How Kentucky Failed to Prevent Over $800 Million of Medicaid Waste

Determine whether Kentucky Medicaid made capitation payments on behalf of enrollees who were enrolled in Medicaid in more than one state during the examination period (January 1, 2019, through December 31, 2022), based on a random sample and selected subgroups.

Kentucky paid MCOs $836,364,425 in capitation payments for enrollees concurrently enrolled in Kentucky and at least one other state during 2019–2022, involving 103,907 unique enrollees across 48 states.

The analysis showed that concurrent capitation payments accounted for 2.06% of Kentucky’s capitation payments to MCOs over 2019–2022, totaling $836 million.

Of the 100 sampled enrollees, 92 were linked to a single series of months, while 8 were linked to two or more series of months, indicating that PARIS alerts were issued for multiple series of months for some enrollees.

Case files lacked evidence that PARIS alerts had been issued for 37 enrollees, and for the remaining 63 enrollees it was unclear whether alerts were issued for the specific month in question.

In one subgroup, Kentucky made capitation payments on behalf of deceased enrollees for multiple months after the reported date of death.

During the four-year examination period, Kentucky made 100 or more capitation payments on behalf of certain enrollees who were concurrently enrolled in two or more States.

AP A observed that current DMS and DCBS contracts did not require Kentucky to recover concurrent capitation payments or proactively review rosters for concurrent enrollees across state lines.

PARIS and T-MSIS data limitations hinder timely detection and prevention of concurrent enrollment across states; Kentucky lacked full access to T-MSIS data and PARIS data was only quarterly, with TAF lacking personal identifiable information.

APA concluded that while the problem is solvable, it requires changes in state leadership, contracting, reporting, and federal data access to prevent future waste.

Address organizational silos by improving interagency collaboration among CHFS agencies and ensuring consistent, timely handling of PARIS alerts.

Amend DMS contracts with MCOs to specifically require sharing of reports and proactive procedures to detect and reduce concurrent capitation payments across state lines.

Advise the federal government to provide greater access to T-MSIS data for regular and timely identification of concurrent Medicaid enrollees, or modify PARIS to operate more like T-MSIS and mandate interstate match participation.

Seek monthly PARIS data delivery and stronger federal monitoring of T-MSIS data to identify concurrent enrollment more promptly.

Communicate with CMS to obtain greater access to T-MSIS, or modify PARIS and reporting to allow Kentucky to identify concurrent enrollment more efficiently.

Provide detailed step-by-step PARIS match task instructions, training, and resources to all Kentucky Medicaid caseworkers; consider requiring PARIS match training at intervals and refresher trainings; include guidance on referrals and case notes.

Integrate PARIS match tasks into daily task queues, automatically assign tasks to responsible staff, and implement supervisory review before marking tasks complete; develop templates for case notes and communications with other states.

Add enrollment and redetermination process steps to proactively detect residency changes; review cases with indicators of non-residency;

Improve the referral process for confirmed concurrent capitation payments and evaluate the use of contracted staff versus in-house resources for PARIS matches; explore multistate cooperatives and additional data sources used by other states (e.g., Massachusetts, Rhode Island) for residency confirmation.