $10 million and has recovered about $19 million of the unallowable payments made to the MCOs.

To read the complete OIG report, please visit: https://www.oig.hhs.gov/oas/reports/region4/41906223.pdf

Law Clerk Colleen R. Pierson contributed to this article. If you have any questions, please contact David R. Ross, Esq., Senior Shareholder, at dross@oalaw.com.