The dead don’t need health insurance coverage. But in Florida, private health insurance companies managing the state’s Medicaid program still made money from the dead, according to a report issued Tuesday by the U.S. Department of Health and Human Services.
Auditors with HHS’ Office of Inspector General estimate Florida paid about $26 million over five years to Medicaid insurers for coverage of people who had already died — largely as a result of outdated information in state databases and a lack of collaboration among different agencies.
The report covered Florida’s Medicaid managed care program from July 2009, when it was still a pilot project in Broward and Duval counties, to November 2014, after the state had completed a statewide transition of more than 3 million people into the privately run model.
In 2011, the Florida Legislature approved statutory language creating the Statewide Medicaid Managed Care program — allowing private insurers to provide healthcare coverage services to more than 3 million people.
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According to the HHS report, Florida’s Agency for Health Care Administration, which oversees the state’s Medicaid program, has recovered about $24 million of the payments identified. AHCA also found about $206,000 that was not paid in error, the report notes.
However, HHS auditors reported that they had not verified that the recoveries took place or that the federal government, which pays about 60 percent of Florida’s Medicaid costs, had been properly credited. The federal government’s share of the overpayment is about $15.3 million.
AHCA declined an interview request. But the agency’s communications director, Mallory McManus, issued a written statement confirming that the state had recouped most of the overpayment.
“In managed care, capitation payments are made for the upcoming month to ensure continuity of care and to prevent lapses in healthcare coverage,” McManus said.
The HHS report noted that Florida officials described steps they had taken or planned to take to follow the federal government’s recommendations, including monthly reviews of Medicaid databases, improved collaboration among state agencies, and new policies and procedures for identifying death information.
During the five years covered in the report, Florida contracted with 37 insurance companies to provide coverage to eligible Medicaid beneficiaries in return for a fixed payment per member per month — a system known as capitation.
The capitation payment depends on the member’s age and other factors, but whatever the private insurer doesn’t spend on healthcare will count as profit.
Former Gov. Jeb Bush first proposed overhauling Florida’s Medicaid program in 2005 as a way for the state to better control its annual costs for the publicly funded healthcare program for poor and disabled people. Florida spends about $26 billion a year for Medicaid services, an expense that’s shared with the federal government.
Privatizing Medicaid by allowing insurers to manage the program led to some cost savings after the first year, according to state officials. But insurers participating in the program complained they were underpaid, and demanded higher rates.
$26.2 million Amount Florida paid Medicaid insurers to cover dead people, federal auditors say
In June, Florida’s Legislature learned that the state had underpaid Medicaid insurers by about $433 million during the program’s first two years — an error attributed to the way the state had classified Medicaid beneficiaries.
To conduct the report released Tuesday, HHS officials reviewed 124 capitation payments that AHCA made to Medicaid insurers for beneficiaries whose death certificates preceded the payment date. Of those 124 payments, HHS investigators found 113 examples where AHCA overpaid — totaling $192,273.
Based on those findings, HHS officials estimated that AHCA overpaid Medicaid insurers about $26 million over five years to cover people who were dead. The overpayments amount to about 2 percent of the $1.3 billion that AHCA paid to Medicaid insurers during the five years covered by the audit.
For 62 of the overpayments identified in the audit, AHCA did not identify enrolled beneficiaries who were listed as dead in the state’s database of Medicaid capitation payments, claims and other information. According to HHS auditors, these overpayments occurred because AHCA staff did not update the dates of death for beneficiaries in its Medicaid database.
An additional 51 overpayments occurred because AHCA data had incorrect, inconsistent or missing information on a beneficiary’s date of death — a result of the state agency’s failure to collaborate with the Florida Bureau of Vital Statistics, the Department of Children and Families and others, according to the report.