Colorado paid for dead people to receive health care, report alleges
Colorado’s Medicaid program made more than 220,000 payments to health care providers on behalf of people who were dead, according to a federal investigation that says the state overcharged the federal government more than $6 million.
Colorado made the monthly payments on behalf of nearly 9,000 people who were deceased but still enrolled in the Medicaid program, according to a report released this month by the Office of Inspector General in the U.S. Department of Health and Human Services.
The state paid $7.8 million from 2018-2020 for health care for 4,003 people whose dates of death were not recorded in the state computer system and $5.1 million for 4,837 people whose death dates were recorded in the state system, the watchdog agency found. The money for those payments came from a mix of federal and state dollars.
In sum, Colorado overcharged the federal government at least $3.8 million for the payments to dead enrollees, and $2.2 million for other incorrect reimbursements the state received from the federal government, the report alleges.
State Medicaid officials told The Sun on Wednesday that they would not pay the federal government back for alleged payments for deceased members and disputed that all the Medicaid members tallied in the federal audit are actually dead.
The audit was conducted from August 2021 through October, during the Biden administration and before President Trump fired more than a dozen inspectors general across various government departments.
9,000 deceased enrollees
The audit used federal Social Security Administration data to show that the nearly 9,000 people still on Colorado’s Medicaid rolls were deceased. State officials say those federal records are unreliable.
Colorado’s Medicaid program, which is for people with low incomes and those with disabilities, covers roughly 1.2 million people. Its budget for the current fiscal year is approximately $16 billion.
The program is funded by a combination of state and federal money — including about $9 billion in federal funds and $5 billion from the state’s general fund for the current fiscal year. States contract with so-called managed care organizations, paying them a per-person, or “capitated,” fee for the health care that they provide to patients.
Those payments are reported to the federal Centers for Medicare and Medicaid Services, and the federal government reimburses the state for the federal share of the cost, which ranged from 50% to 88% in Colorado.
Colorado’s Medicaid program, which is called Health First Colorado, provides health care to people with developmental, intellectual or physical disabilities, as well as children and adults who qualify based on their income. During the audit period, which was Jan. 1, 2018, to Dec. 31, 2020, the state contracted with 22 managed care organizations to provide medical and behavioral health care.
While the audit was ongoing, state officials said they were already aware of some of the payments for deceased Medicaid enrollees and had started to clean up their data set and recover payments, the audit says. Based on the state’s actions, federal auditors narrowed the scope of their review.
Colorado made the “unallowable” payments on behalf of enrollees who had died “because it did not have adequate controls” and had subpar policies and procedures, federal auditors wrote. “Among other factors, for a portion of our audit period the state agency did not have an automated system to verify dates of death,” they said.
Besides payments for the dead, Colorado overreported $2.2 million in other Medicaid expenditures to the federal government. The errors occurred because the state failed to make sure its fiscal data vendor accurately reported information, and the state used some duplicate data, the audit report said. State officials found the other errors, which were outside the scope of the audit, and reported them to federal auditors.
$6 million bill
The inspector general made six recommendations for improvement, including that Colorado reimburse the federal government $6 million. That includes $3.5 million for payments made on behalf of dead enrollees whose death dates were not in the state system and $293,890 for payments made on behalf of dead enrollees whose death dates were in the state system.
The total also includes $2.2 million for other errors, which Colorado paid back in September, the report said.
The OIG also recommended that Colorado recoup overpayments to its managed care organizations and that it strengthen internal controls to verify date-of-death information.
State officials told The Sun that instead of paying back the federal government, the state will spend time disputing the estimates directly with the federal Centers for Medicare and Medicaid Services. A spokeswoman for the Medicaid program, within the Colorado Department of Health Care Policy and Financing, said the Office of the Inspector General used “data analysis of questionable sources rather than proving true verification of their findings,” and noted that federal Medicaid officials say that states cannot rely on death data from the Social Security Administration because of “known errors.”
States are supposed to confirm that enrollees are dead. “The OIG did not independently perform such outreach to presumed deceased members, so the department determines their work to be inadequate,” Colorado Medicaid spokesperson Trish Grodzicki told The Sun via email.
“The department has many control processes to verify that individuals have died and is constantly working to enhance these controls,” she said.
If there is a pay back, Grodzicki said, it will take two to three years to negotiate with the federal government.
In its official response to the OIG, Colorado officials said they cannot recover funds from managed care organizations that are now out of business and that some of its contracts with those organizations prohibit recovery of payments, the audit said. The state also countered that repaying the federal government based on the audit’s estimates “may result” in the state paying back too much.
As for strengthening its procedures, state officials responded that it had “already made several changes.”
The audit is one of a series involving several states. Previous audits found the same problem in 16 other states since 2016, the report said.