Improper Supplemental Maternity Capitation Payments to Managed Care Organizations (Follow-Up)

Issued Date
July 20, 2023
Health, Department of (Medicaid Program)


To determine the extent of implementation of the six recommendations included in our initial audit report, Improper Supplemental Maternity Capitation Payments to Managed Care Organizations (Report 2020-S-57).

About the Program

The Medicaid program is administered by the Department of Health (Department). Many of the State’s Medicaid recipients receive their services through managed care, whereby the Department pays managed care organizations (MCOs) a monthly premium for each enrolled recipient and, in turn, the MCOs pay for services their members require. In addition to the monthly premiums, MCOs can receive a one-time Supplemental Maternity Capitation Payment (SMCP) for the prenatal and postpartum physician care and hospital or birthing center delivery costs associated with the maternity care of a recipient. However, MCOs are not eligible to receive SMCPs for maternity cases that end in termination or a miscarriage, as these are considered reimbursed to the MCO through the monthly premium for the recipient. Further, an MCO is only eligible to receive the SMCP if it submits encounter claim data as evidence of the delivery and any other inpatient and outpatient services for the maternity care of the recipient.

We issued our initial report on November 29, 2021. The audit objective was to determine whether Medicaid made improper SMCPs to MCOs. The audit covered the period August 1, 2015 through July 31, 2020. We found about $55 million in improper and questionable SMCPs to MCOs, including: $29.1 million that was paid without the required supporting encounter data; $23.4 million that was paid where the encounter data or other evidence indicated the maternity case ended in termination or miscarriage; and $2.4 million that was paid when the SMCP date of service preceded the birth by 1 to 6 months. We determined the Department’s eMedNY claims processing system did not have access to maternity encounter data to verify that SMCP claims were eligible for reimbursement. Instead, the Department relied on audits by the Office of the Medicaid Inspector General (OMIG) to identify and recoup inappropriate SMCPs. However, we found OMIG was not performing these audits in a timely manner and the audits were not sufficiently inclusive to capture all improper SMCPs.

Key Findings

The Department made some progress in addressing the problems we identified in the initial audit report, but additional actions are still required. For example, a significant portion of the questionable claims we identified have not been reviewed, and the Department has not followed up with the 10 MCOs identified in our initial audit to ensure issues with their claims processing systems were resolved. Of the initial report’s six audit recommendations, three were partially implemented and three were not implemented.

Key Recommendation

Officials are given 30 days after the issuance of this report to provide information on any actions that are planned to address the unresolved issues discussed in this follow-up.

Andrea Inman

State Government Accountability Contact Information:
Audit Director: Andrea Inman
Phone: (518) 474-3271; Email: [email protected]
Address: Office of the State Comptroller; Division of State Government Accountability; 110 State Street, 11th Floor; Albany, NY 12236