United States General Accounting Office I ,- ’ Report to the Chairman, Committee on GAO Government Operations, House of Representatives ‘November 1990 MEDICYAID Millions of Dollars Not Recovered From Michigan Blue Cross/ . Blue Shield United States GA!0 General Accounting Office Washington, D.C. 20548 Human Resources Division B-239899 November 30,199O The Honorable John Conyers, Jr. Chairman, Committee on Government Operations House of Representatives Dear Mr. Chairman: This report responds to your request that we review Michigan’s efforts to ensure that private insurers are paying claims for Medicaid recipients who have health insurance. Federal law requires state agencies that administer the Medicaid program to make reasonable efforts to identify liable third parties, including health insurers, and seek recovery when they are identified after Medicaid has paid for program services. GAO and others have reported problems that states have encountered in meeting these requirements. Because an estimated 14 percent of the nation’s Medicaid recipients have health insurance, unrecovered pay- ments can result in large losses to the Medicaid program. The Committee had received allegations that the Michigan program was not recovering payments from Blue Cross and Blue Shield of Michigan (nc/ss), which has an estimated 60-65 percent of the state health insur- ance market and insures about 7 percent of Michigan’s Medicaid recipi- ents We sought to determine (1) the nature of any problems that might exist and the amounts involved and (2) the adequacy of state Medicaid agency recovery efforts and federal oversight of those efforts. Over the past 18 years, the Michigan Medicaid agency has encountered Results in Brief serious problems in recovering payments made for Medicaid recipients insured by Be/ES. Michigan has not fully used its authority or taken all the actions that it could to enforce compliance by BC/BSwith Medicaid’s third-party recovery provisions. Also, federal and state monitoring and oversight of the Michigan Medicaid recovery program have been ineffec- tive. Because Michigan and BCIBShave not implemented a system for BC/BSto process and pay claims, BC/BShas avoided or forestalled pay- ments to the state’s Medicaid program and, in effect, shifted consider- able costs to the federal and state governments. Since August 1988, Michigan has made recovery on none of the medical claims it paid for Medicaid recipients with WJBS benefits. As of August 1990, agreements Michigan and BC/BSmade concerning the development Page 1 GAO/HRDSl-12 Medicaid Recoveries From Michigan BC/BS B.239899 an automated file of all Medicaid recipients who have health insurance. MSAuses the file to either avoid payments or seek postpayment recov- eries of claims that should be paid by health insurers instead of Medi- caid. Payment avoidance occurs when MSAreturns incoming claims unpaid so that the insurer pays first. Postpayment recovery occurs when MSApays the provider of the medical services, then bills the insurer and receives payment that the insurer should have made initially. HZ/ESis involved in providing health insurance to about 7 percent of Michigan’s Medicaid recipients. This includes BC/BSplans as well as cov- erage that it administers for self-insured, employer-sponsored health benefit plans. BC/uSis by far the largest health insurer in Michigan. We sought to determine the (1) nature of any problems the Michigan Scope and Medicaid agency may have in ensuring that BC/BSpays claims for Medi- Methodology caid recipients it insures and the amounts involved and (2) adequacy of the Michigan Medicaid program’s efforts to recover payments for such recipients having BUHS health insurance. To do so, we interviewed offi- cials from MSAand the Office of Internal Audit in Michigan’s Department of Social Services; the Michigan Department of Licensing and Regula- tion’s Insurance Bureau; the Michigan Department of Attorney General; the Michigan Office of the Auditor General; and BC/BS.In addition, we reviewed (1) Michigan’s lawsuit against BC/ES,’(2) state health insurance laws and regulations, and (3) documentation concerning the handling of postpayment claims with probable RUBS liability. In assessing the adequacy of Michigan’s recovery efforts, we also tested the accuracy and effectiveness of a separate process used by the state to recover pharmacy claims for recipients with lC/BS pharmacy coverage. To test whether BC/I<Swas paying when it should under this process, we reviewed a random sample of pharmacy claims that the state believed had HC:BScoverage but that I~C~BS rejected. Using documentation pro- vided by RC/BSand the state, we evaluated the reasons why BC/EtSdid not pay the claims. The claims we reviewed covered the 12-month period ending ,July 3 1, 198X--the most recent 12-month period for which com- plete claims data were’available. ‘Kelly v. BlueCrossandBlueSEd of Michigan, Xio.78.83594BCZ (Mich.,WayneCir.Dec.11,1985) (consent decree). Page3 GAO/HRDsl-I2 Medicaid Recoveries From Michigan BG’BS E239899 Figure 1: Significant Events, MSA and SC/B (1972-1990) Claim processing system not implemented. Claim baddog since August 1986 totals $69 million. M S A and EtCiBS signed contract for claim processing system. M S A began negotiating with BCBS for a claim processing system and 1 discontinued recovery efforts fmm providers. State and SCES negotiated a second agreement to settle 1976. 1061 daims. M S A began new prca%3s to attempt recovedes from service providera rather than t3cjBs State and SC/ES signed agreement to reso,VB 1976 lawsuit statesuedEciBs. M S A unsuccessfully attempted to get BC/BS to process Medicaid-paid cbims and provide reimbutzement for recipients identified wlfh BC/SS insurance. 1 1_ 1972 1970 1960 1962 1985 1988 1989 ,990 Page 5 GAO/HBD91-12 Medicaid Recoveries From Michigan BC/B!S B2398SS While workable, this was a slow, labor-intensive process whereby MSA manually processed individual claims. As a result, throughout much of the 1980s a large backlog of unprocessed claims existed, many of which MSAnever processed. For example, in an October 1986 audit report, the State Auditor General reported an MSAbacklog of unprocessed BC/BS claims totaling over $8 million. MS4 was adding claims to this backlog twice as fast as it was processing them.2 During the period the state used this approach, it recovered only about $1.9 million for recipients that had BC/BS coverage. Although no infor- mation on the precise amounts that should have been recovered is avail- able,”we can put the amount recovered into perspective. The $1.9 million (for 7 years of claims) is about 10 percent of what the state recovered from BC/HSunder the 1980 and 1985 agreements (for 5 years of claims). No Recoveries of Medical MSAdiscontinued its alternate recovery process (for claims paid since Claims Since 1988 August 1988). It did so largely because of provider complaints stemming from frequent errors and MSAconcerns that the providers may stop serving Medicaid recipients. Since that time through April 1990, MSAhas identified over $59 million in claims for which BC/&Smay have some lia- bility.4 However, since 1988, although claims have been presented to IX/K, no recoveries have been made. In July 1988, before discontinuing the alternate recovery approach, MSA officials told us, they began negotiating with BC/RSto develop a claim processing system for direct BC/BSpayments to MSA.BC/BSofficials told us that a cooperative working environment between EYJRSand MSAwas the primary reason they felt a claim processing system could be devel- oped at that time. Prior to 1988, neither side was willing to cooperate with the other, BC/M~officials said. Consequently, the claim processing system called for in the 1980 agreement was not developed. ‘Theclaimbacklogdid notincludeclaimstotalinglessthan$250perrecipient-thestatecost-effec- tive-to-pursue thresholdfor EC/18claims.TheAuditorGeneral estimatedthat suchclaimsamountto about$2.8millionannually “Staterecordsontheamounrof Medwidclaimspaidfor recipients believed to havehadBC/E%S coveragewereincomplctc 41tLSunlikelythatBC/BS1sliabk.for thefull amountbecause MSAdoesnotscreenfor E!C/E!S policy hmltations, excludedservice?.deductibles, or copaymentprovisions. Page 7 GAO/HRI%Sl-12 Medicaid Recoveries From Michigan BC/BS F&239899 effect of making claim processing and payment contingent on develop- ment by BC/BSof a claim processing system. Further, the agreements may jeopardize MSA’Sability to collect on some of the Medicaid-paid claims. BC/EISofficials told us that most of the employer-sponsored health benefit plans administered by BC/BSrequire that, to be reimbursed by BC/Bs, claims must be submitted within 12-18 months. The agreements explicitly limit BC/BS liability for the plans it administers (over half of nc/ns’s business) to the amounts it collects from the employers. Thus, BC/BSwill not be required to pay MSAif the employers do not reimburse BC/BS.”Although BC/BSofficials told us that it is likely that some of the employers will waive their time limits for filing claims, none of them had agreed to do so at the time we completed our review.7 Consequently, as time passes, more of the claims will fall outside filing time limits. The amounts in question can be considerable, as almost 30 percent of the claims by dollar value ($16.5 million) were over 12 months old as of July 31, 1990. Opportunity to Avoid MSAdid not take full advantage of its opportunity to avoid paying claims Payments Missed unnecessarily. By completion of phase 1 of MSA’Scontract with RC/BS,the number of recipients identified as having BC/BScoverage had signifi- cantly increased. This gave MSAan opportunity to avoid the problems it had in obtaining postpayment recoveries from BC/BS When recipients are known to have insurance coverage at the time MSAreceives a claim, MSAcan avoid costs by not paying the claim. Providers, when notified of this, directly bill the insurer for payment. In April of 1989, under phase 1 of its contract with MSA,BC/BSgave the agency the names of an estimated 17,000 Medicaid recipients having BC/BSinsurance. This increased the number of recipients MSAhad previ- ously identified as having HC/BScoverage by more than 25 percent. The state entered this information into its insurance file in August 1989 and avoided paying claims for services provided before September 1, 1989. However, MSAofficials told us that various processing and technical problems precluded use of t,he data to avoid paying claims for program services provided during the 4-month period, September l-December 3 1, “lkanse theseplansareadmimstered by BC/BS-usuallyfor self-insured employers-BC/BS obtamsreimbursement for thecknmsIt paysfromtheemployer-sponsor. 7Asdwussedin our report.Mtxhcaid: Legislation Needed to ImproveCollections FromPrivate Insurers(GAO/HRD-91-E.Nov.1990)statesareexperiencing problemsrecovering fromemployer- sponsoredhealthbenefitplansThatreportincludesrecommendationsfor resolvingtheseproblems. Page9 GAO/HRDSl-12MedicaidRecoveriesFromMichiganBC/BS B-239899 We estimate that MSAfollow-up could have resulted in additional recov- eries of $.3 to $1.9 million.10 Also, MSAlacked controls to ensure that recoveries of paid pharmacy claims are timely. For example, BC/BStook an average of 6 months from the receipt of a claim from MSAto the time it submitted a payment.” After we brought the missed potential collections to the attention of HCFAregional officials in October 1989, they asked MSAto investigate the situation and explain state procedures to correct the problem. MSAsaid that higher priorities limited its review of recovery rates for pharmacy claims. However, MSA speculated that HC/BSmight not have incorporated updated drug and provider codes into its claim processing system. MSA told HCFAthat RC!ELS had verbally agreed to reprocess all pharmacy claims if a deficiency existed.‘” Federal monitoring and oversight of Michigan’s Medicaid recovery pro- Monitoring and gram has been ineffective. HCFAperformed two different reviews of the Oversight Weak Michigan program in 1989, but neither detected that MSAwas not promptly seeking recoveries from BC/BS.Moreover, until we brought it to HCFA'Sattention, HCFAwas unaware that MSAhad discontinued its alter- nate recovery process for Medicaid recipients with HC/BScoverage or that the August 1989 three-phase contract with BC/BShad been finalized. We discussed MSA'Srecovery problems with ACFAregional officials in October 1989. As a result, HCE'Acorresponded with the state to follow up on some of the issues we raised. Also, in light of the deficiencies that we noted, IICE'Aregional officials said that they may need to update their audit plans and approac+lcs. State monitoring and oversight of Michigan’s Medicaid recovery pro- gram also has been ineffective. Between 1985 and 1988, audits by the Michigan Office of the Auditor General and a certified public accounting ‘“Weuseda 95.percent confidtmwlevelfor ourprojection.Thismeansthat chances are95outof 100 that thetrue recoveryvaluefor thv pharmacyclaimslieswithintheestimatedrecoveryrange. “As discussed onp. 8, statelawgenerallyrequiresBC/BSLopayclamswithin 60daysor incur interestpenalties. “ML%andX/BS suspended pnxe.w~gpharmacyclaimsaroundAugust1989,thinkingtheycould quicklycorrectthecodingproblem+MSAofficialstoldus.Theyindicatedthat BC/BSresumed processing in July 1990,eventhoughthecodingproblemshadnotbeencorrected. page11 GAO/HRDSl-12MedicaidRecoveriesFromMichiganBC/BS l&239899 the state-could sue an insurer for double damages if the insurer failed to comply with requirements for the payment of health services pro- vided to insured Medicaid recipients. To the extent that insurers can establish legal or administrative barriers Conclusions to delay or postpone payments to the state, it is in their financial inter- ests to do so. Our past work has shown that insurers act on these inter- ests, and this appears to be true in Michigan as well. Ineffective state management, coupled with lack of HCFAleadership, has allowed millions in Medicaid payments to go unrecovered from BC/BS.Until corrective actions are taken, Michigan and the federal government will continue to pay Medicaid claims for which BC/BSis liable. Currently, we are evaluating HHS’s options to deny federal Medicaid funding for claims for which a state like Michigan has not met its responsibilities to recover Medicaid costs. That evaluation of HCFAover- sight and sanction authority involves issues that are beyond the scope of t,his review. The results of that evaluation, together with any recom- mendations, will be included in a subsequent report. In the meantime, we continue to believe that our recommendation to amend Medicaid law to provide federal penalties for delinquent insurers, if implemented, could help resolve Michigan’s Medicaid recovery problems. Page 13 GAO/HRBSl-12 Medicaid Recoveries From Michigan BC/BS Page 16 GAO/HRDSEl2 Medicaid Recoveries From Michigan BC/B!3 ,. -- Ordering Information The first five copies of each GAO report are free. ;V RtW?T! FZ, I’z L are $2 each. Orders should be sent to the following address, :IW panied by a check or money order made out to the i%rdF. of Documents, when necessary. Orders for 100 or more WI&-! mailed to a single address are discounted 25 percent. U.S. General Accounting Office P.O. Box 6015 Gaithersburg, MD 20877 Orders may also be placed by ~&i!HEH&Y-E! .- Appendix I Major Contributors to This Report Human Resources Edwin P. Stropko, Assistant Director Division, Donald J. Walthall. Assignment Manager Washington, D.C. Philip J. Andres, Evaluator-in-Charge Detroit Regional Office Jean T. Shanahan, Evaluator Javier J. Garza. Evaluator Craig H. Winslow, Attorney-Adviser Office of the General Counsel, Washington, D.C. (101153) Page 16 GAO/HRLSBl-12 Medicaid Rccoverie.s From Michigan BC/BS B-239899 As you requested, we did not obtain written comments on this report, but we did discuss its contents with MSA, IX/ES, and HCFA officials. We have incorporated their comments where appropriate. As arranged with your office, unless you publicly announce its contents earlier, we plan no further distribution of this report until 30 days after its issue date. At that time, we will send copies to the Secretary of Health and Human Services and other interested parties and make it available to others on request. Please call me on (202) 275-5451 if you or your staff have any questions about this report. Other major contribu- tors are listed in appendix I. Sincerely yours. + Janet L. Shikles Director, Health Financing and Policy Issues Page14 GAO/HRD91-12 MedicaidRecoveries FromMichiganBC/Bs B-239899 firm identified deficiencies similar to those we found and made recom- mendations to improve recovery efforts. MSAdid not implement the rec- ommendations, and the Auditor General has no authority to require MSA compliance with its recommendations for correction. States have the principal responsibility-both as regulators of insurers Authority Available to and as administrators of Medicaid-for taking actions to ensure that Enforce Insurer insurers comply with Medicaid requirements. In our view, MSAhas not Compliance Not Used taken all the actions that it should, allowing BC/ESfor nearly 18 years to avoid paying claims for many of the Medicaid recipients it insured. For example, MSAhas not . asked the state Insurance Bureau to assist it in obtaining BC/BScompli- ance. The Insurance Bureau has considerable leverage over insurers because it enforces the requirements they must meet to do business in Michigan. Insurance Bureau officials told us that BC/EShas the same obligation to pay Medicaid claims as other insurers. They said MSAcould have sought the Bureau’s assistance to administratively resolve the problem or return to court if necessary. l monitored BC/EScompliance with the 1980 agreement. Though there have been some interpretation problems and uncertainty about MSA's and BC/BS'Sresponsibilities under the agreement, MSAhas not sought legal clarification or enforcement of the agreement. MSAtold us that this may have been due to staff turnover during the past decade. . in effect, required in its agreements that BC/BSpromptly pay claims for which it is liable and thus preserve the state’s right to recover on older claims. Unlike the Medicare program, Medicaid does not provide federal penal- Medicaid Needs ties for insurers who do not comply with federal requirements to pay Delinquent Insurer the claims of insured program recipients. In our view, this gives insurers Penalties an incentive to avoid or delay paying the claims of Medicaid recipients because doing so saves them money. That is, if and when the insurers pay, they usually pay only what they originally owed. Medicare law has been amended to countervail this incentive by providing for “double damages” (double the amount originally owed) in situations where insurers do not pay when they should. We have recommended amending the Medicaid statute to incorporate provisions similar to those of the Medicare program.‘:’ If such legislation was enacted, anyone-including 13GAO/HRD-91-2,5.Nov 1990. Page12 GAO/HRLbBl-12 MedicaidRecoveries FromMichiganBC/B!3 B239899 1989. Consequently, MSAestimates that during the 4 months, it paid over $1.1 million in Medicaid claims for people with BC/RSinsurance. MSAofficials told us that they will seek recovery of these payments when BC/BSimplements its system for processing Medicaid claims. As discussed above, however, it is uncertain when this will occur. The longer it takes to implement the system, the lower the likelihood of MSA’S recovering its payments. Although the provision in the 1980 agreement calling for a BC/BSsystem Weak Internal to process Medicaid medical claims has not yet been implemented, BC/BS Controls Also Reduce began using such a system for processing pharmacy claims in 1980.8 To Recoveries ascertain whether MSAwas recovering the amounts it should on phar- macy claims, we tested the recovery process for the 12-month period ended July 1988. Pharmacy recoveries from BC/BSwere a matter of con- cern because they had declined over the years from 9.0 percent of the amount claimed in 1982 to 3.5 percent in 1989. During the 12-month period we tested, BC/BSrejected most of the claims that MSAsubmitted for recovery, paying only $.5 million of the $11.7 million in claims. In rejecting most of the claims, BC/BSindicated that either recipients did not have BC/BScoverage or their coverage excluded pharmacy benefits. Although BC/BSdocumented the reasons for rejecting each claim, MSA neither reviewed the documentation nor pursued claims that, in our view, still had potential for recoveries. Many rejections appeared to be the result of 1. correctable MS4 errors (for example, the claims MSAsubmitted to Bc/ns had an incorrect or missing provider code) or 2. possible BC/BSerrors (for example, no/us records available at MSA showed that some recipients actually had pharmacy coverage for the service dates for which K/AS had rejected the claims on the basis of no pharmacy coverageLn ‘Theserepresent about8 percentof total stateMedicaid programcosts. ‘MSAhasanon-linecomputerterminalconnected to theE?C/Bs enrollmentfiles,whichit usesto verify EK/BScoverage Page10 GAO/HRDSl-12MedicaidRecoveriesFromMichiganBC/BS B-239899 In August 1989, the state contracted to pay BC/ESabout $400,000, mainly to develop and implement a claim processing system for Medi- caid payments. The contract and subsequent modifications involved a three-phase approach, as follows: l Phase 1. BC/BSwas to match its enrollment files with the state Medicaid file to identify recipients with BC/ESinsurance. When the contract was signed, BC/BShad already completed phase 1 and had delivered the names of additional Medicaid recipients with BC/BScoverage to MSA on April 28, 1989. . Phase 2. BCIBSwas to develop and implement a system to process MSA claims (exclusive of inpatient hospital claims) for recipients having BC/BScoverage. Phase 2 was originally targeted for implementation in December 1989. At that time, however, it was expanded to include inpa- tient hospital claims. As part of the expansion agreement, BC/ES advanced MSA $5.0 million on its potential liability on inpatient claims. According to MSA, it initiated this expansion when it identified inpatient claims as low-volume, high-dollar claims that merited expeditious recovery. As of August 31, 1990, none of the phase 2 system had been implemented. . Phase 3. BC/BSwas to develop and implement a system to process a claim form that a provider can submit for BCIBS,Medicare, and/or Medicaid payment and implement a system capable of directly accepting claims. As of August 3 1, 1990, BCIBShad not begun work on this phase. Excepting the $5 million advance payment, these agreements5 had the practical effect of indefinitely postponing recoveries from HC/IB.The state, however, is obligated under Medicaid regulations (42CFR 433,139(d)(2)) to seek recoveries within 60 days after the end of the month in which it identifies insurance for a Medicaid-paid claim. MSA was not prompt in submitting claims to RC/BSfor payments that Medi- caid made between August 1988 and September 1989. MSA did not for- ward the claims until November 1989, after we questioned MSA'S authority to indefinitely postpone seeking recoveries from RC/BS.MSA forwarded additional claims to in December 1989 and has con- IX/AS tinued to do so sporadically since that time. BCIBSis generally obligated under state law to pay claims to beneficiaries within 60 days or incur interest penalties, and Medicaid recipients must assign their rights to such payments to the states. MSA’s contract with BC/BS,however, has the "The agreementsconsistof I heAugust1989contractandthe December 1989agreement to include inpatienthospitalservices&urns Page8 GAO/HRDSl-lZMedieaidRecoveriesFromMichiganBC/BS B239899 Recovery Problems Begin In November 1978, after 6 years of unsuccessful negotiation to have Bc/Bsprocess state-paid claims for insured Medicaid recipients, the state in Early 1970s filed a lawsuit against W/B% The state sought to (1) establish BC/BSlia- bility for 1973-78 claims totaling $47 million and (2) require BC/ESto implement a system for processing and paying past, present. and future claims. In December 1980, Michigan and BC/BSreached a legal agreement to settle the dispute As part of the agreement, BC/BSwas to l verify state information on Medicaid recipients with BC/FEcoverage by performing a monthly match of its enrollment files against the state Medicaid insurance file, . reimburse the state for the claims of insured recipients who received services after October 1, 1976 (no provision was made for claims for the 3 earlier years), and l arrange for the development of a Medicaid claim-processing system and use it to pay future postpayment claims promptly. The state agreed to submit claims that included data elements necessary for IF/ES to (1) assure its liability and claim accuracy and (2) process claims on its system MSAofficials told LISthat the 1980 agreement did not fully resolve the claim-processing stalemate between the state and K/ES because they could not give B( ’13sall the data elements requested without substantial changes to the state‘s computer system. In December 1985, after BC/E.S had paid $9.1 million as a result of processing a portion of the post- October 1976 claimh, Michigan negotiated a second agreement with BCC/BS.llnder the 1985 agreement, rather than process the remaining claims, BC/BSagrchedt,o pay an additional $9.4 million. In total, BC/BSpaid about $18.5 million on claims of $90.7 million accumulated from October 1976 through August 1981. Fewer Recoveries Than MSAused an alternate approach to obtain recoveries for claims paid from Expected Between September 1981 through August 1988. IJnder that approach, when MSA identified a paid claim for a recipient identified as having BC/BSinsur- 1982-1988 ance, it did not forbvdrd the claim to BC/I%Sfor reimbursement. Instead, it returned the claim to the provider (physician, hospital, etc.) to collect from BQBS.To rclcover payments, MSAadjusted the provider’s account to reduce its futurrs Mtbdicaid payments. Page6 GAO/HRLbSl-12 MedicaidRecoveries FromMichiganBC/Bs B239899 To evaluate the federal oversight of MSA'Srecovery efforts, we reviewed HCFA'Spolicies, procedures, and practices for monitoring MSA.These included specific oversight efforts to ensure the identification of liability and the accuracy of BC/BSpayments to MsA. Additionally, we obtained and reviewed evaluations of the MSAhealth insurance recovery program by HCFA,the Michigan Office of the Auditor General, and certified public accounting firms. We conducted our review between July 1989 and August 1990 in accor- dance with generally accepted government auditing standards. Since 1972, for a variety of reasons MSAhas experienced difficulty Longstanding recovering from X/ES, although other insurers in the state have rou- Problems in tinely processed postpayment claims as submitted to them by MSA(see Recovering Medicaid- fig. I for chronology of events). One major reason is that BC/BShas main- tained that its computer system is incapable of processing Medicaid Paid Claims Persist claims as submitted by MSA,and that it needs additional information, preferably submitted on BC/Bsclaim forms. Because of the administra- tive difficulties involved in meeting EC/W specifications for payment, the state has been precluded from obtaining significant recoveries. Page4 GAO/HBDSl-12MedicaidRecoveries FromMichiganBC/Bfj B-239899 of a claim processing system have not been implemented. With recov- eries from BC/Bs indefinitely postponed, the state has accumulated a $59 million backlog of BCVBSclaims. Michigan’s likelihood of recovering the full amount owed on the backlogged claims from BC/BShas been seri- ously jeopardized because many of the policies under which the claims are payable include time limits for filing claims that have been exceeded. We have recommended that the Medicaid statute be changed to allow assessment of double damages on insurers that do not pay when they should. This provision is currently applicable in certain circumstances under the Medicare program. In addition, as a part of another study, we are evaluating more broadly the options available to the federal govern- ment when a state, such as Michigan, has not met its responsibilities to recover Medicaid costs. Accordingly, this particular report contains no recommendations. Medicaid is a federally aided, state-administered medical assistance pro- Background gram that serves low-income people. Within broad federal guidelines administered by the Department of Health and Human Services’ Health Care Financing Administration (HCFA), each state designs and manages its own Medicaid program. Under federal regulations, states are required to develop and implement systems to identify recipients with health insurance and assure that insurance benefits are used before Medicaid. When the state learns after it has paid a Medicaid claim that other health insurance exists, federal regulations require it to promptly seek recovery of benefits. Recovery of paid claims from liable insurers reduces federal and state Medicaid costs. Normally, Medicaid recipients with health insurance obtain it through their or their parent’s employer. Children in single-parent families receiving public assistance, for example, qualify for Medicaid coverage and also may be covered under insurance policies of their employed absent parents. In fact, federal child support regulations call for states to request that court orders for child support require absent parents to obtain health insurance coverage for their children when it is available at a reasonable cost. In Michigan, the Medical Services Administration (MSA) administers the state’s $2 billion Medicaid program. The federal government funds about 57 percent of Michigan’s Medicaid program. Using information it receives from recipients, providers, and health insurers, MSAmaintains Page 2 GAO/HRDSI-12 Medicaid lkcoveries From Michigan Bc/Bs
Medicaid: Millions of Dollars Not Recovered From Michigan Blue Cross/Blue Shield
Published by the Government Accountability Office on 1990-11-30.
Below is a raw (and likely hideous) rendition of the original report. (PDF)