An Examination of State Policies and Practices Regarding Medicaid Coverage for Inmate Inpatient Healthcare Costs
February 25, 2015 · State Policies and Practices Regarding Medicaid Coverage for Inmate Inpatient Healthcare Costs · Read the full official report (PDF) ↗
Published February 25, 2015 Audit covers January 1, 2011 – December 31, 2012 Under Suzanne M. Bump · 2011–2023
Read the plain-English breakdown
This is a State Auditor performance audit of how Massachusetts handled Medicaid eligibility and possible federal reimbursement for inmates who needed inpatient hospital care.
“The Office of the State Auditor has conducted an audit of the state policies and practices regarding Medicaid eligibility of inmates and potential federal reimbursement for inmate inpatient healthcare costs for the period January 1, 2011 through December 31, 2012.”
Auditors wanted to know whether the state was reducing inmate hospital costs by having hospitals bill MassHealth when federal rules allowed it.
“The objective of our audit was to determine whether the Commonwealth had effectively reduced inmate inpatient healthcare costs by requiring hospitals and other medical service providers to bill MassHealth for eligible inmate inpatient healthcare services.”
Medicaid is a major part of the state budget, and losing federal reimbursement means state and local taxpayers may carry costs the federal government could have shared.
“Medicaid expenditures represent approximately 33% of the Commonwealth’s total annual budget.”
For an ordinary resident, the issue is whether Massachusetts is using available federal dollars efficiently instead of paying the full cost itself for eligible inmate hospital care.
“The federal government reimburses the Commonwealth 50% of every dollar spent on eligible Medicaid services.”
The audit found MassHealth did not have a working process to claim available federal reimbursement for eligible inmate inpatient hospital costs.
“MassHealth did not seek available federal reimbursement for inmate inpatient medical costs, and consequently the Commonwealth lost the opportunity to save as much as $11,644,611 for these medical expenses during the audit period.”
The Auditor recommended that MassHealth work with prisons and sheriffs to identify eligible inmates, suspend and reactivate benefits at the right times, notify providers how to bill, and report its plan to the Legislature.
“MassHealth should take the following actions:”
The finding was significant because the missed reimbursement was not a small paperwork issue; it could have been millions of dollars over just a two-year audit period.
“MassHealth lost the opportunity to obtain $4,076,134 in FFP for eligible DOC inmate inpatient healthcare costs.”
“FFP” means federal financial participation: federal money that reimburses a state for part of eligible healthcare spending.
“FFP is paid by the federal government to reimburse states for a portion of eligible healthcare expenditures, including inmate inpatient healthcare costs.”
4 figure(s) pending source verification - not shown
What the Auditor checked
- Did not comply Did the Commonwealth effectively reduce inmate healthcare costs by requiring hospitals and other medical service providers to bill MassHealth for eligible inmate inpatient health services?
- Complied Did the Commonwealth seek federal financial participation (FFP) for inmates of the Department of Correction (DOC) who were treated at Lemuel Shattuck Hospital (LSH)?
- Did not comply Did the Commonwealth seek federal financial participation (FFP) for inmates of county houses of correction (HOCs) who were treated at Lemuel Shattuck Hospital (LSH)?
What the Auditor found
Why it matters: The Commonwealth lost the opportunity to save as much as $11,644,611 during the audit period.
Standard: Section 1905 of Title XIX of the Social Security Act, CMS guidance, 42 Code of Federal Regulations 435.1010, 130 CMR 503.002(H), 130 CMR 517.002(H), and Outside Section 227 of Chapter 165 of the Acts of 2014. ( Section 1905 of Title XIX of the Social Security Act; Section 4590-0915 of the Massachusetts fiscal year 2013 budget appropriation; 42 Code of Federal Regulations 435.1010; 130 Code of Massachusetts Regulations 503.002(H) and 130 Code of Massachusetts Regulations 517.002(H); Outside Section 227 of Chapter 165 of the Acts of 2014 )
4 recommendations
- Collaborate with DOC and county HOCs to establish processes to determine inmate Medicaid eligibility, enroll eligible inmates in suspended MassHealth status, re-suspend benefits after discharge, and reactivate benefits upon release.agency: agreed
- Issue a Provider Bulletin telling MassHealth-participating medical facilities to bill MassHealth, not DOC or county HOCs, for inpatient services provided to eligible inmates.agency: agreed
- Consider the effect of new processes on Lemuel Shattuck Hospital operations.agency: agreed
- Comply with Outside Section 227 of Chapter 165 of the Acts of 2014, including submitting an implementation plan and reporting the Commonwealth's financial impact.agency: agreed
Agency response & Auditor reply
Agency: "MassHealth is in the process of implementing the recommendations put forth by the State Auditor’s Office (SAO) in its report “An Examination of the Policies and [Practices] Regarding Medical Coverage for Inmate Inpatient Healthcare Costs.”"
Auditor: "MassHealth’s plan addresses all of our recommendations and should help ensure that the Commonwealth obtains FFP for all eligible inmate inpatient healthcare costs."