Kusserow’s Corner: Medicare Payments Made on Behalf of Deceased Beneficiaries

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The HHS Office of Inspector General (OIG) released a report (OEI-04-12-00130) on October 31, 2013 related to a study they performed in connection with Medicare payments on behalf of deceased beneficiaries. They noted that prior OIG studies and audit reports had previously identified this as a problem. It is the latest in a series of reports on the subject by the OIG Office of Audit Services and Office of Evaluation and Inspection. In response to the OIG, CMS implemented safeguards to address this vulnerability.

The OIG focused on 2011 for their review. They identified Medicare beneficiaries who, according to the Social Security Administration in the two preceding years and then cross-checked this data against Medicare Part A and B claims and Part C and D payments associated with these deceased beneficiaries. They also analyzed paid and unpaid Part B claims with service dates after beneficiaries’ deaths to identify providers and suppliers associated with high numbers of these claims.

The OIG found that CMS had safeguards in place to prevent and recover Medicare payments made on behalf of deceased beneficiaries. Despite this Medicare inappropriately paid $23 million. The OIG was quick to note that this figure is less than one tenth of a percent of total Medicare expenditures for that period. Part C accounted for 86 percent of these improper payments. Additionally, 11 percent of these improper payments resulted from missing or incorrect dates of death. The OIG also identified 251 providers and suppliers that had high numbers of paid and/or unpaid Part B claims with service dates after beneficiaries’ deaths. This in turn leads to further investigation.

In an OIG Podcast following release of the report, they noted that federal health care benefits are not allowable for services provided to unlawfully present beneficiaries. CMS has specifically implemented a policy that bars Federal payments for health care services provided to unlawfully present beneficiaries in Medicare Parts A and B. Furthermore, an individual is eligible for Part D benefits if he or she is entitled to Medicare benefits under Part A or enrolled in Part B and lives in the service area of a Part D plan. Thus, federal law prohibits Part D payments for prescription drugs provided to unlawfully present beneficiaries.

They also noted that CMS did not have a policy addressing payments for unlawfully present beneficiaries under Medicare Part D that was equivalent to the existing policy that covers payments for these beneficiaries under Parts A and B. Without such a policy, CMS incorrectly treated unlawfully present beneficiaries as eligible for Part D benefits and did not prevent Part D payments on behalf of them. Of the prescription drug event (PDE) records submitted by Part D sponsors for calendar years 2009 through 2011, CMS inappropriately accepted 279,056 PDE records with unallowable gross drug costs totaling $29.0 million on behalf of 4,139 unlawfully present beneficiaries and used those records to make its final payment determinations to sponsors.

The OIG made several recommendations in their report to CMS and CMS concurred with all of them. They included CMS:

  • Improve existing safeguards to prevent future improper Medicare payments after beneficiaries’ deaths,
  • Take appropriate action on improper Medicare payments made on behalf of deceased beneficiaries and correct inaccurate dates of death,
  • Monitor both paid and unpaid Part B claims with service dates after beneficiaries’ deaths, and
  • Take appropriate action on providers and suppliers that had high numbers of paid and/or unpaid Part B claims with service dates after beneficiaries’ deaths.

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

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Copyright © 2013 Strategic Management Services, LLC. Published with permission.