Medicaid Audit Intelligence

Evidence record

Medicaid Eligibility Determinations: Status on the Use of Federal Tax Information

Jurisdiction
Louisiana
Publishing agency
Louisiana Legislative Auditor
Publication date
September 11, 2019
Source record
Original document linked
Open original reportOriginal source available

Findings

9

Recommendations

2

Overall 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.

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.

Findings (9)

Each finding has a stable link.

  1. F-468

    LDH has ceased its efforts to automate the use of federal tax information (FTI) through the LaMEDS system.

  2. F-469

    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.

  3. F-471

    LDH has not met IRS physical space requirements or completed IRS-required background checks.

  4. F-472

    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.

  5. F-473

    LDH has not used state tax data (LDR) due to sharing limitations; prior agreement existed but LDH does not use this data currently.

  6. F-474

    Auditors maintain a scope limitation due to inability to access tax data for testing MAGI-based eligibility; potential impact on testing and audit opinion.

  7. F-475

    Failure to use tax information prevents verification of critical eligibility factors (tax filer status, household size, total income, etc.), potentially leading to improper payments.

  8. F-476

    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.

  9. F-470

    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)

  1. R-432

    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.

    Related finding F-476
  2. R-433

    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.

    Related finding F-473