Department of Health

Skip to Content

Login   Subscribe   Site Index   Contact Us   Google Translate™

NYS Comptroller


Taxpayers' Guide to State and Local Audits

Department of Health
Medicaid Program: Inappropriate Premium Payments for Recipients No Longer Enrolled in Mainstream Managed Care and Family Health Plus

Issued: July 11, 2017
Link to full audit report 2015-S-47
Link to 90-day response

To determine whether the Department of Health (Department) made inappropriate premium payments to Medicaid mainstream managed care plans and Family Health Plus managed care plans (Plans) for recipients who were no longer enrolled. Our audit covered the period October 1, 2010 through September 30, 2016.

Under the Department’s managed care arrangements, managed care plans receive monthly premium payments for individuals enrolled in their plans. In return, managed care plans arrange for the provision of health care services their members require. The State’s Medicaid program offers different types of managed care. Most Medicaid recipients are enrolled in mainstream managed care, which provides comprehensive medical services that range from hospital care and physician services to dental and pharmacy benefits. In addition to Medicaid managed care, during the audit period, Family Health Plus (FHP) was a publicly funded managed care program for individuals whose income was too high to qualify for Medicaid. As a result of the Affordable Care Act of 2010, the State Fiscal Year 2013-14 Enacted Budget eliminated FHP effective January 1, 2015, and the majority of FHP enrollees transitioned to the Medicaid program.

For the period October 1, 2010 through September 30, 2016, the Department paid Plans approximately $94 billion in monthly premium payments. The Department can recover inappropriate premium payments made to Plans. An inappropriate payment can occur when a premium payment was made to a Plan for a recipient who was later retroactively disenrolled from the Plan, and the Plan was not “at risk” for the provision of medical services during the disenrollment period. (Note: A Plan is not at risk if it did not pay for medical services for a recipient.) Plans can either void their claims for the improperly paid premiums or refund the inappropriate premiums by check.

Key Findings

  • For the period October 1, 2010 through September 30, 2016, the Department made 314,287 improper and questionable premium payments totaling about $122 million for 171,936 recipients who were subsequently disenrolled retroactively from a Plan, and the Plan was not at risk during the disenrollment periods. As of June 16, 2016, the Plans voided premium payments totaling about $7.4 million, potentially leaving several tens of millions of dollars that still needed to be recovered from the Plans. 1
  • Local Departments of Social Services (LDSS), including the New York City Human Resources Administration (HRA), determine retroactive disenrollment periods and notify Plans to void inappropriate premium payments. Our testing at HRA found that officials misinterpreted guidelines governing when Plans are considered not at risk and when corresponding premium payments should be recovered. This resulted in improper premium payments being deemed as appropriate when they were not.
  • The Office of the Medicaid Inspector General (OMIG) regularly performs Plan-specific audits of premium payments made on behalf of recipients who were retroactively disenrolled from managed care plans. However, the OMIG’s identification of improper premium payments is based on LDSS notifications to Plans of retroactive disenrollments during periods when Plans were deemed not at risk, which we found were not always complete. The OMIG’s identification of improper premiums is also based on matches with limited recipient date of death information. Therefore, improper premium payments for many retroactively disenrolled recipients can remain unaddressed.

    1Because Plans do not always void claim payments in the Medicaid claims processing system, but rather repay improper premiums in the form of checks, we were unable to account for check payments and thus eliminate them from our population of improper premium payments. We informed officials of this, and they agreed to match certain overpayments we identified to check payment information so that we could eliminate these recoveries from our population. However, at the end of our audit fieldwork, officials were still in the process of performing this match.

Key Recommendations

  • Review the improper and questionable premium payments we identified and recover overpayments, as appropriate.
  • Formally assess the reasons for the outstanding improper payments and strengthen controls to address these weaknesses. This assessment should include, but not be limited to:
    • Engaging in a dialogue with all LDSS and determining the various reasons for, and solutions to, delays in identifying disenrollment and delays in notifying Plans of retroactive disenrollment once such disenrollment is identified; and
    • Engaging in a dialogue with all Plans and determining the various reasons for, and solutions to, delays in voiding premium payments within the timeframe specified in the managed care model contract.
  • Provide formal clarification to HRA and other LDSS regarding what constitutes “at risk” to help ensure: ineligible recipients are properly disenrolled; Plans are notified of all improper premium payments during periods when Plans are not at risk; and corresponding improper payments are voided.
  • Determine the reasons for the differences in the improper premium payments identified by our office and the OMIG audits, and enhance the methodology of the OMIG audits accordingly to help ensure all improper premium payments are recovered. In particular, the OMIG should assess using other date of death sources, including eMedNY and the SSA.

Other Related Audits/Reports of Interest

Department of Health: Improper Fee-for-Service Payments for Pharmacy Services Covered by Managed Care (2014-S-5)
Department of Health: Improper Payments for Recipients No Longer Enrolled in Managed Long Term Care Partial
Capitation Plans (2015-S-9)

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