FRAUD (VA)- Audit finds Virginia paid nearly $22 million for dead Medicaid patients

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[MM Curator Summary]: Before the system was improved, VA MCOs got paid millions in monthly cap rates for people who were dead.



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The head of Virginia’s Medicaid office wrote in a June letter that the state has worked to fix the issue and has already recouped much of the money.

RICHMOND, Va. (WRIC) – Virginia paid insurers to cover Medicaid services for patients who had already died, a nearly $22 million mistake over three years that the state is working to recover and repay.

A recent federal audit found that the Virginia Department of Medical Assistance Services, the state’s Medicaid office, accidentally paid out capitation payments – or monthly fixed payments for each enrollee – to Medicaid managed care organizations on behalf of dead patients from 2019 through 2021.

The audit from the U.S. Health and Human Services’ inspector general’s office — first reported by the Richmond Times-Dispatch — estimated that the payments totaled at least $21.8 million on behalf of just over 12,000 enrollees.

“Virginia made unallowable capitation payments on behalf of deceased enrollees because it did not have adequate controls in place to enable it to identify all deceased enrollees and properly cancel their enrollment,” the July 19 audit states.

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The inspector general’s office recommended that Virginia refund the federal government’s share of the payments – $15.7 million – and recover payments mistakenly paid to insurers.

Its audit also recommended that Virginia recover payments made on behalf of dead Medicaid enrollees in 2018 and 2022, repay the federal share, implement an “additional supervisory review” and use an automated matching and eligibility process to determine enrollees.

A DMAS spokeswoman said Tuesday that the agency had no comment. But in a June 13 letter to the inspector general’s office, DMAS Director Cheryl J. Roberts laid out details about the agency’s process for identifying dead enrollees and its response to the audit’s recommendations.

DMAS gets death files from the Virginia Department of Health through a monthly data exchange, Roberts wrote, using an algorithm to cross reference Medicaid enrollees into categories of either 100% matches or possible matches.

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“After proper notification, state staff within the Eligibility and Enrollment Services Division would manually close all 100% matches and research those enrollments with a lesser match rate,” Roberts wrote. “This process was found to be inefficient as the level of manual work would often take up to a month to complete.”

In response, Virginia implemented an automatic system in January to close the 100% matches. The new system, Roberts wrote, has helped speed up the process and reduce human error. It retroactively closes enrollments back to when the patient died, initiating Virginia’s recoupment of any payments made on behalf of dead enrollees.

Roberts wrote that, as of June 9, the payments made during the audit period of 2019 through 2021, except for nearly $96,000, have been recouped. Also, the payments made on behalf of dead enrollees in 2022 have been recouped and all but $226,023 from 2018 payments have been recovered.

DMAS will work with the Center for Medicaid and CHIP Services’ audit and review branch to repay any outstanding debt that has not been repaid already, Roberts added in her letter.