Improper Payments for Recipients No Longer Enrolled in Managed Long Term Care Partial Capitation Plans (Follow-Up)

Issued Date
October 06, 2017
Health, Department of (Medicaid Program)


To determine the implementation status of the four recommendations made in our initial audit report, Improper Payments for Recipients No Longer Enrolled in Managed Long Term Care Partial Capitation Plans (Report 2015-S-9).


Enrollment in a Managed Long Term Care (MLTC) plan is mandatory for Medicaid recipients who have both Medicaid and Medicare, are age 21 or older, and who need community-based long term care services for more than 120 days. The Partial Capitation Plan (Plan), one of the three types of MLTC plans, is reimbursed for long term care services through monthly Medicaid capitation payments. A Medicaid recipient who is enrolled in a Plan can be disenrolled retroactive to the effective date the recipient lost eligibility. According to the MLTC contract in effect during the initial audit, the Department had the right to recover capitation payments made to Plans when the recipient was inappropriately enrolled and the Plan was not “at risk” for the provision of medical services during any portion of the payment period.

We issued our initial audit report on March 30, 2016. The audit objective was to determine whether Medicaid made inappropriate capitation payments to Plans for recipients who were no longer enrolled in the Plans. The audit covered the period January 1, 2010 through January 31, 2015. The audit found that Medicaid paid Plans $21.4 million in capitation payments for recipients who were subsequently disenrolled and the Plans were not “at risk” (did not pay for medical services) during the disenrollment periods. By the end of the audit fieldwork, some capitation payments had been recouped and about $12 million still needed to be recovered from the Plans. We also found the Department did not have a system in place to identify capitation payments made for retroactively disenrolled recipients; therefore the Department could not monitor these payments to ensure Plans properly voided them. Further, the Department’s contracts with Plans did not stipulate a required timeframe for Plans to void inappropriate capitation payments. Our audit lastly determined that if the Department revised its policy on the payment of capitation payments during disenrollment periods when Plans were “at risk,” the Medicaid program could realize significant savings.

In our initial audit, we made four recommendations to the Department to: review and recover the $12 million in capitation payments; enhance its oversight to identify and recover capitation payments for retroactively disenrolled recipients; amend the Plan contracts to specify a timeframe in which Plans are required to void inappropriate capitation payments; and assess the impact of paying the cost of Plans’ medical expenses rather than paying capitation amounts during periods when recipients were disenrolled retroactively and Plans were “at risk.”

Key Finding

Department officials made significant progress in addressing the problems we identified in the initial audit report. The Department worked with the Office of the Medicaid Inspector General to enhance its ability to identify and recover capitation payments for retroactively disenrolled recipients, including for periods that Plans were “at risk.” The Department is also in the process of amending Plan contracts that will require Plans to void inappropriate capitation payments within 30 days of being notified of a recipient’s retroactive disenrollment. However, further actions are still needed as only $3.4 million of the $12 million in improper capitation payments had been recovered. Of the initial report’s four audit recommendations, two were implemented and two were partially implemented.

Key Recommendation

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

Other Related Audit/Report of Interest

Department of Health: Medicaid Program - Improper Payments for Recipients No Longer Enrolled in Managed Long Term Care Partial Capitation Plans (2015-S-9)

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