US Inspector General To New Mexico HSD: State Owes Feds $120 Million For Failing to Recoup Over-payments to MCOs

Originally Published in The Candle on June 3, 2024

In a report released in May, the United States Health and Human Services Office of Inspector General (OIG) claims New Mexico owes the federal government for making more than $139 million in excess payments to companies the state trusted to run its managed care system.

And the OIG does not buy the excuses offered by the state, stating the audit investigation’s findings and recommendations regarding the over-payments are valid.

“New Mexico performed reconciliations of capitated payments for CB [Community Benefit] services as required under its contracts with MCOs. However, it did not recoup from its MCOs any overpayments identified in the CB services reconciliations and did not refund any related Federal share to the Federal Government.

According to the report, New Mexico’s HSD failed to recoup “$139.2 million in over-payments for enrollees who did not use CB services within 90 calendar days of their approval for CB services.”

The OIG recommended that New Mexico,

  • (1) recoup $139.2 million in CB services capitated payments from its MCOs and refund the $98.6 million in Federal share to the Federal Government,
  • (2) recoup the $29.4 million in NFLOC capitated payments from its MCOs and refund the $20.5 million Federal share to the Federal Government, and
  • (3) establish policies and procedures to recoup the NFLOC capitated payments made to its MCOs based on settings-of- care that are removed after payment and no longer valid.

The OIG report continues stating “the State agency contracts with MCOs to make services available to beneficiaries enrolled in New Mexico’s Medicaid program, Centennial Care. Centennial Care is a managed care program that began on January 1, 2014.

“The State agency pays MCOs a monthly capitated payment for each Medicaid enrollee, which comprehensively covers enrollees’ medical care for the month.

“The MCO receives a capitated payment regardless of whether an enrollee uses medical services during the month.

“MCOs submit to the State agency encounter data, which is a collection of individual encounters that includes information about the specific services provided to each MCO enrollee, including the first and last date of service provided to an enrollee and how much the MCO paid for the services. The State agency then processes the encounter data using its Medicaid Management Information System.

The CB services program helps enrollees with NFLOC [nursing facility level-of-care] needs to remain living in their homes or in the community (e.g., in adult day care or assisted living facilities) rather than in a long-term care facility. Under the CB services program, long-term care services are provided outside of nursing facilities. CB services include adult day health, respite care, personal care services, and assistance with daily tasks (e.g., hygiene, meals, mobility).

We observed in the State agency’s capitated payments data that MCOs received a higher capitated payment for enrollees with NFLOC needs (NFLOC capitated payment). We also observed that this higher rate was the same whether an enrollee with NFLOC needs resided in a nursing facility or in the community.

“According to the State agency’s contracts with its MCOs, for the CB services reconciliation, the
State agency will review enrollees’ needs for CB services by reviewing their service use in the
first 90 calendar days of approval for the services (i.e., 90-day requirement).

“The contracts state that the State agency will recoup the CB capitated payment if an enrollee does not use CB services in that initial 90-day period.

“To establish the enrollee’s date of approval for CB services in its CB services reconciliations, the
State agency’s contractor used the first date that an MCO placed each CB enrollee into a
setting-of-care, indicating that the enrollee was located in a community-based setting and had
NFLOC needs.

Therefore, this first date was important to establish, not just to determine the start of the 90-day period for CB services enrollees but also to determine when an MCO should receive the higher monthly NFLOC capitated payment for an enrollee...

“New Mexico said that, although it did not implement the recoupment process as outlined in its MCO contracts, it developed an alternative method that met the spirit of compliance. New Mexico also said that the alternative method resulted in an immaterial financial impact.”

The OIG noted that, “[a]fter reviewing New Mexico’s comments, we maintain that our findings and recommendations are still valid.

The Candle emailed both the HSD and the Governor’s office for a statement regarding the OIG report, however there has been no response at the time of this publication.

This is an ongoing story, if The Candle receives a response from HSD or the Governor’s office, we will update the reporting along with additional information.

Copy of United States Health and Human Services Office of Inspector General Report in Brief: