Medicare Improperly Paid Providers Millions of Dollars for Incarcerated Beneficiaries Who Received Services During 2013 and 2014

Both the Centers for Medicare & Medicaid Services' (CMS) policies and procedures to ensure that payments are not made for Medicare services rendered to incarcerated beneficiaries and its planned revisions to those policies and procedures did not comply with Medicare requirements.

CMS's policies and procedures generally prevented improper payments in cases when CMS's data systems identified a beneficiary as incarcerated at the time that a claim was processed. However, CMS's policies and procedures did not allow CMS to detect and recoup improper payments on a postpayment basis when CMS's data systems did not identify a beneficiary as incarcerated at the time that a claim was processed. This nonidentification occurred because in September 2013 CMS turned off a postpayment claims edit that it had created in April 2013. CMS has not taken steps to determine whether any of the $34.6 million in potentially improper payments (for claims for incarcerated beneficiaries) made in 2013 and 2014 should have been denied.

CMS's planned revisions to its policies and procedures to deny Medicare payments for the same period that the Social Security Administration (SSA) suspends its benefits do not comply with Medicare requirements. Medicare payments should not be made for any period of incarceration. In contrast, SSA suspends payments for a shorter period. CMS officials acknowledged that the data on SSA benefit suspension dates that CMS plans to use will be incomplete and will not comply with the Medicare statute but added that CMS believes these data will offer the best information available (as opposed to the information that it currently obtains from SSA). When CMS implements its revised policies and procedures, it will, according to CMS officials, further adjudicate the $34.6 million in claims, which will result in some previously allowed claims being denied. However, because the data that CMS plans on using will be incomplete, these recoupment efforts will not identify all improper payments.

We recommended that CMS (1) develop and implement a system that allows CMS to collect the information necessary to fully comply with Medicare requirements that prohibit payment for Medicare services rendered to incarcerated beneficiaries and, if necessary, seek the appropriate legislation and funding; (2) review the $34.6 million in claims to determine which portion, if any, was not claimed in accordance with Medicare requirements and direct the Medicare contractors to recoup any ensuing improper payments; and (3) identify improper payments made on behalf of incarcerated beneficiaries after our audit period and ensure that Medicare contractors recoup those payments.

CMS did not concur with our first recommendation and said that the benefit suspension data that it plans to obtain from SSA would better allow CMS to comply with statutory requirements and is the most efficient use of its resources. CMS concurred with our other two recommendations. We maintain that all of our findings and recommendations are valid.