PROVIDENCE – An audit released Tuesday by the R.I. Joint Committee on Legislative Services found the state’s Medicaid program disbursed at least $38.4 million to managed care organizations from Jan. 1, 2019, through Dec. 31, 2021 for beneficiaries residing out of state and, in some cases, were extended for two to three years after enrollees had switched residencies from Rhode Island.
Titled “Medicaid Capitation Paid for Members Residing in Other States” and conducted by the R.I. Auditor General David A. Bergantino and the U.S. Department of Health and Human Services Inspector General, the analysis found that the state made payments for enrollees residing in nine other states and Puerto Rico.
Approximately $16.5 million was paid from state general revenues to either of three managed care organizations - Neighborhood Health Plan of Rhode Island, Tufts Health Plan and United Healthcare Community Plan - which administers health benefits for the approximately 316,000 Rhode Island-based Medicaid members.
The “capitation payments,” similar to monthly health insurance premiums paid on the private market, represent roughly 64% of Medicaid benefit expenditures, according to the audit. Medicaid currently represents the largest expenditure category in the state budget, amounting to $3.5 billion in fiscal 2022.
Rhode Island Medicaid members had 194,024 “overlapping” capitation payments, according to the report.
A summary of the audit said that internal controls over eligibility “were not operating effectively to reasonably ensure that eligibility was limited to members residing in Rhode Island.” It recommends the R.I. Executive Office of Health and Human Services that it improve its internal controls in determining eligibility and the residency of beneficiaries.
On Wednesday EOHHS spokesperson Kerri White acknowledged that in early 2019 the agency struggled to identify and disenroll members who had become ineligible by moving out of state, and steps were taken to improve the system.
But when federal regulators paused Medicaid renewals in response to the pandemic, preventing states from removing members even if they moved out of state, Rhode Island was on the hook for many enrollees that would have otherwise been ineligible, said White.
“EOHHS is committed to reviewing existing internal controls for residency requirements to ensure all interfaces are working as designed," she said.
EOHHS in responding to the report said the state
“did not have the operational capacity to adhere to the full set of requirements
” outlined in federal regulations. Therefore, the state opted to
“pause
” notifications to members found to be receiving benefits from another state until April 2023.
In response to the audit, House Speaker K. Joseph Shekarchi on Wednesday said the findings were "deeply concerning," and thanked the auditor general "for bringing this problem to light."
" We cannot afford to misdirect our limited Medicaid funds, and we’re going to demand better controls over Medicaid enrollment and residency verification," he said. "The auditor general’s office was created by the General Assembly to provide oversight that can identify exactly this type of issue, and they are providing a tremendous service to ensure we are getting the value our taxpayers deserve.”
The report notes that Rhode Island is not an outlier, as several states have had issues in managing Medicaid rolls, particularly during the COVID-19 pandemic, but exasperated by “ineffective procedures and policies” designed to confirm residencies of beneficiaries. For example, a previous audit of 14 states released by the U.S. Office of Inspector General identified more than $249 million in unallowable Medicaid capitation payments made to managed care organizations on behalf of deceased people between 2009 and 2019.
According to the R.I. Public Expenditure Council, state general revenue expenditures on Medicaid increased by 44.7% between fiscal 2019 and fiscal 2024, outpacing the 37.4 % growth rate of overall general revenue spending.
All three Rhode Island Medicaid MCOs have signed contract extensions through June 30, 2025.
On Wednesday, Bergantino noted that the cost-savings estimates included in the report were conservative given the audit's limited scope. The office agreed to conduct the joint audit with the stipulation from the federal government that the analysis would only be used to determine the effectiveness of the state's policy's regarding Medicaid eligibility and the state would be
“held harmless
” no matter the audit's findings.
(ADDS paragraphs 11-12 with comment from House speaker.)
Christopher Allen is a PBN staff writer. You may contact him at Allen@PBN.com.