Objective

To assess the extent of implementation of the eight recommendations included in our initial audit report, Medicaid Program – Recovering Managed Care Payments for Inpatient Services on Behalf of Recipients With Third-Party Health Insurance (Report 2021-S-24).

About the Program

Many of the State’s Medicaid recipients receive their services through managed care, where the Department of Health (DOH) pays managed care organizations (MCOs) a monthly premium for each enrolled Medicaid recipient and, in turn, the MCOs are required to pay for the services their recipients require. Medicaid is the payer of last resort, and when Medicaid recipients have other third-party health insurance (TPHI) in addition to Medicaid (e.g., Medicare Part A hospital insurance, commercial health insurance), Medicaid providers and MCOs are required to coordinate benefits with the recipient’s TPHI for payment prior to billing Medicaid. DOH uses post-payment reviews to identify instances where a TPHI carrier may be responsible for payments for services originally paid by Medicaid. The Office of the Medicaid Inspector General (OMIG) contracted with Health Management Systems, Inc. (a Gainwell Technologies company [Gainwell]), to perform these reviews and pursue recoveries from TPHI carriers or providers.

The objective of our initial audit, issued on September 27, 2023, was to determine whether Medicaid overpayments for inpatient services on behalf of managed care recipients who had TPHI were appropriately recovered. The audit covered the period from January 2017 through August 2021. The audit determined that DOH and OMIG lacked adequate oversight of the third-party liability recovery process. Gainwell had not billed TPHI carriers for the recovery of about $52.2 million in inpatient encounter claims that Medicaid MCOs paid as the primary insurance for recipients who, according to eMedNY (DOH's Medicaid claims processing and payment system), had TPHI inpatient coverage. Additionally, Gainwell’s recovery files contained $39.3 million in inpatient claims that were in an unresolved status due to TPHI carrier or provider non-response, as well as an additional $2.1 million in claims that were denied by TPHI carriers for reasons that could potentially be rectified.

Key Findings

DOH and OMIG officials made minimal progress in addressing the problems we identified in the initial audit report, and additional actions are still needed. Specifically, officials had not reviewed or recovered most of the inpatient encounter payments made on behalf of recipients with TPHI identified in the initial report. As a result, DOH and OMIG likely missed an opportunity to recover a significant portion of the payments we identified because they have exceeded either Medicare or New York State’s statute of limitations. In addition, no action was taken to ensure MCOs are aware of recipients’ TPHI with inpatient coverage per eMedNY. Of the initial report’s eight audit recommendations, two were implemented, two were partially implemented, and four were not implemented.

Key Recommendation

DOH officials are requested, but not required, to provide information about any actions planned to address the unresolved issues discussed in this follow-up within 30 days of the report’s issuance.