Medicaid Eligibility Determinations: Status on the Use of Federal Tax Information
Learn how the AI-generated research projects were createdOverall Conclusion
LDH has not implemented the use of federal tax information for MAGI-based Medicaid eligibility determinations as of August 2019. The agency has ceased automated use in LaMEDS, awaiting IRS approvals and addressing security and space requirements. The IRS-compliant environment exists for post-eligibility reviews, but significant obstacles (space, background checks) mean the automation for initial determinations is not in place. Because LDH did not use tax data during each MAGI-based application and renewal, auditors maintain a scope limitation, and a full opinion on Medicaid and LaCHIP MAGI eligibility is likely unattainable until the scope limitation is resolved.
Source Document
Audit Scope
Audit of Louisiana Department of Health's use of federal tax information (FTI) for MAGI-based Medicaid eligibility determinations (Medicaid and LaCHIP) as of August 2019. The scope covers LDH’s efforts to automate or manually use FTI within the LaMEDS eligibility system, the required IRS approvals (secure IT environment, physical space security, and background checks) for receiving and using FTI, the establishment of an IRS-compliant environment (vault) for post-eligibility reviews, and related activities including LTC eligibility considerations and the potential use (or non-use) of state tax data from the Louisiana Department of Revenue (LDR). It also notes the ongoing scope limitation in testing MAGI-based eligibility due to the lack of access to tax data, and references the potential legislative considerations.
Key Findings Summary
LDH has ceased its efforts to automate the use of federal tax information (FTI) through the LaMEDS system.
IRS approvals required to receive and use FTI (secure IT environment, physical space security, background checks) had only one approval granted as of August 2019; others not yet met.
LDH has not met IRS physical space requirements or completed IRS-required background checks.
View the Findings tab to see all 9 findings
AI-Assisted
AI Scope Summary
This audit aimed to determine whether LDH has progressed toward using federal tax information to MAGI-based Medicaid eligibility determinations, including the status of LaMEDS automation, IRS approvals, and security requirements, and to assess the resulting impact on eligibility verification and the audit's scope limitation.
AI-Generated Insight
This report highlights a critical policy and operational gap between data security/compliance requirements for federal tax data and the potential for improved accuracy and cost savings in Medicaid eligibility determinations. The transition to MAGI-based determinations hinges on IRS approvals and secure infrastructure; without these, LDH risks continued verification gaps and potential improper payments, delaying modernization. The vault-based post-eligibility review path offers a cautious, interim approach but may postpone full automation. The analysis also suggests considering state tax data as a practical alternative if automated FTI remains cost prohibitive, and it underscores potential legislative actions to reallocate Medicaid eligibility functions to LDR.
Audit Objectives
To provide the status of LDH’s use of federal tax information for MAGI-based eligibility determinations.
Audit Findings (9)
LDH has ceased its efforts to automate the use of federal tax information (FTI) through the LaMEDS system.
IRS approvals required to receive and use FTI (secure IT environment, physical space security, background checks) had only one approval granted as of August 2019; others not yet met.
LDH has not met IRS physical space requirements or completed IRS-required background checks.
LDH temporarily discontinued using FTI for Long-Term Care (LTC) eligibility cases in April 2019 due to federal requirements; LTC reviews planned to reinstate use of IRS data.
LDH has not used state tax data (LDR) due to sharing limitations; prior agreement existed but LDH does not use this data currently.
Auditors maintain a scope limitation due to inability to access tax data for testing MAGI-based eligibility; potential impact on testing and audit opinion.
Failure to use tax information prevents verification of critical eligibility factors (tax filer status, household size, total income, etc.), potentially leading to improper payments.
Potential savings if corrections to eligibility are achieved: estimated $48 million annually (0.5% of 1.6 million recipients) from correcting erroneous eligibility; costs of security and checks to be weighed via formal cost analysis.
LaMEDS automation for FTI is not operational; LDH is pursuing post-eligibility reviews using an IRS-compliant environment (vault), but this environment is not yet fully deployed for initial determinations.
Recommendations (2)
Recommendation 1: Conduct a cost analysis for the option of using an IRS-compliant method for utilizing automated federal tax data in LaMEDS before deeming the possibility to be cost prohibitive.
Recommendation 2: If a cost analysis shows that an IRS-compliant method for utilizing automated federal tax data in LaMEDS is truly cost prohibitive, LDH should explore the possibility of using state tax data in LaMEDS instead.