Office of Medicaid Managed Care Organization

This is a state audit of MassHealth payments for people enrolled in managed-care health plans from October 2009 through September 2014.

“This report details the audit objectives, scope, methodology, findings, and recommendations for the audit period, October 1, 2009 through September 30, 2014.”

The auditor checked whether MassHealth was blocking fee-for-service bills when the same services were supposed to be covered by managed-care organizations.

“Did MassHealth disallow FFS claims for MCO enrollees for services that should have been covered by the MCOs?”

If MassHealth pays both the health plan and the provider for the same type of service, public money is wasted.

“Otherwise, MassHealth may pay twice for the same service (by paying a capitated premium to an MCO to provide a type of service and then paying a provider on an FFS basis when the service is actually performed).”

This matters to residents because MassHealth is a major state program funded partly by Massachusetts taxpayers.

“Medicaid expenditures typically represent approximately one-third of the Commonwealth’s total annual budget.”

The audit found weak controls, missing payment edits, and unclear service lists that allowed improper or potentially avoidable payments.

“During the audit period, MassHealth did not have effective system edits in place to identify and deny FFS claims for services covered by MCOs.”

The auditor recommended that MassHealth recover improper payments, tighten its payment system, and create clearer service-code lists for managed-care coverage.

“MassHealth should take appropriate action to recoup the approximately $233 million we identified in improper payments associated with the paid FFS claims.”

The amounts are large: the audit identified $233 million in improper payments and at least $288 million more in potentially unnecessary payments.

“These control deficiencies caused MassHealth to make at least $288,952,449 of potentially unnecessary FFS payments during the audit period in addition to the $233,208,842 discussed in the previous finding.”

A managed-care organization is a health plan paid a set monthly amount per member; fee-for-service means MassHealth pays a provider for each individual service.

“MassHealth pays the MCO a fixed monthly fee, or capitated premium, for each member enrolled in the MCO.”