Finding 1186981 (2025-013)

1. MEDICAID CLUSTER/CHIP – INELIGIBLE RECIPIENTS Finding Number: 2025-013 State Agency Number: MCD-01 Assistance Listing Numbers and Titles: 93.767 – Children’s Health Insurance Program (CHIP) 93.767 COVID 19 – CHIP 93.775/93.777/93.778 – Medicaid Cluster 93.775/93.777/93.778 COVID-19 – Medicaid Cluster Federal Award Identification Numbers / Years: 2305OH5023 / 2023 (CHIP) 2405OH5024 / 2024 (CHIP) 2505OH5025 / 2025 (CHIP) 2305OH5MAP / 2023 (Medicaid Cluster) 2405OH5MAP / 2024 (Medicaid Cluster) 2505OH5MAP / 2025 (Medicaid Cluster Federal Agency: Department of Health and Human Services Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Eligibility Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2024-014 QUESTIONED COSTS, NONCOMPLIANCE, AND MATERIAL WEAKNESS NOTE: Finding number 2025-014 details deficiencies and weaknesses in internal control related to the Medicaid Cluster and CHIP programs regarding the Department’s eligibility processes. That finding is integral to and should be read in conjunction with this finding. 42 C.F.R. § 435.10, State Plan requirements, pertaining to the Medicaid Cluster states, in part A. State plan must--- (a) Provide that the requirements of this part are met; and (b) Specify the groups to whom Medicaid is provided, as specified in subparts B, C, and D of this part, and the conditions of eligibility for individuals in those groups. 42 C.F.R. § 431.17, Maintenance of records, pertaining to the Medicaid Cluster states, in part: (b) Content of records. A State plan must provide that the Medicaid agency will maintain or supervise the maintenance of the records necessary for the proper and efficient operation of the plan. The records must include all of the following: (1) Individual records on each applicant and beneficiary that contain the following: (i) All information provided on the initial application submitted . . . on behalf of, the applicant or beneficiary, including the signature on the date of application. . . . (iii) The date of, basis for, and all documents or other evidence to support any determination, denial, or other adverse action, including decisions made at application, renewal, and as a result of a change in circumstance, taken with respect to the applicant or beneficiary, including all information provided by, or on behalf of, the applicant or beneficiary, and all information obtained electronically or otherwise by the agency from third-party sources. . . . (v) Any changes in circumstances reported by the individual and any actions taken by the agency in response to such reports. (vi) All renewal forms and documentation returned by, or on behalf of, a beneficiary, to the Medicaid agency in accordance with § 435.916 of this chapter, . . . . including the signature on the form and date received. . . . 42 C.F.R. § 435.916, Regularly scheduled renewals of Medicaid eligibility, states in part: (a) Frequency of renewals. . . (1) The eligibility of Medicaid beneficiaries not described in paragraph (a)(2) of this section must be renewed once every 12 months, and no more frequently than once every 12 months. (2) The eligibility of qualified Medicare beneficiaries described in section 1905(p)(1) of the Act must be renewed at last once every 12 months, and no more frequently than once every 6 months. (b) Renewals of eligibility – (1) Renewal on basis of information available to agency. The agency must make a redetermination of eligibility for all Medicaid beneficiaries without requiring information from the individuals if able to do so based on reliable information contained in the individual’s account or other more current information available to the agency, including but not limited to information through any data bases accessed by the agency . . . 42 C.F.R. § 435.912(c), Timely determination and redetermination of eligibility, states in part: (3) . . . the determination of eligibility for any applicant or individual whose account was transferred from another insurance affordability program may not exceed— (i) 90 calendar days for applicants who apply for Medicaid on the basis of disability; and (ii) 45 calendar days for all other applicants. 42 U.S.C. § 1397bb(b), pertaining to the Children’s Health Insurance Program (CHIP) states, in part: (1) Eligibility Standards (A) The plan shall include a description of the standards used to determine the eligibility of targeted low-income children for child health assistance under the plan. . . 42 C.F.R. § 457.380(d), Eligibility verification pertaining to CHIP states: Income. If the State does not accept self-attestation of income, the State must verify the income of an individual by using the data sources and following standards and procedures for verification of financial eligibility consistent with § 435.945(a), § 435.948, and § 435.952 of this chapter. 42 C.F.R. § 457.344, Changes in circumstances pertaining to CHIP, states in part: (a) Procedures for reporting changes. The agency must: (1) Have procedures designed to ensure that enrollees understand the importance of making timely and accurate reports of changes in circumstances that may affect their eligibility . . . (b) State action on information about changes . . . the State must promptly redetermine eligibility between regularly scheduled renewals of eligibility required under § 457.343, whenever it has reliable information about a change in an enrollee’s circumstances that may impact the enrollee’s eligibility for CHIP, the amount of child or pregnancy-related health assistance for which the enrollee is eligible, or the enrollee’s premiums or cost sharing charges. . . . (1) The State must redetermine eligibility based on available information, if possible. When needed information is not available, the State must request such information from the enrollee in accordance with § 435.952(b) and (c) of this chapter . . . Ohio Rev. Code § 5164.57(A)(1), Recovery of Medicaid Overpayments states, in part: . . . the department of medicaid may recover a medicaid payment or portion of a payment made to a medicaid provider to which the provider is not entitled if the department notifies the provider of the overpayment during the five-year period immediately following the end of the state fiscal year in which the overpayment was made. Ohio Admin. Code § 5160-26-02.1, Managed care: termination of enrollment states, in part: . . . (B) The Ohio department of medicaid (ODM) will terminate a member from enrollment in a managed care organization (MCO) for any of the following reasons: . . . (3) The member dies, in which case MCO enrollment ends on the date of death (D) All of the following apply when enrollment in an MCO or the SPBM [Single Pharmacy Benefit Manager] is terminated for any of the reasons set forth in paragraph (B) or (C) of this rule: . . . (5) ODM shall recover from the MCO or the SPBM any capitation paid for retroactive enrollment termination occurring . . . The Medicaid and CHIP State Plan outlines the specific eligibility conditions and standards within Sections 2.2 – Coverage and Conditions of Eligibility and 2.6 A – Financial Eligibility, Eligibility Conditions and Requirements for Medicaid, and Section 4 – Eligibility Standards and Methodology for CHIP. It is management’s responsibility to implement policies and procedures to provide reasonable assurance they have complied with these requirements. As the lead agency for administering the Medicaid Cluster and CHIP federal grant awards for the State of Ohio, the Department is responsible for providing reasonable assurance only eligible individuals receive assistance and the documentation maintained is accurate, complete, and properly recorded in the Ohio Benefits system to ensure appropriate eligibility determinations. It is also the Department’s responsibility to implement sufficient controls, systems, processes, and procedures to reasonably ensure compliance with the rules and regulations associated with these programs and only eligible recipients receive benefits. The Department is responsible for overall program compliance and must have appropriate oversight and monitoring procedures in place to ensure those they rely on are operating in accordance with all expectations, guidelines, and requirements related to their tasks. During state fiscal year (SFY) 2025, the Department disbursed a combined total of $29.6 billion in public assistance benefits to recipients processed through the Ohio Benefits system related to the following programs: Assistance Listing Number & Title Benefits Paid # of Recipients* 93.767 - CHIP $916,720,909 242,000 93.775/93.777/93.778 – Medicaid Cluster $28,653,789,593 2,646,003 Combined Total $29,570,510,502 2,888,003 * We did not separately identify recipients who could be covered under both programs. These programs are administered using a multi-agency approach, as follows: overall compliance and administration of the Medicaid Cluster and CHIP programs fall under the Department, and programming and administration of the State’s eligibility determination computer system, Ohio Benefits, falls under the Ohio Department of Administrative Services (DAS). The Ohio Benefits system contains the eligibility and benefit information/determinations for these programs. The Department also, through a Memorandum of Understanding with the Ohio Department of Job & Family Services (JFS), utilizes the 88 County Departments of Job & Family Services (CDJFS) in the eligibility determination process to work with applicants, receive/enter eligibility documentation into the Ohio Benefits system, and follow up on alerts issued by the system. Currently, individuals applying to receive public assistance benefits complete an application through various methods. The CDJFS collect and maintain any documentation provided by the individual either in a paper case file or in the OnBase Enterprise Documentation Management System (EDMS) maintained under contract by DAS and utilized by the Department. After collecting documentation, the county caseworker enters the individual’s information into the Ohio Benefits system which determines the initial eligibility benefit amount and assigns the benefit aid category, where applicable. This process is also used to perform eligibility redeterminations on an annual basis or when prompted through a system alert. Once the determination is made, the Ohio Benefits system uploads the eligibility information to the Department’s new Ohio Medicaid Enterprise System’s (OMES) Fiscal Intermediary (FI) to process the provider payments. The following noncompliance was noted related to eligibility for the Medicaid Cluster and CHIP programs, which included questioned costs for Medicaid totaling $2,384 and CHIP totaling $204,076: • One of 81 (1.2%) Medicaid recipients and six of 80 (7.5%) CHIP recipients selected for testing were not eligible to receive benefits on the date services were performed as they were not validly enrolled beneficiaries based on information in Ohio Benefits, the State’s official eligibility determination system. Therefore, these items will result in questioned costs for all claims paid for services provided for these individuals during the time they were ineligible, totaling $1,238 for Medicaid and $204,076 for CHIP. The items noted included issues such as: o The recipient failed to timely report an increase in income. o The wrong household size was utilized when determining eligibility; as a result, the recipient was over the income limit. • Three of 81 (3.7%) Medicaid recipients and seven of 80 (8.8%) CHIP recipients selected for testing were not placed in the correct benefit aid category. One of the three Medicaid recipients and six of the seven CHIP recipients were included in the first bullet and deemed ineligible for both programs. • One of 81 (1.2%) Medicaid recipients and seven of 80 (8.8%) CHIP recipients selected for testing did not have adequate documentation to support the Department's decision on the recipient’s eligibility, or incorrect information was entered into Ohio Benefits. The Medicaid recipient and six of the seven CHIP recipients were included in the first bullet and deemed ineligible for both programs. • One of 81 (1.2%) Medicaid recipients selected for testing was eligible during the date of service initially tested; however, during testing we identified questioned costs for Medicaid after the recipient’s date of death resulting in questioned costs totaling $1,146. • One of 13 (7.7%) CHIP recipients selected for testing with applications during the audit period did not have the initial eligibility determination completed within 45 days. ADDITIONAL QUESTIONED COSTS: The Ohio Benefits system is designed to generate alerts to notify the CDJFS caseworkers of a deceased match. The Department has 10 calendar days to process a re-determination when a change has been reported affecting a recipient’s ongoing eligibility. When the Department has been notified of a potential death of a recipient, the recipient is to be removed from managed care and placed in fee for service until confirmation of the death is received. An analysis of the Medicaid Cluster’s managed care capitation payments and the fee for service medical claims paid during SFY 2025 were compared to the death master file received from the Ohio Department of Health to identify any payments with a capitation month or date of service after the recipient’s date of death. The Department made 13,159 payments, totaling $2.5 million, on behalf of 2,165 deceased individuals receiving Medicaid benefits were included in the population to determine if the payments were allowed. We selected 60 of the 2,165 deceased individuals for further testing to determine if the Department took the appropriate action to identify and/or recover the payments. Twenty-one of 60 (35%) Medicaid recipients tested had an unallowable fee for service payment made on behalf of these deceased individuals which was not recovered by the Department, resulting in questioned costs, totaling $41,599. Furthermore, during testing we determined the Department recouped overpayments or reversed unallowable claims on behalf of 25 recipients, totaling $59,295. The questioned costs noted above only includes the outstanding amounts. The items noted above under Noncompliance and Additional Questioned Costs resulted in questioned costs for both the Medicaid Cluster and CHIP, as summarized in the table below: Summary of Questioned Costs by Category Medicaid Cluster CHIP Ineligible Recipients $2,384 $204,076 Deceased Individuals $41,599 N/A* Total Questioned Costs: $43,983 $204,076 *We completed testing over CHIP Deceased Individuals; however, we did not identify any claims paid past the recipient’s date. Without proper controls for entering, processing, and maintaining recipient information, including working system alerts in a timely manner, there is an increased risk that benefits paid to or on behalf of recipients will be inaccurate or unallowable. Overpayments or payments to or on behalf of ineligible recipients may subject the Department to penalties or sanctions which may jeopardize future funding and limit its ability to fulfill program requirements to provide benefits to those in need. Based on discussions with management, the issues identified were caused by oversight and systemic issues. We recommend the Department evaluate and seek reimbursement for all claims that were incorrectly paid. We also recommend management continue to work collectively with the related state agencies to implement/update robust processes, procedures, and system programming to address the weaknesses in the overall eligibility process, including those associated with the Ohio Benefits system. We also recommend the Department regularly evaluate selected benefit payments to verify the recipient’s eligibility, verify the recipient information entered into Ohio Benefits by the CDJFS is accurate and the information is being maintained to support the Department’s eligibility decision, and ensure initial eligibility determinations and redeterminations are completed timely. Any problems noted should be promptly corrected to reduce the risk of benefit payments being made on behalf of ineligible individuals and additional training provided to the State and/or county employees affected. Lastly, we recommend the Department evaluate current processes for identifying deceased individuals to ensure Ohio Benefits and OMES FI are updated in a timely manner. Controls should be implemented to ensure CDJFS caseworkers are following up with the Social Security Administration, Ohio Department of Health, or other death indicators in a timely manner. This should include developing a process for confirming an individual’s death if the family member, caretaker, or facility is not responding to the CDJFS caseworkers and ensuring the recipient is disenrolled from the managed care plan and converted to fee for services until date of death is confirmed. We further recommend the Department develop procedures to identify the improper payments to providers on behalf of deceased individuals and seek recovery, reimbursement, or offset future payments, when necessary. Auditor of State Conclusion: The response to this finding included within the State of Ohio Corrective Action Plan indicated the Department disagreed with a portion of the Medicaid Cluster and CHIP eligibility errors which required an Auditor of State Conclusion. For both the Medicaid and CHIP recipients, eligibility was determined based on older income and the county caseworker did not obtain current income information and/or the recipient failed to report an increase in income (e.g., new employment) in a timely manner. Additionally for the CHIP recipient, SWICA alerts were identified prior to determining eligibility and not worked properly resulting in the recipient being ineligible for the designated benefit aid category. Based on this information, the Medicaid and CHIP recipients would have been over the income limit for the benefit aid categories, and the Medicaid recipient would have been deemed ineligible to receive Medicaid benefits. Therefore, this finding will remain as stated above.