Finding 1210999 (2024-021)

DIVISION OF MEDICAID ELIGIBILITY Material Weakness Material Noncompliance 2024-021 Strengthen Controls to Ensure Compliance with Eligibility Requirements of CHIP and the Medical Assistance Program. ALN Number(s) 93.767 – CHIP 93.778 - Medical Assistance Program (Medicaid; Title XIX) Federal Award No. All Current Active Grants Questioned Costs $27,314 Criteria Code of Federal Regulations (42 CFR 435.948(a)(1)) states, “The agency must in accordance with this section request the following information relating to financial eligibility from other agencies in the State and other States and Federal programs to the extent the agency determines such information is useful to verifying the financial eligibility of an individual: Information related to wages, net earnings from self-employment, unearned income and resources from the State Wage Information Collection Agency (SWICA), the Internal Revenue Service (IRS), the Social Security Administration (SSA), the agencies administering the State unemployment compensation laws, the State administered supplementary payment programs under section 1616(a) of the Act, and any State program administered under a plan approved under Titles I, X, XIV, or XVI of the Act." Code of Federal Regulations (42 CFR 435.949(b)) states, "To the extent that information related to eligibility for Medicaid is available through the electronic service established by the Secretary, States must obtain the information through such service, subject to the requirements in subpart C of part 433 of this chapter, except as provided for in 435.945(k) of this subpart." The Center for Medicaid and CHIP Services (CMCS) Informational Bulletin -Subject: MAGI-Based Eligibility Verification Plans states, "To the extent that information related to Medicaid or CHIP eligibility is available through the electronic data services hub established by the Secretary, states must obtain the information through this data services hub. Subject to Secretarial approval and the conditions described in 435.945(k) and 457.380(i), states can obtain information through a mechanism other than the data services hub." The Mississippi Division of Medicaid Eligibility Policy and Procedures Manual Section 201.03.04A requires the use of the individual's most recent tax return to verify income for individuals considered self-employed, a shareholder in an S Corporation, a partner in a business or one who has income from a partnership, LLP, LLC or S Corporation. Per the Mississippi Division of Medicaid MAGI based Eligibility Verification Plan, Mississippi Division of Medicaid has determined Mississippi Department of Employment Security (MDES) to be a useful electronic data source. Per the Mississippi Medicaid State Plan Attachment 4.32-A, applicants are submitted weekly to MDES to verify wage and unemployment benefits. Renewals are submitted once per month for the same data. Renewal files are processed in the month prior to the scheduled review due date. Code of Federal Regulations (42 CFR 435.914(a)) states, “The agency must include in each applicant's and beneficiary's case record the information and documentation described in 431.17(b)(1) of this chapter.” Per Code of Federal Regulations (42 CFR 431.17(b)(1)), 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 individual records on each applicant and beneficiary that contain all information provided on the initial application submitted through any modality described in 435.907 of this chapter by, or on behalf of, the applicant or beneficiary, including the signature on and date of application. Further, the records must contain the disposition of income and eligibility verification information received under 435.940 through 435.960 of this chapter, including evidence that no information was returned from an electronic data source. The Mississippi Division of Medicaid Eligibility Policy and Procedures Manual Section 101.08.01 states, “All cases must be thoroughly documented. Documentation is the written record of all information pertaining to the eligibility decision. Case documentation includes the completed application form, the specialist’s verbal and written contacts with the applicant, information requested and received from electronic data sources, the applicant or third-party sources, such as governmental or nongovernmental agencies, businesses and individuals, and notification of the eligibility decision." Miss. Code Ann (1972) Section 43-13-116.1(2) states, “In accordance with Section 1940 of the federal Social Security Act (42 USCS Section 1396w), the Division of Medicaid shall implement an asset verification program requiring each applicant for or recipient of Medicaid assistance on the basis of being aged, blind or disabled, to provide authorization by the applicant or recipient, their spouse, and by any other person whose resources are required by law to be disclosed to determine the eligibility of the applicant or recipient for Medicaid assistance, for the division to obtain from any financial institution financial records and information held by any such financial institution with respect to the applicant, recipient, spouse or such other person, as applicable, that the division determines are needed to verify the financial resources of the applicant, recipient or such other person in connection with a determination or redetermination with respect to eligibility for, or the amount or extent of, Medicaid assistance. Each aged, blind or disabled Medicaid applicant or recipient, their spouse, and any other applicable person described in this section shall provide authorization (as specified by 42 USCS Section 1396w(c)) to the division to obtain from any financial institution, any financial record, whenever the division determines that the record is needed in connection with a determination or redetermination of eligibility for Medicaid assistance.” The Mississippi Division of Medicaid Eligibility Policy and Procedure Manual Section 303.03 states, "Section 1940 of the Social Security Act and Mississippi state law requires the verification of liquid assets held in financial institutions for purposes of determining Medicaid eligibility for applicants and beneficiaries in programs with an asset test, i.e., Aged, Blind, and Disabled (ABD) Medicaid programs." Per the Mississippi Division of Medicaid Eligibility Policy and Procedure Manual Section 303.03, implementation of MDOM's Asset Verification System (AVS) is on/after November 1, 2018. The AVS contractor will perform electronic matches with financial institutions to detect and verify bank accounts based on identifiers including Social Security Numbers for the following COEs: 010 through 015, 019, 025, 045, 062 through 066, and 094 through 096. At each application and redetermination, a request will be submitted through A VS for information on an individual's financial accounts. The AVS must be used as a primary data source when verifying resources. Code of Federal Regulations (42 CFR 435.945(d)) states, "All State eligibility determination systems must conduct data matching through the Public Assistance Reporting Information System (PARIS)." The Mississippi Division of Medicaid MAGI-Based Eligibility Verification Plan states, "The state uses quarterly PARIS data matches to resolve duplicate Medicaid participation in another state and residency discrepancies." Per the Mississippi Medicaid State Plan Attachment 4.32-A, quarterly file transmissions of Medicaid recipients active in the previous quarter are submitted for matching purposes with applicable federal databases (PARIS) to identify benefit information on matching Federal civilian employees and military members, both active and retired, and to identify duplicate participation across state lines. Condition During testwork performed over eligibility requirements for CHIP and the Medical Assistance Program as of June 30, 2024, the auditor tested 300 total beneficiaries (180 Modified Adjusted Gross Income (MAGI) beneficiaries and 120 aged, blind, and disabled (ABD) beneficiaries) and noted the following: • Mississippi Division of Medicaid (MDOM) did not use federal tax and/or state tax returns to verify income, including self-employment income, out-of-state income, and various types of unearned income when these types of income were not reported by the beneficiary. The Medicaid State Plan requires the verification of all income for MAGI-based eligibility determinations, and MDOM' s Eligibility Policy and Procedure Manual (Section 201.03.04a) requires the use of an individual's most recent tax return to verify self-employment income. This section further states, if tax returns are not filed, not available, or if there is a change in income anticipated for the current tax year, refer to Chapter 200, Net Earnings from Self-Employment at 200.09.08, for policy on estimating net earnings from self-employment. The MDOM's State Plan does not allow for accepting self-attested income. Therefore, if an applicant indicates zero for self-employment income, the amount of zero must be verified like any other income amount. • Three of the 180 MAGI beneficiaries (or 1.66 percent) reported self-employment income, out-of-state income, or unearned income on the Mississippi income tax return, but the income was not reported on the recipient’s application. Of the three instances, two instances (or .66 percent) were noted in which the total income per the most recent tax return available at the time of determination exceeded the applicable income limit for the recipient’s category of eligibility. • One of the 180 MAGI beneficiaries (.05 percent) reported self-employment income to MDOM, but MDOM recorded this income as wages and therefore did not request a tax return from the recipient. In this instance (or 100 percent) the total income per the most recent tax return available at the time of determination exceeded the applicable income limit for the recipient’s category of eligibility. Due to MDOM not verifying self-employment income on the applicant’s tax return, MDOM was not aware income exceeded eligibility limits, and did not request any additional information that might have explained why income was not self-reported; therefore, the auditor could not determine with certainty that individuals are in fact ineligible. However, information that MDOM used at the time of the eligibility determination did not support eligibility. The auditor acknowledges that the self-employment income reported on the income tax returns does not, in and of itself, make the three cited beneficiaries ineligible. However, it does indicate that they had self-employment income during the year of eligibility determination that was potentially inaccurately reported on their application. Furthermore, MDOM did not perform any procedures to verify that zero self-employment income reported on the applications was accurate. MDOM's policy requires the use of the individual’s most recent tax return to verify income for individuals considered self-employed, a shareholder in an S Corporation, or a partner in a business or one who has income from a partnership LLP, LLC, or S Corporation. Due to the timing of tax returns filings, including allowable extensions, MDOM requires the use of prior year income verification in these circumstances. The auditor used tax return data from 2022 and 2023 for 2024 determinations. The fiscal year payments for these three beneficiaries that might not have been eligible to receive benefits totaled $4,664 of questioned cost. Based on the error rate calculated using the sampled fee for service (FFS) and capitation payments, the projected amount of payments made for beneficiaries who it is reasonably possible were ineligible is $13,885,515. The following is a breakdown projected costs for 2024 by category: CHIP: $1,971,277 MAGI Managed Care: $11,884,238 • For six of the 180 MAGI beneficiaries (or 2 percent), income was not verified through Mississippi Department of Employment Security (MDES) at the time of the redetermination for the eligibility period during SFY24. This resulted in questioned costs of $7,606. Questioned costs were not projected for this item due to the inability to statistically validate the sample. • For 12 of the 300 beneficiaries (or 4 percent), the beneficiary's case file did not contain a completed application. Of these 12, Medicaid was unable to provide auditors with any documentation from the case files for six beneficiaries (2 percent). This resulted in questioned cost of $2,776 for the six beneficiaries with no file. Questioned costs were not projected for this item due to the inability to statistically validate the sample. • Seventy ABD beneficiaries required resource verifications through the Asset Verification System (AVS). Of the 70 beneficiaries, one instance (1.43 percent) was identified in which resources were not verified through AVS at the time of redetermination. This resulted in questioned costs of $12,269. Questioned costs were not projected for this item due to the inability to statistically validate the sample. • Out of 300 beneficiaries, 135 (45 percent) were not included on all required quarterly Public Assistance Reporting Information System (PARIS) file transmissions for fiscal year 2024. Cause MDOM did not have adequate internal controls to ensure compliance with eligibility requirements. Additionally, MDOM did not have policies in place to verify certain types of income on applicant's tax returns, as required by its own policy and procedures, for eligibility determinations. Effect Failure to comply with eligibility requirements could result in ineligible beneficiaries being determined eligible, resulting in questioned costs and the possible recoupment of funds by the federal granting agency. Recommendation We recommend MDOM strengthen controls to ensure compliance with eligibility requirements of CHIP and the Medical Assistance Program. Repeat Finding Yes, 2023-024, 2022-025, 2021-041, 2020-042 and 2019-027. Statistically Valid Portions of this finding were based on statistically valid samples.