Tennessee Managed Care Organizations Received Medicaid Capitation Payments After Beneficiary's Death

Tennessee did not always stop making capitation payments after a beneficiary's death, despite its efforts to identify and recover any unallowable payments. Of the 120 capitation payments in our random sample selected from payments for beneficiaries whose dates of death (DODs) preceded the payment dates, Tennessee recovered 43 prior to the start of our audit, and 13 were not recoverable. For the remaining 64 payments, Tennessee made unallowable payments totaling $39,909 ($27,357 Federal share). During our audit, Tennessee adjusted 35 of the 64 payments totaling $23,614. On the basis of our sample results, we estimated that Tennessee made overpayments to managed care organizations (MCOs) totaling $2.7 million ($1.8 million Federal share) during our audit period. These unallowable payments amount to less than 1 percent of the $3.8 billion that the Tennessee paid to MCOs from July 1, 2009, through March 4, 2016.

In general, the unallowable payments occurred because Tennessee did not collaborate with other State and Federal agencies and did not use additional sources or alternative procedures to determine the reason its data were incorrect, inconsistent, or missing.

We recommended that Tennessee (1) identify and recover unallowable payments totaling $2.7 million from MCOs and refund $1.8 million (Federal share) to the Federal Government; (2) perform monthly reviews of Tennessee's Medicaid Program (TennCare) Management Information System (TCMIS) records to ensure that beneficiaries with DODs are removed from TennCare; (3) implement policies and procedures for identifying and correcting inaccurate death information received through its sources of death data, specifically ensuring that differences in the DODs between TCMIS and incoming death records are quickly resolved; and (4) improve its collaborative efforts with State and Federal agencies to identify and resolve inconsistencies in recipient information such as DOD and Social Security number.

Tennessee concurred with all four of our findings and recommendations and described corrective actions that it had implemented.