Here’s how much an audit uncovered in Utah Medicaid waste

A collaborative audit by state and federal inspectors has identified more than $24 million in Utah Medicaid payments that shouldn’t have been made.

But they also report it’s a system problem that creates waste, not a question of fraud. Inspectors told Deseret News that fixing the process would free up money to tackle waiting lists and assist more people in need.

The U.S. Department of Health and Human Services Office of Inspector General and the Utah Office of Inspector General teamed up for the audit, published Monday, as part of the Utah office’s Medicaid oversight.

The identified issue that led to the waste stems from people who are on Medicaid rolls in more than one state, with managed-care payments being made by those states. The audit said contributing factors include “delayed interstate benefit match updates, system limitations and unclear policies and procedures.”

The report contains a number of suggestions for solving the problem going forward and Utah Medicaid has accepted all nine recommendations, said Neil Erickson, Utah interim inspector general.

How waste happens

Medicaid is a program for people who are low-income or have disabilities and qualify, paid for by a federal-state match. The match varies by state, based on a formula. The Utah match has the federal government contributing just under 62% right now.

The audit looked at a four-month period in 2021 and another in 2024, noting 231 recipients in one and 226 in the other that were enrolled in at least two states.

To understand the problem, one must understand how Medicaid pays for health care for its beneficiaries. Medicaid beneficiaries do not receive payments from the program, but managed care organizations do.

There are two ways the program works in Utah: a fee-for-service branch where health care providers are paid directly by the Utah Medicaid program and a managed care model, which is at the heart of this issue.

Under managed care, a monthly payment called a capitation payment is made to the managed care entity, which processes any claims from health care providers for those beneficiaries and pays them. Utah has 22 managed care entities that receive a monthly payment regardless of whether the beneficiary uses the service that month, per the audit report.

The managed care entity is not an insurance company, but that’s probably the best way to understand it, according to Elise Napper, Utah Office of Inspector General policy and training manager.

Just as an insurance company is paid a monthly premium, the managed care entity is paid one from the state’s Medicaid program. In exchange, the entity makes sure providers are paid for eligible services. And like an insurance company, it receives that monthly payment whether the beneficiary needs health care services that month or not.

If an enrollee’s participation in a managed care plan isn’t terminated at the appropriate time in one state or if there’s a lag, the payment may continue when it shouldn’t. As the inspector general’s report notes, “States are required to provide Medicaid services to eligible residents, including residents who are absent from the state, unless another state determines that an enrollee has established residency for purposes of Medicaid eligibility.” If a different state approves a Utah Medicaid enrollee for benefits, that state has determined the individual is a resident of the new state. But Utah has to be notified to stop enrollment here.

But people may have moved and enrolled in another state and not withdrawn from Utah Medicaid or vice versa, so two different managed care entities are being paid, one of those payments not necessary. And the federal government is hit especially hard, because it’s making a monthly payment in both states.

That also means that taxpayers are paying double and sometimes even more of what should be paid, Erickson said.

“This is not at all a recipient problem,” Napper told Deseret News, blaming “inefficiencies” that lead to waste. “Sometimes stopping waste can bring people off waiting lists and provide care.”

One of the issues is a lag time between moving and when the system catches up with the fact that the person no longer qualifies for Utah Medicaid, Erickson said.

While Medicaid eligibility is reviewed on a set basis, it doesn’t always catch the duplicate enrollments, although states use the Public Assistance Reporting Information System. PARIS, as it’s called, doesn’t always catch the dual enrollment, including when all available data fields aren’t filled in.

And the process is set up for quarterly reporting and matching to detect duplication. So several months of duplicate enrollment can occur. Plus, PARIS is not always used efficiently.

There are other complications, as well.

What’s to blame?

The report makes clear not only that it’s not fraud on the part of the Medicaid enrollee, but it’s also not typically the caseworker’s problem.

“(Department of Workforce Services) caseworkers do not have the necessary tools, and the available tools are not deployed effectively to respond efficiently to concurrent enrollment,” per the audit report. It said its tests showed that during the COVID-19-prompted public health emergency, Utah Medicaid recipients were enrolled an average of 24 months after a new or renewed enrollment in another state.

When the public health emergency ended, the average time dropped to 14 months, although just one month of concurrent enrollment is allowed by Medicaid rules.

Workforce Services doesn’t require closure of other states’ cases before providing benefits. It doesn’t require proof of residency. And application forms don’t make clear that beneficiaries should disclose they have had and may still have Medicaid in other states, either.

So now what?

The audit makes multiple recommendations, all of which Utah Medicaid has agreed to follow. Among them:

• Make the application form clearer regarding former state residency and Medicaid participation.
• Ensure benefits don’t begin before someone actually becomes a Utah resident.
• Create automatic notification to the caseworker of PARIS matches to another state, which “should trigger a priority follow-up procedure” to make sure just one state is providing coverage.
• Better train caseworkers on need to terminate eligibility for those enrolled by another state.
• By law, Utah must refund the federal share of overpayments, so the report says to “benchmark with other states best practices” so Utah’s overpayment policy aligns with the other states.