Medicaid Payments to MCOs for Deceased Individuals
Learn how the AI-generated research projects were createdOverall Conclusion
The DHHS procedures for identifying deaths, updating records, and recouping post-death Medicaid payments were found to be insufficient to prevent improper disbursements to MCOs. While some adjustments and recoupments have begun, there are notable opportunities to strengthen internal controls and data interfaces to reduce the risk of fraud or misuse of state funds.
Source Document
Audit Scope
Review of March 2025 Medicaid capitation payments to MCOs, cross-checks with Vital Statistics death records, NFOCUS interfaces, and MMIS data; analysis through August 4, 2025; includes 13 deceased recipients across 4 MCOs with overpayments totaling $65,554.43 and ongoing recoupment.
Key Findings Summary
Four Medicaid MCOs identified receiving March 2025 capitation payments for 13 deceased recipients, with overpayments totaling $65,554.43.
MMIS eligibility end dates were sometimes established after the date of death or ended with the status Not Eligible instead of Recipient Deceased, resulting in continued payments after death totaling substantial sums (e.g., $12,409.07 in one set; $26,951.37 across five cases).
NFOCUS did not receive automated death notices from Vital Statistics for certain recipients, leading to untimely death verifications and continued payments.
View the Findings tab to see all 7 findings
AI-Assisted
AI Scope Summary
This audit examined DHHS's controls over Medicaid capitation payments to managed care organizations (MCOs) to identify payments to deceased individuals and related overpayments. It evaluated the reliability of death notification processes and MMIS/NFOCUS data interfaces, quantified identified overpayments, and recommended improvements to prevent recurrence. The scope covered March 2025 capitation payments and related verifications through August 4, 2025, and concluded that while processes exist to identify and recoup some overpayments, significant control weaknesses remain that require strengthening for future audits.
AI-Generated Insight
Auditors found systemic gaps in death notification, data interface reliability between NFOCUS, Vital Statistics, and MMIS, and timing of death verifications that allowed overpayments to MCOs for deceased Medicaid recipients. Strengthening automated notices, end-date updates, and recoupment processes is essential to protect Medicaid funds and prevent recurrence in future audits.
Audit Objectives
Identify improper Medicaid capitation payments made to managed care organizations for deceased individuals.
Assess the effectiveness of DHHS internal controls related to death notification interfaces (NFOCUS and Vital Statistics) and MMIS eligibility end dates.
Identify errors, delays, and recoupment opportunities related to overpayments and recommend corrective actions.
Audit Findings (7)
Four Medicaid MCOs identified receiving March 2025 capitation payments for 13 deceased recipients, with overpayments totaling $65,554.43.
MMIS eligibility end dates were sometimes established after the date of death or ended with the status Not Eligible instead of Recipient Deceased, resulting in continued payments after death totaling substantial sums (e.g., $12,409.07 in one set; $26,951.37 across five cases).
NFOCUS did not receive automated death notices from Vital Statistics for certain recipients, leading to untimely death verifications and continued payments.
Several cases were closed or reopened due to death timing and renewal issues, causing delayed action and continued payments.
Recipients listed as Not Eligible rather than Recipient Deceased in MMIS, delaying recognition of death and end-date updates.
MMIS reason codes were changed to Recipient Deceased after APA inquiry, and some overpayments had not yet been recouped as of August 4, 2025.
As of August 4, 2025, DHHS had adjusted and begun to recoup the overpayments for 3 of the 13 Medicaid recipients.
Recommendations (4)
Strengthen procedures to ensure all payments are proper and allowable, precluding disbursements to MCOs for deceased individuals unless for services provided prior to death.
Correct and recoup overpayments in a timely manner and update records promptly to reflect accurate dates of death.
Establish and/or enhance interfaces with systems containing death information (Vital Statistics, NFOCUS) to ensure automated case notices trigger timely eligibility end-date updates.
Improve staff training and ongoing monitoring related to Vital Statistics notices, death date verification, and case closure decisions to prevent future overpayments.