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State “technical flaw” has $3.2 million federal pricetag

Thursday, Sep 5, 2019

* Tribune

Illinois paid an estimated $4.6 million in state and federal money to health insurance organizations to cover people on Medicaid who were dead, according to a federal audit released this week.

The state paid the money to Medicaid managed care organizations — insurers that administer Medicaid benefits for the state — between Oct. 1, 2015 and Sept. 30, 2017, according to a federal audit released Tuesday. Medicaid is a state and federally funded health insurance program for the poor.

Now, the state has been advised to try to get the money back and repay the federal portion of $3.2 million.

Auditors said the error occurred because the state did not enter the Medicaid beneficiaries’ dates of death into its system used to process payments and track eligibility and enrollment information. The state attributed that error to a technical flaw in the system, according to the audit.

* This is not an Illinois-only problem. From the HHS Office of Inspector General

The Illinois Department of Healthcare and Family Services (State agency) pays managed care organizations (MCOs) to provide covered health care services in return for a monthly fixed payment for each enrolled beneficiary (capitation payment). Previous Office of Inspector General (OIG) reviews found that State Medicaid agencies had improperly paid capitation payments on behalf of deceased beneficiaries. We conducted a similar review of the State agency, which administers the Medicaid program. […]

The State agency made payments of approximately $11 billion to Medicaid MCOs during our audit period.

Hopefully, the state can get the MCOs to pony up.

- Posted by Rich Miller        

11 Comments »
  1. - Perrid - Thursday, Sep 5, 19 @ 1:05 pm:

    The state already recoups money paid to MCOs when the state finds out the beneficiary was already dead when the payments were made. So I doubt there would be a problem now that they have identified this bug that stopped some beneficiaries from being flagged. The only question that comes to mind is if the state can still recoup payments made in 2015. I would assume so.


  2. - Nearly Normal - Thursday, Sep 5, 19 @ 1:19 pm:

    According to today’s Pantagraph, the state also overpaid the McLean County Nursing Home for Medicaid patients from July 1, 2016 to Dec 31, 2017. The nursing home has to reimburse $244,195.86 to the state for the overpayment.

    “The system the state uses is not regularly updated, so the system doesn’t catch up with the information submitted” –quote from the nursing home director.

    Another quote in the article–overpayments to nursing homes for Medicaid reimbursement “is not an uncommon occurrence.” During a typical 18-month period, the nursing home gets $4 million in Medicaid reimbursement from the state.

    Wonder how many other nursing homes have had this problem.


  3. - RNUG - Thursday, Sep 5, 19 @ 1:32 pm:

    Guess we finally found some of that waste / fraud / abuse that Rainer couldn’t find /s


  4. - Skeptic - Thursday, Sep 5, 19 @ 2:02 pm:

    “Guess we finally found some of that waste / fraud / abuse that Rainer couldn’t find” Also sounds like another DoIT accomplishment.


  5. - Perrid - Thursday, Sep 5, 19 @ 2:13 pm:

    Skeptic, much as I would like to blame DoIT, the audit period was from 2015-2017, and DoIT was formed in 2016. This is DHS’ systems and or HFS’ systems, both fairly old, not communicating correctly. Specifically not communicating correctly around managed care, which is relatively new.


  6. - CharlieKratos - Thursday, Sep 5, 19 @ 2:39 pm:

    DoIT/the state needs to setup a few troubleshooting teams that go around to the different agencies, interviewing business owners and application ID personnel, and developing solutions to any problems they find. Rarely is there a need for a complete rewrite of many of the systems they have, since doing so often results in the loss of a lot of the “baked in” business logic, not to mention the costs. They should have a troubleshooting team, a web enabling team, and a mobile application team at a minimum.


  7. - CharlieKratos - Thursday, Sep 5, 19 @ 2:40 pm:

    *application IT


  8. - Ebenezer - Thursday, Sep 5, 19 @ 2:50 pm:

    $3.2MM is real money, and I’m glad they are addressing it.

    It represents about 0.042% of the payments to MCO’s for the period. ($4.18 out of every $10,000)

    Not exactly a big factor in cost increases.


  9. - GADawg - Thursday, Sep 5, 19 @ 3:03 pm:

    So the MCOs received $4.6 million extra and didn’t question it? Wouldn’t you realize it if there was a little extra in your paycheck?


  10. - LTSW - Thursday, Sep 5, 19 @ 3:21 pm:

    The system stops paying when the recipient is reported as deceased. The system flaw was for some, but not all, of the deceased recipients HFS was not recouping payments made after the date of death but before HFS was notified.


  11. - Perrid - Thursday, Sep 5, 19 @ 4:30 pm:

    GADawg, how would the MCOs know it was extra? HFS tells the MCOs that the MCO is responsible for the health care costs for X number of people, and the MCOs work off of that number. The MCO doesn’t have a crystal ball that tells them some of the X people are dead.

    It is theoretically possible a case worker for the MCO reaches out to the recipient and finds out they are deceased, but that’s not very likely.


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