Indiana spent more than $1 million on dead Medicaid patients, feds say

Indiana spent more than $1 million on dead Medicaid patients in a recent two-year period, and now the federal government wants its share of those payments back.

The U.S. Department of Health & Human Services said the errors occurred because the Indiana Family & Social Services Administration, which administers the Medicaid program, failed to process some beneficiaries’ death information in a national claims-processing computer system.

The federal government found the errors by matching the Medicaid database against death records compiled by the Social Security Administration in its “master death file.”

An audit conducted by the Office of Inspector General found that dozens of beneficiaries had died, yet Indiana continue to make regular payments to cover their health benefits to outside managed care organizations.

The Indiana FSSA made at least $1.1 million worth of payments for dead beneficiaries during the audit period of Jan. 1, 2016, through Dec. 31, 2017.

Medicaid is a federal program that pays for medical care, hospitalization, drugs, skilled nursing and other services for low-income and disabled people. Nearly one in five Hoosiers receives Medicaid benefits.

The federal government wants Indiana to return the federal portion of those payments, totaling $862,097. Medicaid programs are financed through a combination of federal and state dollars.

The FSSA said it will recover the payments and return the federal share. It also said it will recover payments that were made for deceased beneficiaries during and outside of the audit period, and ensure that dates of death are added to the computer system.

“Indiana Medicaid has reviewed the findings and concurs with the OIG recommendations,” Allison Taylor, Indiana’s Medicaid director, said in a letter to the regional inspector general in Chicago in a letter dated Jan. 3.

The Office of Inspector General released its report on Jan. 29.

The audit covered 1,746 monthly payments totaling $1.3 million. A 100-sample review of claims revealed that Indiana made 95 unallowable payments during that period.

“On the basis of our sample results, we estimated that Indiana made payments totaling at least $1.1 million ($862,097 federal share) … on behalf of deceased beneficiaries during our audit period, the report said.

The report did not name the managed care organizations that received the funds. MCOs are typically insurers that receive a monthly, per-person, fixed fee to cover the medical care of its members. According to the federal government, the contracts require that beneficiaries’ enrollment be terminated upon death.

If the medical care exceeds the fees, the MCO has to cover it. If the medical care costs less than the fees, the MCOs can keep the difference.

In Indiana, 1.4 million people are covered by Medicaid, including members of the Children’s Health Insurance Program, better known as CHIP. Medicaid also covers medical services for low-income pregnant women, people of all ages with disabilities and people who need long-term care.

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