Dead to rights: Virginia caught paying Medicaid services for over 12,000 deceased enrollees

Federal auditors found Virginia’s Medicaid program paid managed care organizations at least $20.8 million in capitation payments from 2019-21 for more than 12,000 deceased enrollees during those years.

As Medicaid is a government-provided benefit, whereas individuals or their employers typically pay a monthly health insurance premium for coverage, Virginia pays that amount on behalf of the enrollee to managed care organizations and is reimbursed a percentage by the federal government.

“Managed care organizations,” in this case, refers to the health insurance providers that offer Medicaid coverage in Virginia. Those are Aetna, Anthem Blue Cross Blue Shield, Molina Healthcare, Inc., Optima Health and United Healthcare; they provide Medicaid coverage to Virginians, and the state supports those services by paying those providers the equivalent of each enrollee’s monthly Medicaid premium. These are called “capitation payments.”

The U.S. Health and Human Services Inspector General tested a random, stratified, computer-generated sample of 100 capitation payments Virginia made during the pandemic years and confirmed that 67 of these were made erroneously after the month in which the Medicaid enrollee passed away.

It’s possible that more errors were made and not reflected in the audit because the Department of Medical Assistance Services, Virginia’s Medicaid program, updated some of the data before the audit began.

Based on its findings with the sample study, the OAS concluded that the state made unallowable capitation payments on behalf of 12,054 deceased enrollees, totaling a minimum of $21.8 million.

Assistant Regional Inspector General Natalie Edwards called this estimate “conservative,” and told The Center Square in an email that the calculation methods the OAS used are “designed to be less than the actual overpayment total 95% of the time.”

The OAS attributed the results to DMAS not having the right controls to catch such inaccuracies and an inadequate process for identifying deceased enrollees that included too many manual steps and not enough automation. The OAS also indicated insufficient staffing and oversight for the process.

The enrollment department would have handled the verification of death reports, the subsequent cancellation (or temporary stoppage until confirmed) of capitation payments, and other coverage, payment and data corrections.

Currently, according to DMAS’ website, there are 2 million Virginians enrolled in Medicaid. The number of Virginians enrolled in Medicaid increased by approximately 800,000 under the pandemic-induced expanded eligibility, from 1.5 million to 2.2 million.

DMAS did not explicitly agree with the OIG’s assessment but stated that they implemented some automatic systems to minimize errors and an additional supervisory review. They also stated that, as of June 2023, they had recovered all erroneous capitation payments from 2018, the year before the audit began, all but $95,677 from 2019-21, and all but $226,023 from 2022, the year after the audit.