Medicaid Paid Benefits to the Dead: Incompetence or Fraud or Both

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INDIANA

The state of Indiana paid some $1.1 million in Medicaid-related payments in 2016 and 2017 to managed-care organizations (MCO) on behalf of beneficiaries who were dead, according to federal auditors reported by the United States Department of Justice.

The audit, carried out by the Department of Health and Human Services Office of Inspector General (OIG) and released on February 13, 2020 revealed that in a random sample of 100 so-called capitation disbursements made to MCOs, the state of Indiana “made 95 unallowable payments.”

Indiana did not always fully process Medicaid beneficiaries’ death information in the MMIS. Although the State agency’s eligibility systems interfaced with Federal and State data exchanges that identify dates of death, the State agency did not enter the dates of death in the MMIS for 48 of our sampled beneficiaries. Additionally, the State agency did not recover the capitation payments for 22 sampled beneficiaries that did have a date of death in the MMIS.

The organizations that received the unlawful payments are part of the Medicaid Managed Care health care delivery system.

Medicaid agencies and managed care organizations (MCOs) that accept a set per member per month (capitation) payment for these services,” the Medicaid program site states. MCOs use capitation payments to manage health care costs, utilization, and quality.

The OIG concluded that the State agency made capitation payments on behalf of deceased beneficiaries. OIG confirmed that 70 of 71 beneficiaries associated with the 100 capitation payments in our sample were deceased. Of the 100 capitation payments, the State agency made 95 unallowable payments totalling $79,403 ($58,773 Federal share).

Similarly, an audit released in September 2019 found that Illinois paid an estimated $4.6 million to MCOs to cover deceased Medicaid beneficiaries.

There are more than 71 million people currently covered under Medicaid, the social safety net program created five decades ago and expanded by President Barack Obama through the Affordable Care Act, commonly known as Obamacare. 

The Office of the Attorney General recommended that and Indiana, Illinois and Michigan return to the federal government the monies paid for the Dead.